DXY Recovering
The US Dollar continues to chop around ahead of Friday’s keenly awaited US labour market reports. DXY was seen moving higher yesterday in line with a stronger-than-forecast JOLTS job openings number. Jobs growth was seen at 7.39 million last month, well above the 7.11 million the market was looking for and sharply higher than the 7.20 million reading seen over the prior month. The data has raised speculation that the NFP on Friday could come in above expectations, leading to some covering of USD shorts here. Given the low expectations for Friday’s data (NFP forecast 132k vs 177k prior), there is certainly plenty of room for an upside surprise, highlighting bullish USD risks into the data.
US Jobs Data
Ahead of Friday’s data, traders will be watching the ADP release due later today and forecasted to rise to 11k from 62k prior. If such a jump is confirmed, this should feed into bullish USD sentiment here fuelling a further rally into Friday’s data. An upside beat on Friday should then keep USD supported into next week, likely causing a weakening of near-term Fed easing expectations as traders take a stronger view on the economy.
Trump/Xi Call
On the trade front, traders are now waiting on a call between Trump and Xi JinPing, scheduled to take place this week. If the call goes well and it looks as though trade negotiations are back on track, USD is likely to rally firmly higher near-term. However, if the calls results in negative headlines, we could see USD reversing sharply lower. As such, plenty of volatility risk to navigate ahead of the weekend.
Technical Views
DXY
For now, the index is fighting to stay above the rising trend line off YTD lows and the 99.15 level. While above here, focus is on a fresh recovery higher and a challenge of the bear channel highs and 100.38 level next. To the downside, 98.03 remains the key support to watch.
Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.
Past performance is not indicative of future results.
High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% and 75% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Futures and Options: Trading futures and options on margin carries a high degree of risk and may result in losses exceeding your initial investment. These products are not suitable for all investors. Ensure you fully understand the risks and take appropriate care to manage your risk.
With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.