Hawkish FOMC Minutes
The US Dollar is pushing higher today on the back of a hawkish set of FOMC minutes yesterday. The DXY is testing the 100.39 level resistance and with momentum studies bullish, focus is on a break higher. The minutes showed considerable resistance to furtehr easing, as expected. Several members expressed opposition to cutting rates last month and many signalled they expected rates to remain unchanged at the December meeting. While the minutes were well-expected to be hawkish, other developments have conspired against doves this week also.
Further Data Delays
The BLS announced yesterday that the delayed October jobs report, and the November jobs report, will be released together on December 16th. Given that this is after the December 10th FOMC meeting, rate cut expectations have now plunged again. The one remaining hope that doves had was that incoming data, including delayed data from the shutdown period, would show fresh weakness, giving the Fed ammunition to ease again. However, with the data now delayed until after the meeting, the likelihood of the Fed cutting before seeing that data is seen as very low, fuelling a fresh bid in USD.
Today’s NFP Data
Looking ahead today focus will be on the delayed September NFP data due this afternoon. If we see an uptick in the headline reading as expected (55k vs 22k prior) this should keep USD supported. If we see an upside surprise, this should be firmly bullish for USD into next week. A downside surprise, on the other hand, should help cap the rally for now but shouldn’t impact December easing prospects.
Technical Views
DXY
Following a correction lower, DXY has rallied off the 99.15 level and is now once again testing the 100.29 resistance. With momentum studies bullish, focus is on a breakout here with, confirming a rounded bottom reversal which puts focus initially on 101.91 as the next bull target to note.
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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.