Powell Comments Boost USD
The US Dollar continues to push higher on Thursday with the DXY now trading at its highest levels in a month. The rally comes on the back of comments from Fed chairman Powell earlier in the week, pushing back against expectations of a further .5% cut this year. Powell signalled that the Fed intends to pursue two further .25% cuts this year, as its base case scenario, fuelling a downshift in market pricing for a deeper cut in November. CME group is now pricing just a 36% chance of a 5% cut.
Better US Data – NFP on Watch
Alongside Powell’s easing pushback, better US data this week as well as safe-haven demand linked to rising Middle East tensions has also helped bolster sentiment in the Dollar. The ADP employment figure yesterday came in above forecasts at 143k from 103k prior, above the 124k the market was looking for. Looking ahead, focus today will be on the latest weekly unemployment claims and ISM services reading ahead of tomorrow’s headline NFP release. Any upside surprise will be firmly bullish for USD given the current market dynamic.
Middle East Tensions
Soaring tensions in the Middle East are also helping drive USD higher here via safe-haven demand. With Israel engaged in a ground offensive in Lebanon, as well as taking missile fire from Hezbollah positions in Iran, there is a very real risk of a wider war breaking out, threatening to further destabilise the region. For now, USD remains vulnerable to further upside on any headlines reflecting an escalation of violence.
Technical Views
DXY
The index is rallying firmly back above the 100.93 level now, currently testing the September highs. Above here, 102.46 and the retest of the broken bull trend line will be the main focus with a break there opening the way for a test of 104.05 next.
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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.