Dollar Jumps Midweek
The US Dollar is pushing higher through the middle of the week following a set of better-than-forecast US economic readings yesterday. The JOLTS job openings number was seen spiking higher to 8.1 million from 7.84 million prior, well above the 7.73 million level the market was looking for. Coming just ahead of the headline NFP release on Friday, the data has sparked speculation that we could see a similar upside surprise in that data, leading USD higher today.
Inflation Concerns
Alongside jobs data yesterday, the ISM services reading also came in above forecasts at 54.1 vs 53.5 expected, up from 52.1 prior. However, it was the details of the data which caused the biggest bullish reaction in USD. The prices paid component was seen jumping to level last seen in January 2023. Given that this data tends to correlate with inflation, the uptick is a clear warning sign for the Fed on the back of the recent trend higher in CPI.
Hawkish Fed Risks
Taken in sum, stronger jobs data and readings indicating fresh inflationary pressure are a clear hawkish risk for the Fed. Market pricing for a further Fed rate cut this month has virtually disappeared while odds have been slashed in March too. Pricing now reflects a more than 60% chance of the Fed holding rates steady through Q1. If Friday’s data comes in hot, we can expect this pricing to jump above 70%, leading USD higher still into next week.
Technical Views
DXY
The index is once again testing the 109.35 level resistance and looks poised for an upside break and a continuation of the bull channel. 110.86 will be the next target for bulls, while to the downside, 107.25 and the bull channel lows sit as the next support to watch. Bullish outlook remains intact while price holds above that region.
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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.