Upside ADP Surprise
The DXY is easing back from 4-month highs today, despite a better-than-forecast ADP print yesterday. Private sector jobs were seen rising by 42k, up from -32k prior and above the 31k the market was looking for. Additionally, the ISM services reading was seen beating forecasts also. Together, both data sets offer further pushback against December easing expectations, with the CME FedWatch tool now pricing a December cut at less than 70%.
US Govt Shutdown
However, with USD under offer despite yesterday’s data beats focus looks to be shifting back onto the ongoing US govt shutdown which has now become the longest in history. Furthermore, it is likely that we are seeing a ‘sell the news’ dynamic at play given that neither reading was sensational enough to fuel a fresh breakout and DXY was testing a key resistance level on the back of a sustained rally.
Tariff Court Ruling
Looking ahead, USD traders will be awaiting fresh directional cues. With data scant amidst the ongoing shutdown, some rangebound action is likely here. Incoming Fed commentary could offer some fresh support for USD while traders will also be watching the outcome of the US Supreme Court ruling on Trump’s trade tariffs which gets underway today.
Technical Views
DXY
The rally in the DXY has stalled for now into a fresh test of the 100.39 level which capped the rally in August. Momentum studies are bullish here and focus is on an eventual break higher while price holds above 99.15 and the broken bear channel, targeting 101.91 next.
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. 73% and 72% 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.