Waller Backs Pause in Easing
The US Dollar is trading in the green so far today with the DXY bid on the back of hawkish comments from some Fed policymakers yesterday. Fed’s Waller voiced his support for pausing rate cuts on the back of disappointing inflation data last week, though said the Fed could likely resume cutting later this year if the current inflationary spike fades.
Data Accuracy Concerns
Notably, however, Waller did express some concern around the accuracy of the data pointing to a trend over recent years for higher readings at the start of the year which could be a result of ‘residual seasonality’ in the data not being fully adjusted for. Fed’s Harker also shared this concern speaking yesterday, pointing to an upside surprise in 9 of the last 10 January CPI readings.
FOMC Minutes
Looking ahead this week, traders will be watching tomorrow’s FOMC minutes for further insight into the Fed’s current view. Given the hot inflation reading we’ve had since that meeting, there is a chance that some of the comments might have lost relevancy. However, any discussions related to pausing easing given the return of inflation risks are likely to have a bigger impact on the market in light of that data meaning that USD risks appear skewed to the upside tomorrow.
Technical Views
DXY
For now, the Dollar remains below the 107.24 level and with momentum studies bearish, focus is on a continued push lower while the level holds as resistance. 105.97 and 104.59 will be the next supports to watch. Back above 107.24, focus turns to 109.35 as the next objective for bulls.
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