USD Holding Ground For Now
The US Dollar appears to have avoided any major fireworks for now on the back of yesterday’s broadly in-line CPI release. Annualised CPI was seen rising to 2.9% in August, up from 2.7% prior, as expected. Monthly core inflation rose to 0.3% from 0.2% as expected while headline was slightly higher at 0.4% vs 0.3% expected. In all, the data was seen as offering no significant pushback against current market forecasts for three Fed rate-cuts this year, starting with next week’s September FOMC meeting. However, given that CPI is continuing to push higher, there was also nothing to spark a fresh sell-off in USD. As such, the Dollar is likely to continue to consolidate into next week’s meeting with traders looking for the Fed to set near-term direction through the tone of its guidance.
Weak Jobs Data
Alongside CPI data yesterday, we also saw a worse-than-forecast weekly jobless claims figure. Claims soared to 263k last week, up from 236k prior, marking the highest level since October 2021. On the back of the heavy downside miss in the August NFP last week, the data adds further evidence of the concerning slowdown in the jobs market. Powell previously cited the risks to the jobs market as a key driver for dovish reasoning. With this in mind, traders will be looking for a cut next week and a clear signal that further easing is coming which should see USD resolving to the downside next week.
Technical Views
DXY
For now, DXY remains below the broken bull channel lows and the 98 level and with momentum studies weak, risks of a fresh break lower are seen. 96.89 will be the initial support to watch with 94.85 the deeper bear target if we break lower. Topside, the bearish view only shifts on a break of the 99.15 cap.
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. 75% and 75% 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.