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USD Volatility Risk
We’re seeing plenty of USD volatility risk this week as traders brace for the latest US inflation readings, due on Wednesday. On Friday, the latest US jobs data once again came in above forecasts, further muddying the waters for those looking to establish clarity on when the Fed is likely to begin easing.
US Jobs Market Stays Strong
The headline NFP number was seen coming in above forecasts at 303k up from 270k prior and well above the 212k the market was looking for. Additionally, the unemployment rate was seen weakening while average hourly earnings were seen rising. With employment figured remaining surprisingly robust, traders are finding it difficult to get behind the idea of a rate cut in June. Indeed, pricing for a June cut has now fallen below 50% from around 56% ahead of the data.
US Inflation Due
Looking ahead this week, traders will now be watching the latest US inflation figures due on Wednesday. The market is forecasting headline, annualised CPI to come in at 3.4%, up from 3.2% prior. If seen, this would likely drive June rate-cut expectations lower, sending USD higher near-term. On the other hand, if we see unexpected downside in the data, particularly a decline against the prior month, this could well revive June rate-cut expectations, weighing on USD.
FOMC Minutes
Along with CPI, we also have the latest FOMC minutes due on Wednesday. In light of the latest jobs data (and by that point, inflation too), the minutes will have potentially lost some relevance. However, if there are any clear timing signals disused, this should still be very market moving.
Technical Views
DXY
The rally in DXY has stalled for now into the 104.95 level. While below here, risks of a double top reversal are seen. To the downside, 103.48 remains the key support to note. While this level holds focus is on an eventual break higher and a test of 107.04 next. Should we break lower, however, 102.49 will be the next support to note.
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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.