Post-NFP Bounce
The US Dollar is pushing higher today, following a recovery off yesterday’s lows as traders reacted to the November NFP release. The headline NFP number came in at 64k, above the 51k the market was looking for but down sharply from the prior month’s initial 119k reading, though this was revised heavily lower to -105k. Wage growth was seen falling to 0.1% from 0.4% prior, below the 0.3% the market was looking for while the unemployment rate was seen jumping to 4.6% from 4.4% prior, above the 4.5% the market was looking for. On the back of the data, pricing for a January cut has weakened slightly, falling to just shy of 20% from around 26% prior. The headline beat on the NFP seems to be enough to dissuade traders from buying into a January cut and with pricing for a March cut still 50/50, USD could have room to recover further near-term.
Fed’s Waller to Speak
Looking ahead today, traders will be focusing on Fed’s Waller who gives a speech on the economic outlook. Given the jump in the unemployment rate, there could be a dovish twist today if Waller takes a dim view on the economy, particularly if he expresses any concern over the labour market. Given that Waller’s recent commentary has leaned more to the dovish side, there are downside risks for USD into this speech today and any sell off could be amplified by a more hawkish meeting from the ECB tomorrow and BOJ on Friday.
Technical Views
DXY
For now, price is bouncing off support at the 98.24 level, still above the broken bear channel highs. While this area holds, bulls will be looking for a fresh test of the 99.15 level to put focus back on a return back towards the $100 mark. However, if we drop back below this level, a retest of the channel and deeper support at 96.63 is the next focus.
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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.