The US Dollar (USD) is showing slight weakness in today’s trading session, with limited movement observed across major currencies. Investors seem to be waiting on the sidelines, anticipating tomorrow’s release of US CPI data and the upcoming presidential debate tonight, according to Scotiabank’s Chief FX Strategist Shaun Osborne.
Currently, the Norwegian Krone (NOK) and New Zealand Dollar (NZD) are leading the intraday gains, while the Mexican Peso (MXN) lags behind along with the South African Rand (ZAR). European stocks are mixed, and US equity futures are flat. Bond markets are also quiet, with little activity. No major economic reports are scheduled for today, although Fed officials Barr and Bowman are speaking on regulatory matters.
On the technical side, the Dollar Index (DXY) is consolidating on short-term charts, attempting to capitalize on the recent price rebound in late August. Option pricing for the Dollar Index indicates a shift in sentiment towards a more neutral stance, with short-term risk reversal trades hovering around neutral levels.
Market participants have reduced expectations of a 50 basis points rate cut by the Fed next week, but there is still a possibility of a larger cut. The DXY may see more range-bound trading in the near term, with a potential for strength if it surpasses the 102 level. Key support for the index is at 100.5.
Analysis: The current market sentiment is cautious, with investors awaiting key economic data releases and political events. The USD’s performance against other major currencies is closely watched, with potential implications for global markets. Traders should pay attention to technical levels on the Dollar Index for signals of further strength or weakness.