The US Dollar: Consolidation and Anticipation
- The US Dollar sees its rally stall while traders await US Jobs Report.
- Tensions in the Middle East together with pared bets of big Fed rate cuts are fueling safe-haven inflows to the Greenback.
- The US Dollar Index flirts with potentially breaking out of the September range after a false break on Thursday.
The US Dollar (USD) has been consolidating after a strong week, with the focus now on the upcoming US Employment Report, particularly the Nonfarm Payrolls (NFP) numbers. The outcome of the data will play a crucial role in determining the direction of the US Dollar, either pushing it further away from its current range or pulling it back into consolidation.
Daily Digest Market Movers: Risk Over the Weekend with Israel
- Expect volatility in the Greenback if Israel strikes Iranian Oil fields, pending discussions with the Biden administration for approval.
- The US Jobs Report for September is due at 12:30 GMT:
- Nonfarm Payrolls expected to fall to 140,000 from 142,000 in August.
- Monthly Average Hourly Earnings expected to ease to 0.3% from 0.4%.
- Unemployment rate expected to remain unchanged at 4.2%.
- Equities are showing a slight rebound globally, with US futures remaining flat.
- CME Fedwatch Tool indicates a 69.3% chance of a 25 basis-point rate cut at the next Fed meeting on November 7.
- US 10-year benchmark rate trades at 3.86%, reaching a 30-day high.
US Dollar Index Technical Analysis: False Break or Just the Start?
The US Dollar Index (DXY) has shown strength this week, attempting to break out of September’s range. The 55-day Simple Moving Average (SMA) at 102.05 has acted as a resistance level, indicating a potential breakout pending the US Jobs Report outcome.
Key levels for the DXY:
- Resistance at 102.05 – the first level to break for more upside.
- Final resistance at 103.18 for the week, followed by a choppy area with multiple SMAs and pivotal levels in play.
- Support at 100.62, with a potential test of the 2024 low at 100.16.
- Further downside towards 99.58 if the DXY gives up the 100.00 level.
Nonfarm Payrolls FAQs
- Nonfarm Payrolls (NFP) measure the change in the number of people employed in the US, excluding the farming industry.
- NFP figures can influence Federal Reserve decisions, impacting inflation, monetary policy, and interest rates.
- NFPs generally have a positive correlation with the US Dollar, affecting inflation and policy expectations.
- NFPs are negatively correlated with the price of Gold, impacting its value based on USD strength.
- NFPs are part of a larger jobs report and can be influenced by other components like Average Weekly Earnings and Participation Rate.
US Dollar Price This Week
The table below shows the percentage change of the US Dollar (USD) against major currencies this week, with the USD showing strength against the Japanese Yen.
### Analysis:
– The US Dollar is currently in a consolidation phase, awaiting the US Jobs Report for direction.
– Market volatility may increase due to geopolitical risks involving Israel and Iran.
– Key economic indicators like Nonfarm Payrolls will be closely watched for their impact on the US Dollar and global markets.
– Technical analysis suggests potential upside for the US Dollar Index if it breaks key resistance levels.
– Understanding the impact of NFPs on the USD and other asset classes is crucial for investors.
– Monitoring currency price movements provides insights into market sentiment and relative currency strength.