Dollar Falls Despite NFP Beat
Dollar Down on Monday
The US Dollar is starting the week under pressure today, despite the upside surprise in Friday’s US NFP data and subsequent lift in Fed tightening expectations. The headline NFP set printed 102k jobs vs 55k expected and -23k prior. This was a solid upside surprise and, along with wages rising to 0.3% from 0.2% prior and the unemployment rate holding steady at 4.1%, rate expectations rose accordingly with the CME group now pricing in a 60% chance of a hike this month up from 50% ahead of the data.
Inflation Up Next
Despite the lift in rate hike expectations, USD is trading lower today suggesting some caution ahead of the upcoming US inflation print this week. The latest US CPI reading due on Friday is now seen as the final decider for whether the Fed will raise rates this month. The 10% lift in market pricing on the back of the NFP suggests that the rise in jobs data wasn’t enough to convince traders strongly, leaving the focus on CPI this week. If headline CPI holds steady at 3.4%, this should be enough to keep September tightening expectations around current levels while an upside surprise would likely be seen as sealing the deal, sending expectations soaring along with USD consequently. On the other hand, a downside surprise would likely see tightening expectations back below the 50% level, pulling USD lower again for now.
Technical Views
DXY
The index is now back below the 99.15 level as the downside channel break resumes. Focus now is on the August lows around 98.57. If that marker breaks, this should encourage fresh momentum selling with 97.97 the next bear target and 96.59 the deeper level 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.