The US Dollar is firmly lower today despite a strong showing in yesterday’s advance Q3 GDP print which rose to 3.4% from 2.2% prior, above the 3.2% the market was looking for. Following on from September’s hotter-than-forecast CPI print, the data serves as the latest evidence of the strong economic growth Fed chairman Warsh referenced this week. However, regardless of current data strength, market pricing for a December hike has softened again, now down to 75% from 81% at the start of the week as investors focus on current AI concerns.

Tech Jitters

Big misses from tech giants Alphabet and Samsung this week have revived the AI selling we saw over the last fortnight with Google suffering stock losses of around $500 billion. The market rout has driven a spike in Treasuries with yields plunging, dragging USD lower ahead of the weekend. The growing view is that a pullback in AI stocks, and the accompanying broader market turmoil, will make it very difficult for the Fed to hike rates near-term.

Hawkish ECB

With stock markets pushing lower and traders moving into treasuries as a safe-haven play, USD looks vulnerable to further downside near-term. Some hawkishness from the ECB yesterday is also feeding into weaker USD sentiment today meaning that any recovery feels unlikely for now and better opportunities will be found on the short side.

Technical Views

DXY

For now, the index remains anchored around the 101.91 level, supported still by the bull channel from YTD lows. While this structure holds, focus is on a fresh push higher and a continuation towards the 103.20 level next.

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Tagged in: #dollar #dxy #fed #usd #stocks

Written byleos James Harte

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.