The US Dollar is bouncing back firmly today with the DXY up almost 1% now off the week’s lows. The fresh surge higher comes amidst the stock market chaos we saw yesterday as equities plunged lower on a fresh AI rout following the US midterms results which saw the Democrat party take both houses. The view now is that expansion of the AI sector will be heavily slowed, particularly the building of data centres, to which Democrats have a high level of reservation. With stocks plunging, safe-haven flows have switched back into the US Dollar.

US NFP Up Next

Traders are now looking ahead to the latest US labour market report today as markets brace for the NFP release. On the data front, Wall Street is looking for the headline NFP figure to print 65k up from 29k prior with the unemployment rate to hold steady at 4.2% and wages to rise to 0.3% from 0.1% prior. If seen, this should help drive December tightening expectations (currently 70%) higher, lifting USD further. Any upside surprise today will of course be more firmly bullish for USD. On the other hand, if we see any weakness in today’s data, the USD rally could be capped as December tightening expectations soften. Indeed, a downside surprise today set against the backdrop of current market turmoil could see December tightening pricing drop below 50%.

Technical Views

DXY

The sell off has stalled for now into the cradle of support formed at the retest of the broken bear trend line from summer highs and the bull channel lows. Price is now attempting to get back above the 101.91 level. If successful here, bulls will be focusing on a continuation higher to 103.20 next.

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Tagged in: #dollar #dxy #fed #nfp

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.