Dollar Consolidation Continues
The US Dollar is starting the week on a soft footing, trading just above the YTD lows for now. A better-than-forecast NFP print on Friday has failed to lift sentiment with traders instead focusing on the sharp drop from the prior month. At 139k, the NFP marks its fifth consecutive month below the 150k mark, suggesting little reason to be optimistic on the US economy for now. Fed rate cut expectations remain little changes on the back of the data with the market still pricing September for the next Fed rate cut.
US/China Talks
For now, it seems that US data and Fed expectations are taking a backseat with traders instead more focused on US trade developments. A phone call between Trump and Xi last week has offered a glimmer of hope that the two sides might still eek out a trade deal in coming months. However, with little detail from the call and talks having previously faltered, traders remain cautious and USD remains vulnerable to a fresh move lower unless we see any concrete signs of progress on the trade negotiations front soon.
US Inflation on Watch
Looking ahead this week, US inflation will be the headline data focus on Wednesday. Annualised CPI is projected to have rise to 2.5% last month, up from 2.3% prior. If seen, this could stem the selling in USD, potentially diluting those September rate-cut expectations. On the other hand, if CPI undershoots forecasts, this should be firmly bearish for USD through the rest of the week.
Technical Views
DXY
The index continues to consolidate within the bear channel, recently forming a triangle pattern. As such, the focus now is whether we break against the trend and correct higher towards 103.40 or we see a trend continuation move towards 94.85 next. Near-term, 98.03 and 100.38 are the key levels to watch.
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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.