Dollar Pushing Higher On Hawkish Fed Speak
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More Hawkish Fed Commentary
The US Dollar is continuing to storm higher today with the DXY up sharply mid-week as focus falls on hawkish Fed expectations. Following on from hawkish comments earlier in the week from Fed’s Goolsbee and Musalem, yesterday we heard Richmond Fed President Barkin warning that inflationary pressures could take longer to fade than initially expected with the risk that higher prices become entrenched. Additionally, Boston Fed President Collins was seen on LinkedIn voicing her support for rate hike amidst fears of inflation becoming entrenched above 2%.
October Rate Hike Pricing
Despite the strength in USD linked to these hawkish comments, market pricing for a hike next month only sits slightly above 50% for now. As such, there is plenty of room for USD to push higher if that pricing starts to lift in response to any incoming data strength. Inflation and jobs numbers ahead of the October FOMC will of course be key to monitor. With that in mind, the main focus will be on next week’s September NFP print with chatter starting to circulate regarding a strong number. If jobs growth is seen ramping higher again this could provide the catalyst for a fresh push higher in USD as October rate hike pricing lifts above the 60% figure.
Technical Views
DXY
The index is now pushing firmly back up into the broken bull channel and above the key 100-level. With momentum studies bullish, the focus is on a continuation higher while above this region. The June and July highs around the 101.50 – 101.91 mark are now the big resistance area 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.