Dollar Steady Ahead of Warsh Speech & Jobs Data
Fed Chair to Speak
The US Dollar remains buoyant today ahead of a closely watched speech by new Fed chairman Kevin Warsh who speaks at the ECB’s Sintra conference today. While the DXY is down from last week’s highs, the correction lower has run out of steam and price is once again turning higher. Looking ahead today, Warsh’s comments look more likely to amplify this support rather than curtail it. This will be the first time hearing from the new Fed chief since the June FOMC last week, his first as chairman. At that meeting, nine members forecasted at least one hike this year (up from zero in March) with five members seeing at least two hikes. Given the clearly hawkish shift in the Fed, Warsh is likely to address the need for the Fed to explore tightening in order to pursue its price stability mandate. Ahead of Warsh’s comments we’ll get the latest ADP jobs data which could help spark further USD buying on any upside surprise seen.
NFPs On Watch
Tomorrow, focus will then turn to the headline NFP data set which comes a day early this month due to the holiday in the US. Market pricing for a Fed hike by year end is currently around the 80% level. As such, there is plenty of two-way risk into this data with room for pricing to push higher on an upside surprise, fuelling a fresh Dollar spike, and plenty of room for pricing to cool on a downside surprise, leading USD firmly lower.
Technical Views
DXY
The rally has stalled for now ahead of the 101.91 level and softening momentum studies readings suggest risks of a correction lower. While price holds above the $100-mark, however, focus is on a continuation higher with 103.20 the next bull target to note.
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