The US dollar (USD) rebounded last week after selling off about 5% since the beginning of July. Obviously, the bearish trend in the USD needs to be impacted, but there was little material last week. This week is a different story. After today’s US Labor Day holiday, the US data calendar begins with ISM Manufacturing Statistics (Tuesday), JOLTS Jobs Data (Wednesday), ADP, Unemployment Insurance Claims, ISM Services (Thursday), then this week The main event, ING currency strategist Chris Turner, points to Friday’s August jobs report.
DXY trades quietly during US holidays
If the consensus on Friday’s jobs report (employments rose by 165,000, unemployment fell to 4.2%) is correct, then market prices lock in with just a 25 basis point cut as the start of the Fed’s easing cycle on September 18th. Probably. Payrolls could remain at just 125,000 people, but the unemployment rate could rise to 4.4%. If so, the USD could test recent lows as the pendulum swings back toward the Fed’s 50bp rate cut in September.
This week we will also see whether US opinion polls start to be reflected in foreign exchange markets. Arguably, the dollar sell-off since July has been helped by the Democratic Party’s improved poll performance. As we enter the preparation phase for November, the importance of public opinion polls is increasing, and public opinion polls will become a hot topic next week after the first Harris-Trump televised debate on September 10th. There is no doubt about it.
Forex trading is expected to be slow today due to the Labor Day holiday, and I don’t think DXY has the strength to overcome the 101.85/102.00 area.
