Consumer confidence, durable goods today – OCBC

US Dollar (USD) fell this morning, in knee-jerk reaction to headline that Trump removed Fed Governor Lisa Cook from her position. DXY last at 98.43 levels, OCBC’s FX analysts Frances Cheung and Christopher Wong note.

2-way trades likely in the interim

“As a governor, her full term is supposedly 14 years and is expected to end in Jan 2038. Decline in USD reflects concerns over Fed independence and potentially, how the make-up of the Fed may be more dovish leaning going forward. This can skew the votes for cut and ultimately weigh on USD.”

“But for USD to come off more significantly may require the blessing of softer US data print this week – durable goods report, conf board consumer confidence on Tue, GDP on Thu and core PCE on Friday. There are also a few Fedspeaks including Barkin and Waller on Tue and Fri, respectively. We will be keeping a lookout on whether data or Fedspeaks changes the narrative from 25bp cut expectation to discussion of 50bp cut at Sep FOMC or whether the trajectory of cut this year increases.”

“Softer US data or dovish tilt rhetoric in Fedspeaks should continue to weigh on USD. Mild bearish momentum on daily chart faded while RSI was flat. 2-way trades likely in the interim. Resistance at 98.50 (21 DMA), 98.90 (100 DMA), 99.60 levels. Support at 97.60 levels.”