Supported by caution – OCBC

DXY was a touch firmer this morning. Market narrative has shifted towards concerns of what the backlog of US data may reveal about the US economy but at the same time, there is also rising caution that Fed may slow pace of rate cuts. December cut is now <50% probability as Fed officials continue to paint a clear division in opinions. DXY was last at 99.40 levels, OCBC’s FX analysts Frances Cheung and Christopher Wong note.

Quite a number of Fedspeaks on 19 occasions this week

“Bostic said that while he was able to support the most recent 2 interest-rate cuts, he wasn’t yet convinced about another move next month. Logan said it would be hard to support another rate cut unless we were to get convincing evidence that inflation is really coming down faster than my expectations or that we were seeing more than the gradual cooling that we’ve been seeing in the labour market. Schmid said additional interest-rate cuts could do more to ingrain higher inflation than shore up the labour market. Daily momentum is mild bearish but RSI rose. 2-way trades likely to persist though risks skewed to upside.”

“Resistance at 100 levels (200 DMA), 100.6 (76.4% fibo). Support at 99.10/30 levels (21 DMA, 50% fibo retracement of May high to September low), and 98.30/50 levels (50, 100 DMAs, 38.2% fibo). “There are quite a number of Fedspeaks on 19 occasions this week, including Williams, Waller, Miran and FOMC minutes (Thursday). On data releases this week, BLS confirmed that the employment situation report for September (initially scheduled for release on 3 October) will be released on 20 November (Thursday, 830pm SGT) and the real earnings report will be released on Friday.”