US Dollar eases after NY Manufacturing data contracts against all odds
- The US Dollar rally hits a curb and has difficulties passing through several important levels against most major G10 currencies
- Markets are gearing of for Fed speakers to convince markets on the Fed’s approach going forward
- The US Dollar Index hovers above 103.00, but struggles to move higher
The US Dollar (USD) is trading slightly lower on Tuesday, following its 10-week high on Monday. This is due to investors’ expectations that the Federal Reserve will not reduce interest rates as rapidly and aggressively as had been anticipated. Additionally, markets appear to be placing bets on the possibility of a victory for former President Donald Trump in the November 5 presidential election, as indications from numerous wagering websites and polls indicate that the Republican nominee is gaining momentum.
On Tuesday, the economic calendar in the United States is once again relatively sparse. The NY Empire State Manufacturing Index for October was significantly lower than anticipated, as it even entered a contraction. Three Federal Reserve officials are scheduled to deliver speeches later this Tuesday.
Market fluctuations on a daily basis: Hits Greenback in New York Manufacturing
- The NY Empire State Manufacturing Index for October was released at 12:30 GMT. In contrast to the previous increase of 11.5, the October number experienced a contraction of 11.9, whereas a positive 2.3 was anticipated.
- In an event hosted by NYU Stern School of Business, Federal Reserve Bank of San Francisco President Mary Daly delivers keynote remarks and participates in a moderated conversation and an audience Q&A at 15:30 GMT.
- Federal Reserve Governor Adriana Kugler participates in a webcast regarding career opportunities and diversity in the field of economics at approximately 17:00 GMT.
- Raphael Bostic, President of the Federal Reserve Bank of Atlanta, will conclude this trading day by speaking during a moderated discussion at the Gathering Spot regarding the impact of the economy on small businesses at approximately 23:00 GMT.
- Japanese equities were up on the day, while Chinese stocks closed substantially lower. Equities are inconsistent. The European equities are expected to close in the red, while the US equities are seeking direction following the US opening chime.
- The CME Fed rate expectation for the November 7 meeting indicates an 86.8% likelihood of a 25 basis point rate reduction, with the remaining 13.2% predicting no rate cut. The probability of a 50 basis point rate reduction has been completely discounted.
- The US 10-year benchmark rate is currently trading at 4.07%, which is slightly lower than the maximum of 4.11% set last week on Thursday
Technical Analysis of the US Dollar Index: The daily close may indicate further decline
The US Dollar Index (DXY) is encountering resistance in the form of a second false break and rejection at the 100-day Simple Moving Average (SMA) of 103.23. The risk is that the DXY may perceive sellers as entering and defending the 100-day SMA following the second rejection. A return to 101.90 as the initial pivotal support level could result in a broad decline in search of support.
The DXY has been trading in the vicinity of the initial resistance level at 103.18 for the second day in a succession, and it is currently under pressure. The 100-day Simple Moving Average (SMA) at 103.23, the 200-day SMA at 103.78, and the critical 103.99-104.00 levels are all present in the choppy area that arises once the price climbs above that point.
The initial line of defence on the downside is the 55-day SMA at 101.90, which is supported by the 102.00 round level to stifle any bearish pressure and initiate a rebound. If that level is not feasible, the low of December 28, 2023, at 100.62, serves as support. Subsequently, the year-to-date low of 100.16 should be tested before further declines occur. Lastly, the July 14, 2023, low of 99.58 becomes relevant, despite the fact that it necessitates a loss of the significant 100.00 level.
