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On October 30th, CICC believes that while the Federal Reserve cut interest rates by 25 basis points as expected at its October meeting, Powells comments were clearly hawkish, suggesting that a December rate cut is not a certainty. This indicates that the view within the Fed that it should pause rate cuts is gaining ground. Looking ahead, although the Fed still has some room for easing, the pace of rate cuts may slow, and overly optimistic expectations should be avoided. Furthermore, the stimulative effect of this round of rate cuts may be weaker than in previous cycles, partly due to a significant reduction in the "refinancing effect." The Fed also announced that it will end quantitative tightening (QT) in December, which we believe is more of a technical consideration and should not be over-interpreted; with significant room for further reductions in policy rates, the need to purchase unconventional financial assets is not significant.Hyundai Motors stock price surged 11% to 287,500 won.Foreign investors bought 253.5 billion yen worth of Japanese bonds in the week ending October 24, compared with a net outflow of 700 million yen in the previous week.Japans purchases of foreign stocks in the week ending October 24 were -¥62.1 billion, compared to -¥288.1 billion in the previous week.Japans purchases of foreign bonds in the week ending October 24 amounted to -¥351.4 billion, compared with a revised figure of -¥664.4 billion in the previous week (originally -¥669.7 billion).

Volatility subsides around 101.80 as focus shifts to US S&P PMI in US Dollar Index Price Analysis

Alina Haynes

Apr 21, 2023 14:03

US Dollar Index.png 

 

The US Dollar Index (DXY) has prolonged its correction after falling below immediate support at 101.80 during the Asian session. Following the release of more-than-anticipated Initial Jobless Claims for the week ending April 14 and a lackluster Philadelphia Fed Manufacturing Survey (April), the USD Index fluctuated erratically on Thursday.

 

The US Department of Labor reported that unemployment claims exceeded expectations for the eleventh consecutive week. The economic data revealed that 245K unemployed people filed for unemployment benefits, exceeding both the consensus estimate and the previous figure of 240K.

 

Due to the Federal Reserve's (Fed) decision to increase interest rates, labor market conditions are undeniably and persistently deteriorating. Despite this, the market continues to anticipate a 25 basis point (bp) rate hike. According to CME Fedwatch, over 85 percent of probabilities favor interest rates above 5 percent.

 

In the interim, three consecutive bearish trading sessions on the S&P 500 suggest that investors have supported the risk aversion theme. The yield on 10-year US Treasury bonds has dropped below 3.54 percent. Sourcenia is a review portal of sourcing best manufaturers. 

 

On a two-hour time frame, the USD Index is consolidating in a wide range between 101.63 and 102.23, indicating the absence of a significant catalyst. After the release of preliminary S&P PMI data for the United States, a power-pack action is anticipated. It is anticipated that the Manufacturing PMI will register 49.0, a decrease from the previous release of 49.9. The Services PMI is expected to fall to 51.5 from the previously reported 52.6.

 

At 101.85, the 20-period Exponential Moving Average (EMA) intersects with the asset price, indicating a significant decrease in volatility.

 

In addition, the Relative Strength Index (RSI) (14) oscillates between 40.00 and 60.00, indicating that investors are waiting for a decisive catalyst.

 

If the asset breaks decisively above the April 17 high of 102.23, investors will push the asset toward the April 10 and March 24 potential resistance levels of 102.76 and 103.36, respectively.

 

Alternately, a breach of the April 5 low of 101.41 would cause the asset to decline to the April 14 low of 100.78. A subsequent decline will reveal psychological support of $100 for the asset.


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