USD Jumps on Strong NFP Beat
The US Dollar is seeing continued demand across early European trading on Monday as the rally from last week extends on the back of Friday’s bumper US jobs report. The headline NFP print came in at a solid 256k, up from 227k prior and well above the 164k the market was looking for. Along with that, the unemployment rate was seen falling back to 4.1%, below both the prior and expected 4.2% level while wages growth was seen cooling slightly to 0.3% form 0.4% prior, in line with expectations.
Q1 Fed Expectations
On the back of the data, market pricing for a rate cut in Q1 has virtually disappeared. Pricing for rates to remain unchanged through March jumped to 80% from around 60% prior. The market is now only considering a rate cut by the June meeting with even that pricing hovering around the 50% level.
US Data Incoming
Looking ahead, there is plenty of key US data this week with CPI, PPI and retail sales all due. The current USD rally should continue if incoming data remains supportive. Beyond that, focus shifts to Trump’s upcoming inauguration this weekend. A hawkish market outlook on the Fed, along with the expected pro-USD impact of a Trump administration, means that USD should remain bid this week.
Technical Views
DXY
The rally in DXY has seen the index breaking out above the 109.35 level. With momentum studies bullish, and price supported by the bull channel, focus is on a continuation higher with the 110.86 level the next target for bulls. To the downside, 107.25 remains key support to note.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.