- The greenback faces market’s presumption of a rate cuts the H2 and H1 202.
- The DXY ends the week around 96.58, – 0.42% on Friday.
The greenback took the final blow on Friday, dropping from 97.18 to 96.46 on a weaker than expected job report as data went on to complete a series of disappointing economic inputs for recent days which has sent yields into a descending spiral. The market is now pricing in 71bp of Fed cuts in 2019 and 27bp of Fed cuts in 2020 while expectations are for a full 25bp of a rate cut by the July 31st FOMC meeting. Indeed, May’s below-consensus non-farm payrolls (+75K) will no doubt keep the bears on top into next week, although, overall, one could argue that one data point does not change the overall healthy picture of the U.S. labour market.
“In short, the latest jobs report still suggests the US economy is in relatively solid shape for the time being,” analysts at ING Bank argued:
With wage growth outpacing inflation and consumer confidence close to multi-year highs, consumer spending should continue to underpin overall growth during the second quarter. But with rising concerns over where President Trump will take his trade war to the next stage, risks facing the economy are undoubtedly growing – albeit the 100bp of easing now priced in by the end of 2020 may be a little overdone.”
DXY levels
The index has been on the defensive since the end of May and had dropped to the 200 D EMA at 96.50 and below the 61.8% retracement fibo of the March to recent swing highs as daily sti=ochatics run into oversold territory. On an extension to the downside, 95.80 comes as a keen support level guarding 95 the figure and confluence of the Jan and Feb 2019 lows. On the flipside, 97.34 comes as a 38.2% resistance level.
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