- DXY manages to recover as traders gear up for the Fed’s final appearance of 2019.
- Trade jitters continue, risk sentiment turns haywire ahead of the key events.
- US CPI can offer intermediate moves prior to the Fed meeting.
The gauge of the comparative US Dollar (USD) strength versus six major currencies, the US Dollar Index (DXY), manages to pare early-week losses to 97.51 while heading into Wednesday’s European session. The greenback indicator seems to have benefited from the market’s anticipation of an upbeat statement from the US Federal Reserve (Fed) Chairman Jerome Powell.
The third quarter (Q3) Nonfarm Productivity and Unit Labor Costs failed to reflect Friday’s upbeat job report while other second-tier data from the United States (US) couldn’t lure the Bulls on Tuesday. The performance could also be attributed to the welcome prints of ZEW sentiment numbers from the Eurozone and Germany.
Signals concerning the phase-one deal between the US and China have been mixed as usual. While the US President Donald Trump keeps reiterating the calls of trade talks “going well”, other White House members fail to follow the suit.
With this, the risk tone stays challenged ahead of the US tariff deadlines of December 15. Should the US stay on the path to levy fresh tariffs on Chinese goods, a trade war is bound to negatively affect the global economy.
Additionally, caution also prevails ahead of the final meeting of the Federal Open Market Committee (FOMC) during the year 2019. While the US central bank is widely anticipated not to change current monetary policy after three rate cuts, markets will be keen to see as to what the Jerome Powell and Company have in their pockets as far as 2020 is concerned.
Furthermore, the November month Consumer Price Index (CPI) data from the US will also be the key. The headline CPI YoY may increase to 2.0% from 1.8% while the CPI ex Food and Energy, also known as Core CPI, is likely to stay unchanged on YoY and MoM at 2.3% and 0.2% respectively.
Technical Analysis
Unless breaking 200-day Simple Moving Average (SMA), at 97.68 now, prices are less likely to negate fears of revisiting October lows near 97.15.
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