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U.S. DOLLAR TALKING POINTS & ANALYSIS
- US GDP leaves dollar shaky.
- Core PCE in focus later right this moment and will dictate phrases for the remainder of 2023.
- DXY bulls hunt down upside reversal.
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DOLLAR INDEX FUNDAMENTAL BACKDROP
The US greenback makes an attempt to cease yesterday’s bleeding after US GDP missed expectations alongside a decline in core PCE costs. The cussed jobless claims information was not sufficient to pushback in opposition to these components and now locations the dollar roughly 1.6% decrease year-to-date. After the Fed’s dovish shift in tone, some Fed officers have tried to withstand the intense repricing in fee expectations as to the timing of the primary lower. Because it stands, cash markets (discuss with desk beneath) forecast the opportunity of a fee lower as quickly as Q1 2024. This can be a bit too optimistic, leaving room for a danger to the upside for the USD.
IMPLED FED FUNDS FUTURES
Supply: Refinitiv
That being mentioned, projections for right this moment’s core PCE index (Fed’s most well-liked measure of inflation) is decrease and will lengthen the present narrative. Sturdy items orders and Michigan shopper sentiment could tick larger but when inflation dips, I anticipate markets to put extra emphasis on the inflation measure. As we speak marks the final day for 2023 that would set the tone for the ultimate week buying and selling week of the 12 months as no different excessive impression financial information is due from a greenback perspective. Subsequent week is prone to mirror a continuation of right this moment’s information with minimal volatility throughout the board.
US ECONOMIC CALENDAR (GMT +02:00)
Supply: DailyFX financial calendar
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TECHNICAL ANALYSIS
U.S. DOLLAR INDEX (DXY) DAILY CHART
Chart ready by Warren Venketas, IG
Worth motion on the day by day DXY chart above reveals a breakout from the latest symmetrical triangle sample (dashed black strains) with bears trying to push beneath the long-term trendline help zone (black)/101.74 swing low. This key inflection level might give us a sign as to short-term directional bias heading into 2024. The Relative Energy Index (RSI) recommend bullish/constructive divergence that will maintain USD bulls in play.
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