US Dollar, DXY, Market Sentiment, USD/JPY, Technical Outlook– Talking Points
- Asia-Pacific markets look ready for a mixed trading session
- US Dollar strength moderated as traders prepare for US CPI
- DXY Index stalls as trendline resistance tempers recent gains
Recommended by Thomas Westwater
Get Your Free USD Forecast
Thursday’s Asia-Pacific Outlook
Asia-Pacific markets look set for a mixed open. A lull in US Dollar strength bodes well for today’s trading session, but the upcoming US consumer price index (CPI) for September is on tap tomorrow. The core reading is expected to cross the wires at 6.5% from a year before. That would be up from 6.3% in August. A hotter-than-expected print would bode poorly for risk assets, as it would bolster Federal Reserve rate hike bets.
The S&P 500 closed at its lowest level since November 2020, falling 0.33% to close at 3,577.04. Fed funds futures are pointing to a 95% chance for a 75-basis point rate hike at the November 02 FOMC meeting. Tomorrow’s inflation report is the last high-impact economic print before that meeting, making it especially critical to rate traders, and, therefore, the broader market.
Elsewhere, the British Pound rose against the USD. The Sterling gained a bid after reports crossed the wires, suggesting that the Bank of England will extend its emergency market intervention measures to support market liquidity and allow pension funds more time to balance their books. That spurred some appetite for UK Gilts, pushing yields lower across the short end of the curve.
The Japanese Yen is another focal point for today’s trading session. USD/JPY rose above levels that the Bank of Japan and the Ministry of Finance (MoF) intervened. Japanese policymakers are likely comfortable with the move as long as it doesn’t rapidly accelerate. Otherwise, another intervention is likely on the table. Japanese data, including bank lending and PPI numbers for September, are due out at 23:50 UTC. Australian consumer inflation expectations for October are set to follow later today.
US Dollar Technical Outlook
After a string of daily consecutive gains, upside US Dollar momentum is slowing. A trendline from May is back in focus as a possible level of resistance. If prices fail to clear above the trendline, a pullback to the June 2002 high at 112.04 or the rising 26-day Exponential Moving Average (EMA) is on the cards.
US Dollar DXY – Daily Chart
Chart created with TradingView
— Written by Thomas Westwater, Analyst for DailyFX.com
To contact Thomas, use the comments section below or @FxWestwater on Twitter
