The US Dollar (USD) traded relatively flat on Monday, following a speech by Federal Reserve Governor Michelle Bowman who expressed concerns about inflation remaining “uncomfortably above” the 2% target. This comment came ahead of a busy week that will culminate with the release of the Nonfarm Payrolls data.
Economic Indicators and Fed Speeches:
- Chicago PMI: The Chicago Purchasing Managers Index (PMI) for September came in slightly better than expected, improving from the previous month but remaining in contraction territory.
- Dallas Fed Manufacturing Business Index: The Dallas Fed Manufacturing Business Index for September is also expected to remain in contraction.
- Fed Speeches: Federal Reserve Governor Michelle Bowman and Chairman Jerome Powell are scheduled to deliver speeches this week, discussing the US economic outlook and monetary policy.
Market Sentiment and Fed Rate Expectations:
- Equity Markets: Global equity markets experienced mixed performance, with Asian markets rallying and European and US markets declining.
- Fed Rate Cuts: The CME FedWatch Tool shows a 60.4% probability of a 25 basis point rate cut at the next Fed meeting in November, while 39.6% is pricing in a 50 basis point cut.
Technical Analysis: US Dollar Consolidates
The US Dollar Index (DXY) is currently trading near its recent low and lacks clear technical levels. A break below 100.00 could lead to further downside, with potential support at 99.58. On the upside, resistance levels are at 100.62 and 101.90.