We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

Free Trading Guides
EUR/USD
Bullish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
GBP/USD
Bearish
USD/JPY
Bullish
Gold
Bearish
Oil - US Crude
Bullish
Bitcoin
Mixed
More View more
Real Time News
  • 🇯🇵 JPY Industrial Production (YoY) (OCT F), Actual: -7.7% Expected: N/A Previous: -7.4% https://www.dailyfx.com/economic-calendar#2019-12-13
  • Heads Up:🇯🇵 JPY Industrial Production (YoY) (OCT F) due at 04:30 GMT (15min), Actual: N/A Expected: N/A Previous: -7.4% https://www.dailyfx.com/economic-calendar#2019-12-13
  • #Euro area stocks may be preparing to break the four-month uptrend built around hopes for a US-China trade deal and an orderly #Brexit outcome. Get your market update from @IlyaSpivak here: https://t.co/ujlCJiXLvh https://t.co/vKhjtd86RV
  • SNP is feeling pretty good tonight. #indyref2 is coming. Just a matter of when. #indyref2020? #Brexit #UKElection #UKelection2019 https://t.co/WYmQK84Mfd
  • RT @IGSquawk: Jo Swinson loses her seat to the SNP by 149 votes. #UKElection
  • RT @bbclaurak: Separately SNP sources believe they have beaten Jo Swinson - tonight may have claimed Lib Dem Leader, DUP Westmin leader, an…
  • Get your $GBP reaction to the latest #GE2019 results. Join our live coverage with @JMcQueenFX to follow the release and its impact live today at 11:30PM EST/ 4:30GMT: https://t.co/8rzLPMJ6tE #UKElection https://t.co/h7cLIuOJ2O
  • Commodities Update: As of 03:00, these are your best and worst performers based on the London trading schedule: Oil - US Crude: 0.53% Gold: -0.12% Silver: -0.16% View the performance of all markets via https://www.dailyfx.com/forex-rates#commodities https://t.co/cRuZTQ2amT
  • My trading video amid all this volatility: 'S&P 500 and Risk Trends Next Steps After #TradeWar, #Brexit Developments' https://www.dailyfx.com/forex/video/daily_news_report/2019/12/13/SP-500-and-Risk-Trends-Next-Steps-After-Trade-Wars-Brexit-Developments.html?CHID=9&QPID=917719
  • Jeremy Corbyn steps down as Labour leader $GBP
USDOLLAR Eyes Major Support Ahead of ADP, ISM Services

USDOLLAR Eyes Major Support Ahead of ADP, ISM Services

2016-02-03 12:49:00
Christopher Vecchio, CFA, Sr. Currency Strategist
Share:

Talking Points:

- AUD/JPY, AUD/USD pivot at former support turned resistance.

- EUR-crosses seek stability; important few days for EUR/GBP.

- Follow trader sentiment in USD/CAD with live DailyFX SSI updates.

US economic data has been rocky of late, and traders are starting to chip away at the USDOLLAR Index as fears of a deeper slowdown take shape. Economic data momentum (via the Citi Economic Surprise Index) is off to its weakest start to the year since 2009, which of course was at the height of the global financial crisis.

The signs are alarming and gave the Fed good reason to soften its tone last week. We are just coming off of some of the slowest US retail sales growth in the post-GFC era, and industrial production just suffered its worst contraction in a non-recession year since 1952. The Fed's commentary embodied these concerns, saying in their policy statement that "labor market conditions improved further even as economic growth slowed late last year." Headline jobs growth has remained firm, but recent US Initial Jobless Claims - typically seen as a leading indicator for the labor market - have started to creep higher. The US economy is on shakier footing than most are willing to admit.

Rates markets are already pricing out the possibility of a hike in March, with only a mere 12% chance of a 25-bps hike being priced in, according to the Fed funds futures contract. How alarmed are markets? The first hike is now being priced in for December 2016:

Table 1: Probability of Rate Hikes across Upcoming Fed Meetings

fed rate hike probabilities

For today, the January US ADP Employment Change report and the January US ISM Services/Non-Manufacturing index should give fairly strong hints about what we should expect from this Friday's January US Nonfarm Payrolls report. There is a chance that there may be a weather distortion in construction, housing, and jobs data between December and January: December produced the warmest weather on record in the US; whereas January saw the East Coast endure one of the worst blizzards ever (NYC missed its all-time snowfall total by <0.2"). It's possible that the strong December figures 'borrowed' growth from January; which may exacerbate the recent slide in US economic data.

Read more: Risk FX Not in the Clear Yet, Particularly the Australian Dollar

We're over one-third through the quarter - see how the DailyFX Research Q1'16 forecasts are holding up.

--- Written by Christopher Vecchio, Currency Strategist

To contact Christopher Vecchio, e-mail cvecchio@dailyfx.com

Follow him on Twitter at @CVecchioFX

To be added to Christopher’s e-mail distribution list, please fill out this form

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES

News & Analysis at your fingertips.