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US Dollar May Rise if Jobs Data Cools Fed Rate Cut Bets

US Dollar May Rise if Jobs Data Cools Fed Rate Cut Bets

2020-01-10 08:00:00
Dimitri Zabelin, Junior Currency Analyst

US Dollar, Fed, Nonfarm Payrolls Data – Talking Points

  • The US Dollar may rise on nonfarm payrolls report
  • Robust jobs data could cool 2020 Fed rate cut bets
  • USD index approaching key resistance: will it hold?
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The US Dollar may rise if nonfarm payrolls data beats forecasts and cools Fed rate cut bets for 2020. Easing geopolitical tensions between Washington and Tehran may also help quell market angst and push the Greenback higher alongside stocks. However, the US Dollar’s behavior for the past few months has been erratic as it oscillates between acting like a haven and a typical currency in response to easing expectations.

US Dollar Index – Daily Chart

Chart showing US Dollar Index

US Dollar index chart created using TradingView

USD, Stocks Eye NFP Data

US nonfarm payrolls data is expected to show a 160k figure for December, putting it around the same level of growth in October 2019. The prior 266k print marked the highest increase since January 2019. If payrolls data beats expectations and chills 2020 Fed rate cut bets it could send the US Dollar higher. This may be amplified amid cooling tensions between Iran and the US, especially after the House’s most recent vote.

Chart showing NFPs

Traders will be watching this economic statistic with particular scrutiny because of its notable impact on swaying Fed monetary policy and sparking US Dollar volatility. A robust figure would re-affirm the Fed’s neutral position and would help uplift sentiment as US stocks indices continue to clock in record highs. Conversely, a softer figure may chip away at the Fed’s resolve and inflate 2020 Fed rate cut bets.

US Dollar Technical Analysis

As mentioned in my prior outlook, the US Dollar index has recovered a little over 1.50 percent after bottoming out in at the nexus of 2019 and 2020. It appears to now be heading for a resistance range between 1.2888 and 1.2936 (gold-dotted lines), though recent price action shows the pair is shyly edging away from it. Failure to break above the zone could catalyze a selloff and lead to a re-test of the 1.2604-1.2670 support range.

US Dollar Index – Daily Chart

Chart showing US Dollar Index

US Dollar index chart created using TradingView

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--- Written by Dimitri Zabelin, Jr Currency Analyst for DailyFX.com

To contact Dimitri, use the comments section below or @ZabelinDimitrion Twitter

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