DailyFX US AM Digest: US Dollar Awaits ISM Manufacturing Before FOMC Later
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The US Dollar has pushed slightly higher from yesterday’s close in the hours ahead of the Federal Reserve’s second-to-last rate decision of 2017. Earlier in the day, the British Pound got a lift after the UK PMI Manufacturing report for October beat expectations, bumping up speculation that the Bank of England will hike rates tomorrow. Overnight index swaps are currently pricing in an 89% chance of a 25-bps rate hike tomorrow. Elsewhere, the Japanese Yen took another leg lower just after 8 EDT/12 GMT amid news that Japanese PM Shinzo Abe would be readying a new economic reform package shortly.
DailyFX Economic Calendar: Wednesday, November 1, 2017 – North American Releases
There are several ‘high’ importance events on the calendar that garner attention on Wednesday. The October US ISM Manufacturing report will help traders get their bearings ahead of the October US Nonfarm Payroll release on Friday; earlier, the October US ADP Employment Change showed the economy gained +235K jobs last month. Later today the Federal Reserve will conclude their November policy meeting. No policy change is expected at the meeting, with Fed funds pricing in a 0% chance of a 25-bps rate hike. All attention will be on the policy statement, where traders will be looking for confirmation that a rate hike is indeed coming next month.
DailyFX Webinar Calendar: Wednesday, November 1, 2017
USDJPY: Retail trader data shows 49.4% of traders are net-long with the ratio of traders short to long at 1.02 to 1. The number of traders net-long is 3.7% lower than yesterday and 7.9% higher from last week, while the number of traders net-short is 1.2% lower than yesterday and 9.4% lower from last week.
We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests USDJPY prices may continue to rise. Positioning is more net-short than yesterday but less net-short from last week. The combination of current sentiment and recent changes gives us a further mixed USDJPY trading bias.
Five Things Traders are Reading
- “USD Uptrend Steady Before FOMC; GBP Risky Ahead of BOE” by Christopher Vecchio, CFA, Senior Currency Strategist
- “FX Pairs with Highest Expected Volatility on FOMC Per Options” by Paul Robinson, Market Analyst
- “Limited Further Upside Potential for Brent Crude Oil Price” by Martin Essex, MSTA, Analyst and Editor
- "UK Manufacturing PMI Rises, BoE Set To Hike Rates” by Martin Essex, MSTA, Analyst and Editor
- “DAX & CAC Getting Best of Both Worlds; Weak Euro, Strong Risk Trends” by Paul Robinson, Market Analyst
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