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US Jobs Report to Dictate USD Price Action Going into Mid-Term Elections

US Jobs Report to Dictate USD Price Action Going into Mid-Term Elections

Nick Cawley, Senior Strategist

US Dollar Price, Analysis and News:

  • USD positive sentiment remains
  • Democrats may take the House of Representatives.

We have just released our Brand New Q4 Trading Forecasts including USD and EUR.

USD Outlook Predicated on Jobs Report and Election Results

The short- to medium-term outlook for the US Dollar now rests firmly on the outcome of today’s US non-farm payroll data and the next week’s US election results.

Today’s non-farm payroll data is expected to show 193k new jobs created, up from last month’s lowly 134k, but below the average 208k monthly increase seen so far in 2018. Traders will also need to keep an eye on any revisions for last month that may skew today’s data. With the jobs market remaining robust - the 3.7% unemployment rate is a near five-decade low – wages data takes on a more important role and today’s report is expected to show monthly average hourly earnings rising by 0.2%, pushing the year-on-year figure up to 3.2% from September’s 2.8%. If confirmed, these numbers will add credibility to the ongoing interest-rate hiking cycle pursued by the Fed, with another 0.25% rate hike already priced-in by the market.

Next week, the US mid-term elections take place on Tuesday, November 6 with the Republican Party currently in control of both the Houses. According to recent polls, the Republicans look set to keep control of the Senate, but the Democrats are looking more likely to reclaim the House of Representatives. A division of the two would open the way for the Democrats to oppose the President’s agenda and potentially open impeachment proceedings against Donald Trump.

The US dollar basket’s uptrend remains in place and any confirmation, or upside beat, of the numbers above should see the recent 16-month at 96.70 re-tested in the short-term.

US Dollar Basket (DXY) Daily Price Chart (February – November 2, 2018)

Tools for Traders

Traders may be interested in two of our trading guides – Traits of Successful Traders and Top Trading Lessons – while technical analysts are likely to be interested in our latest Elliott Wave Guide.

What is your view on the US Dollar – bullish or bearish?? You can let us know via the form at the end of this piece or you can contact the author at nicholas.cawley@ig.com or via Twitter @nickcawley1.

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

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