Breaking News: USD Bulls Defend 100, NFP and ISMs in Focus: The Week Ahead
Date: September 27, 2024
Market Sentiment:
The US dollar (USD) bulls have successfully defended the psychological 100 mark, with the currency strengthening against most major peers. The upcoming Non-Farm Payrolls (NFP) report and ISM indices will be closely watched for further guidance on the direction of the USD.
Key Market Events:
- Non-Farm Payrolls (NFP) Report: The highly anticipated NFP report will be released on Friday, September 30, 2024. Market participants will be keenly watching the numbers to gauge the health of the US labor market and its implications for interest rates and the USD.
- ISM Manufacturing Index: The ISM Manufacturing Index will be released on Monday, September 25, 2024. A strong reading could reinforce the USD’s gains, while a weaker reading could lead to a correction.
- ISM Services Index: The ISM Services Index will be released on Wednesday, September 27, 2024. A strong reading could further support the USD, while a weaker reading could lead to a decline.
Market Analysis:
The USD has been strengthening in recent weeks, driven by expectations of a 75-100 basis point rate hike at the Federal Reserve’s next meeting. The NFP report will be a crucial indicator of the labor market’s strength, which could influence the Fed’s decision.
The ISM indices will provide valuable insights into the health of the manufacturing and services sectors. A strong reading could reinforce the USD’s gains, while a weaker reading could lead to a correction.
Technical Analysis:
The USD Index has been trading within a narrow range, with support at 100 and resistance at 105. A break above 105 could lead to further gains, while a break below 100 could trigger a decline.
Forex Pairs to Watch:
- EUR/USD: The pair has been trending lower, with support at 0.95 and resistance at 1.00. A break below 0.95 could lead to further declines, while a break above 1.00 could trigger a rally.
- GBP/USD: The pair has been trading within a narrow range, with support at 1.20 and resistance at 1.25. A break above 1.25 could lead to further gains, while a break below 1.20 could trigger a decline.
- USD/JPY: The pair has been trending higher, with support at 125 and resistance at 130. A break above 130 could lead to further gains, while a break below 125 could trigger a decline.
Commodities to Watch:
- Gold: Gold prices have been trending lower, with support at $1,300 and resistance at $1,400. A break below $1,300 could lead to further declines, while a break above $1,400 could trigger a rally.
- Oil: Oil prices have been trending higher, with support at $60 and resistance at $70. A break above $70 could lead to further gains, while a break below $60 could trigger a decline.
Economic Calendar:
- Monday, September 25, 2024: ISM Manufacturing Index
- Tuesday, September 26, 2024: ADP Employment Report
- Wednesday, September 27, 2024: ISM Services Index
- Friday, September 30, 2024: Non-Farm Payrolls (NFP) Report
Conclusion:
The USD bulls have successfully defended the psychological 100 mark, with the currency strengthening against most major peers. The upcoming NFP report and ISM indices will be closely watched for further guidance on the direction of the USD. Traders should be prepared for potential market volatility and keep a close eye on key market events and economic data releases.
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Like it or hate it, there is clearly demand for the USD index around 100. And should NFP and ISMs outperform against next week, it might spark a dollar rebound.
By : Matt Simpson, Market Analyst
US data takes the limelight again, with the ISM services and manufacturing report alongside NFP standing out on the calendar. I doubt the Vice President candidate debate will amount to much for markets, but it may be one to earmark for entertainment purposes. Beyond that, final PMIs are nice to see but not likely to be a huge driver. And the same can be said for China’s PMIs as they won’t capture the recently announced stimulus.
The Week Ahead: Calendar
Click the website link below to get our Guide to central banks and interest rates in H2 2024.
https://www.cityindex.com/en-au/market-outlooks-2024/h2-central-banks-outlook/
ISM manufacturing and services
Both of the August ISM reports surprised to the upside, although it is clearly the services sector which is actually expanding. New orders also expended at a faster pace for services, and if this trend continues it could excite USD bulls. However, while services surprised to the upside its rate of expansion has been trending lower for some time. And I fully expected USD bears to pounce upon any slight cracks on the services report, particularly if the employment component softens ahead of Friday’s NFP report.
Nonfarm payrolls report (Friday)
August’s payrolls figures threw a spanner in the works for those calling a US recession. Unemployment fell to 4.2% and 140k jobs were added. Moreover, earnings rose at the fastest pace in four months at 0.4% m/m, and picked up to 3.8% y/y. When placed alongside stronger-than-expected manufacturing and services ISMs, CPI and PPI, I still suspect the Fed will move in 25bp increments going forwards.
Especially if we see NFP figures remain firm in next week’s report. Note that the 140k jobs added was above its 3-month average, so any figure above 141k can be seen as a strengthening jobs market. As could an unemployment number at 4.1% or less. If such figures arrive, an arguably oversold USD could provide a decent bounce.
Trader’s watchlist: EURUSD, USD/JPY, WTI Crude Oil, Gold, S&P 500, Nasdaq 100, Dow Jones
USD index technical analysis:
Over the past weeks the USD index has fallen over 5%, mostly in a slight line. Yet bearish momentum has been waning since the August low, and prices have failed to break beneath it despite a high-volumed bearish week last week. The market is also on track to form a inside week and doji should it close around current prices, which could play into the case for a pending countertrend move.
I am getting similar vibes from the daily chart. The 100 handle, 2024 open and historical weekly VPOC (volume point of control) also reside around the August low, which simply reinforces it as a support level. And when you consider that price held above support despite a 50bp Fed cut, I continue to suspect a decent bounce is on the cards as a robust US economy seems more likely to pump out better-than-expected numbers next week than not.
— Written by Matt Simpson
Follow Matt on Twitter @cLeverEdge
https://www.cityindex.com/en-au/news-and-analysis/usd-ism-nfp-week-ahead-2024-09-27/
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