We are entering a period of numerous publications of macroeconomic data for the US economy prior to the presidential election results. Today’s focus will be on the ADP report and the preliminary GDP reading. Tomorrow is the PCE index – the Fed’s preferred inflation measure. The end of the week will see the NFP and ISM reports for the industry. The dollar has surely gained quite a lot in value as investors anticipate Trump’s victory next week. Investors are likely wondering how sensitive the US dollar will be to the latest economic news.
After the ADP report, a worse result is expected, sending a further signal that the job market is cooling down. In case of the government report scheduled for Friday – forecasts indicate that the situation has worsened in October. The unemployment rate is expected to remain unchanged. The PCE index data are assessed as unimportant because, after the CPI data, no major surprises are expected. Moreover, the Fed is no longer focusing on inflation, but on growth and the job market. The GDP is likely to have significantly increased in the third quarter, but the resilience of the US economy is well known and it doesn’t come as a major surprise. Furthermore, the data are historical, and the market prefers to look into the future. Therefore, I don’t foresee a significant reaction from the dollar.
I think that Friday will be key. It will be interesting to see how special effects, like Hurricane Milton and the Boeing workers strike, influenced the NFP data. This could mean that the figures will be worse than expected. A weak NFP report should weaken the USD, as speculations will grow that the Fed will be more inclined to cut rates. However, we are at a critical moment and the reaction is not so obvious. On the other hand, the USD significantly appreciated in October. A corrective growth move is visible on the main currency pair for the past three days, so a further move towards 1,09 is quite possible. A “double bottom” formation is visible on the daily chart. For now, the hard bottom is around 1.0780. I won’t be surprised if we “move” towards 1.09 even before Americans go to the polls.
Łukasz Zembik Oanda TMS Brokers
Source: https://ceo.com.pl/raport-nfp-oslabi-dolara-59973
