The US Dollar (USD) experienced a muted market reaction following the release of significant US economic data and speeches from multiple Federal Reserve (Fed) policymakers. Despite the abundance of information, the market quickly digested the news and focused on the upcoming November meeting, where a large bond trader has placed a record-breaking bet on a significant interest rate cut.
Key Economic Data:
- US GDP: The third reading of US Gross Domestic Product (GDP) for the second quarter came in line with expectations, showing growth of 3%.
- Durable Goods: Durable Goods orders were stronger than anticipated, increasing by 0% compared to the expected decline of -2.6%.
- Jobless Claims: Weekly Jobless Claims remained low, indicating a healthy job market.
Fed Speeches and Market Sentiment:
- Fed Futures Bet: A bond trader made a record-breaking bet on a 50 basis point rate cut at the Fed’s November meeting.
- Chinese Stimulus: The Chinese government announced additional stimulus measures, including a capital injection into major banks.
- Fed Policymakers: Numerous Fed policymakers delivered speeches, discussing various topics such as economic outlook, monetary policy, and financial inclusion.
Market Outlook:
- US Dollar: The US Dollar Index (DXY) is expected to be influenced by future economic data and Fed speeches. A stronger-than-expected economic outlook or hawkish comments from Fed officials could push the DXY higher.
- Interest Rates: The market is pricing in a high probability of a 50 basis point rate cut at the next Fed meeting.
- Equity Markets: Asian equity markets rallied on the news of Chinese stimulus, while European and US equities showed mixed performance.
Technical Analysis:
- US Dollar Index: The DXY is currently trading near the middle of its September range. Support levels are at 100.22 and 99.58, while resistance levels are at 101.90 and 103.18.
