- The US Dollar remains stable and directionless following a lackluster Monday trading session.
- Today’s US economic calendar highlights Business Optimism figures.
- Despite somewhat dovish remarks from both Fed officials Goolsbee and Kashkari, the US Dollar Index maintains its position above 104.00.
The US Dollar (USD) maintains its stability following a lackluster beginning to the trading week. Monday saw minimal movement in the Greenback, with only slight easing observed after remarks from Federal Reserve Bank of Minneapolis President Neel Kashkari and Chicago Fed President Austan Goolsbee. They suggested that while the job market remains resilient, it’s not as robust as indicated by the recent US Jobs Report. This led to a modest retreat overnight in the USD, with further commentary from Bullard suggesting that three rate cuts are likely the Fed’s baseline scenario.
On the economic front, both the National Federation of Independent Business (NFIB) and the TechnoMetrica Institute of Policy and Politics (TIPP) are poised to release their latest Business Optimism figures, which serve as leading indicators. Optimism among small businesses often serves as a key metric for assessing the state of the US economy and could potentially influence the current market sentiment, which appears cautiously optimistic about the US economic outlook.
Daily digest market movers: Small Business under a microscope
- Overnight, Minneapolis Fed President Neel Kashkari spoke, emphasizing that inflation is expected to decrease and acknowledging that while the labor market remains tight, it’s no longer overheated, according to Bloomberg reports.
- Chicago Fed President Austan Goolsbee warned that maintaining current interest rates could lead to a rise in unemployment, Bloomberg noted.
- Former St. Louis Fed President James Bullard, speaking on Bloomberg TV, suggested that three rate cuts are likely for the Fed, with the first cut being supported by data. Bullard, however, is no longer a member of the Federal Open Market Committee (FOMC).
- The People’s Bank of China (PBoC) kept its Yuan fixing at 7.0956 overnight, while the market traded it at 7.2450, representing a more than 2% difference, raising the likelihood of intervention from the PBoC.
- At 10:00 GMT, the NFIB Business Optimism Index for March was published, showing a decrease to 88.5 from 89.4. Expectations were for a reading of 90.2. The US Redbook Index is expected around 12:55 GMT, with the previous reading at 5.2%. At 14:00 GMT, TIPP will release its April reading, estimated at 44.2 points after March’s reading of 43.5.
- The US Treasury is holding a 3-year note auction at 17:00 GMT.
- Asian equities are trading positively this Tuesday, up nearly 1%, while European equities are also positive, albeit with less enthusiasm, with gains of less than half a percent. US futures are indecisive after minor gains on Monday.
- According to the CME Group’s FedWatch Tool, expectations for the Fed’s May 1 meeting indicate a 97.2% likelihood of maintaining the fed funds rate unchanged, with only a 2.8% chance of a rate cut.
- The benchmark 10-year US Treasury Note is trading around 4.42%, having rallied more than 20 basis points in just one week.
US Dollar Index Technical Analysis: Chopping up the joint
The US Dollar Index (DXY) is once again testing the patience of larger hedge funds and institutional traders, while retail traders find themselves squeezed and stopped out once more. This tug-of-war seems unlikely to resolve until at least one major central bank begins cutting rates. Range trading appears to be the prudent strategy yet again, with the DXY moving sideways and caught between 102.00 and 105.00 for another week.
The initial crucial level for the DXY is at 104.60, which was breached to the downside last Wednesday but reclaimed from below by Friday. Beyond that, 105.12 stands as a significant point after the DXY’s failed attempt to surpass it last week. If it manages to break above, 105.88 serves as the final resistance before the Relative Strength Index (RSI) enters overbought territory.
Last Wednesday, the 200-day Simple Moving Average (SMA) at 103.82, the 100-day SMA at 103.43, and the 55-day SMA at 103.90 all provided notable support. Looking lower, the 103.00 level appears likely to remain unchallenged for the time being, with substantial support acting as a barrier.
