US Dollar (DXY) is under pressure. prior to NFP release. The US debt ceiling has been settled upon, and President Biden will now sign it.
US Dollar tracking US job market is still booming; and monitored
Just a few days prior to the federal government was due to run out of money. The US debt ceiling agreement has been approved by Congress. And markets wait for President Joe Biden’s sign before it will enter into effect.
The deal reached today would delay the debt ceiling until January 1, 2025. Which will save the country almost $1.5 trillion over the following decade. The short-dated note rates increased significantly as a result of the lengthy discussion regarding this debt limit. And markets priced in the extremely remote probability of a US default. The strain on these yields will go down now that these concerns are behind us.
Despite a declining US economy, the employment market is still strong and employers are still having trouble filling positions. The JOLTS & ADP numbers this week both above market expectations. Supporting Fed chair Powell’s assessment that the job market is “quite severe.”
US Economic Activity Schedule and Data
NFP Indications
Later today, the most recent US employment report (NFPs) will be airing. And analysts will attentively examine it for any new indications of tight job markets. Despite the fact that the year-over-year average is less. April’s data indicated a little increase as the jobless rate remained near reaching a multi-decade bottom. The data released today is anticipated to reveal that 190k fresh jobs were created in May. Despite the fact that the market opinion has constantly been weak during the past year. Additionally, investors should be mindful of any market adjustments to the headline figure and the statistics on average hourly wages.
NFP Data and Expectations
With recent comments from two of the Fed’s voting participants, Harker and Jefferson. Hinting that the Fed would put interest rates back on hold for this month’s FOMC conference. The US dollar has been losing ground. The market had been factoring in a 65% likelihood of a 25bp increase on June 14 before these remarks. With a 73% possibility that the Fed won’t raise rates. The likelihood has now dropped to only 27%.
Technical Perspective
With the US dollar already approaching lows last seen more than a week ago. Its a one-month US dollar surge appears to be coming to an end. The 200-dma as well as a previous level of resistance continue to act as a ceiling on any upward trend. Whereas the 20- & 50-dmas are expected to act as support. The USD could rise after today’s NFP news, yet more moves. Notably any possible breaches of resistance and support, will be based on the June FOMC meeting outcome.
