Oct 5
VOT Research Desk
Key Considerations and Analytics
Resilient ISM sector activity data supports the case for the Fed to remain on a hawkish path; U.S. dollar extends gains on better-than-expected results; ISM Services PMI at 56.7 in September, compared to 56.00 expected.
At the end of the third quarter, a gauge of overall business services activity in the United States remained resilient and moderated less than anticipated, indicating that the economy is holding up well in the face of growing threats like sky-high inflation and rising interest rates.
The Institute for Supply Management (ISM) reports that the services PMI increased for the 28th consecutive month in September, falling to 56.7 from August 56.9 reading, which was forecast to be 56.00.
To put things in perspective, readings above 50 indicate growth, while readings below that threshold indicate contraction. The non-manufacturing sector was held back by a slight decline in production and new orders.
On a monthly basis, both indicators decreased, but the decrease was not significant, indicating that demand is decreasing but is not yet at risk. Positively, the employment index increased by 2.8 points to 53.00, its highest level since March.
This indicates that hiring continues to be robust in spite of the Federal Reserve’s best efforts to cool the labor market through tighter financial conditions. Values paid decreased from 71.5 to 68.7 in terms of inflation, extending the mid-summer pullback. Although the change in direction is welcome, service providers’ costs remained high, which may prevent CPI numbers from significantly falling in the coming months.
The DXY index of the United States dollar accelerated its advance immediately following the ISM data, supported by rising Treasury yields. Policymakers ought to maintain an aggressive posture, delivering further interest rate hikes at upcoming FOMC meetings to bring inflation down to the 2% target over the forecast horizon, given the resilience of activity in the most important economic sector and the strength of the jobs market. In light of this, it is likely that the U.S. dollar will continue to trend upward in the near future.
Technical Analytics
U.S. Dollar Index (DXY)
Prediction Effective Date: Oct 5, 2022
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110.98 |
14-3 Day Raw Stochastic at 30% |
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110.90 |
38.2% Retracement From 13 Week High |
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110.70 |
Pivot Point |
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110.57 |
14 Day RSI at 50% |
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110.43 |
14-3 Day Raw Stochastic at 20% |
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110.39 |
38.2% Retracement From 4 Week Low |
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Previous Close |
110.18 |
Previous Close |
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Low |
110.09 |
Low |
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109.70 |
50% Retracement From 13 Week High/Low |
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109.55 |
Value Crosses 40 Day Moving Average |
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Pivot Point 1st Support Point |
109.53 |
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108.97 |
Value Crosses 18 Day Moving Average Stalls |
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108.96 |
3-10 Day MACD Oscillator Stalls |
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Pivot Point 2nd Support Point |
108.87 |
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108.50 |
38.2% Retracement From 13 Week Low |
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Pivot Point 3rd Support Point |
107.70 |
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1-Month Low |
107.68 |
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106.56 |
38.2% Retracement From 52 Week High |
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105.22 |
Value Crosses 40 Day Moving Average Stalls |
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14 Day RSI at 30% |
104.89 |
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13-Week Low |
104.63 |
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104.02 |
50% Retracement From 52 Week High/Low |
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101.48 |
38.2% Retracement From 52 Week Low |
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14 Day RSI at 20% |
97.80 |
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52-Week Low |
93.27 |
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89.68 |
Value Crosses 9-18 Day Moving Average |
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79.32 |
Value Crosses 9-40 Day Moving Average |
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60.47 |
Value Crosses 18-40 Day Moving Average |
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N/A |
14 Day %d Stochastic Stalls |
Blue areas lower the Last Value Shows support to limit the downward slope movement
Red areas exceeding the Last Value Shows resistance to limit the upward Trend movement.
Blue areas exceeding the Last Value Shows support to confirm the upward trend movement.
Red areas lower the Last Value Shows resistance to confirm the downward Slope movement.
