The American Dollar was offered across the board in Asia as markets priced in the even odds of a neck-to-neck race between Powell and Warsh as candidates for next year's Fed Chair position. The Dollar-Yen pair dropped to a low of 112.41 after failing multiple times to close above 113.00 levels.
Jerome Powell brings deep Wall Street roots to the job from his tenure as a partner at the Carlyle Group from 1997 to 2005. He also is a current voting member of the policymaking Federal Open Market Committee. Powell is less hawkish than Warsh and favors reducing bank regulation. Hence, a significant majority in the market believes Powell is more suitable for the job under Trump Presidency.
Focus on US ISM non-manufacturing and Yellen speech
The US ISM non-manufacturing PMI, due at 14.00GMT, is expected to show the pace of expansion in activity improved slightly to 55.5 in September from the previous month's print of 55.3. A better-than-expected ISM non-manufacturing print could improve the odds of a strong NFP data due on Friday.
Meanwhile, Fed President Yellen is likely to repeat last week's comments that “it would be imprudent to keep monetary policy on hold until inflation is back to 2 percent" and that the central bank "should be wary of moving too, gradually". The USD may regain bid tone if the ISM non-manufacturing beats estimates and President Yellen sounds hawkish.
Technicals
Daily chart
- Repeated failure to close above the 113.00 handle has opened doors for a pullback to the weekly 200-MA support seen at 111.80 levels.
- An end of the day close below 112.21 [Sep 29 low] would signal some potential for a deeper pullback to 111.44 [200-DMA].
- On the higher side, a daily close above 113.25 [Sep 27 high] would revive the bullish move and shall open up upside towards the 115.00 handle.
US 10-year yield needs to break above 2.4%
- A convincing break above 2.4% would put an end to a series of lower highs seen on the weekly chart. Such a move looks likely as indicated by the bullish engulfing pattern on the monthly chart.
- A move above 2.4% coupled with an end of the day close in the USD/JPY pair above 113.25 would signal some potential for a more sustained rally to 115.00 levels.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks
EUR/USD turns negative near 1.0760
The sudden bout of strength in the Greenback sponsored the resurgence of the selling pressure in the risk complex, dragging EUR/USD to the area of daily lows near 1.0760.
GBP/USD comes under pressure and challenges 1.2500
GBP/USD now rapidly loses momentum and gives away initial gains, returning to the 1.2500 region on the back of the strong comeback of the US Dollar.
Gold retreats from highs on stronger Dollar, yields
XAU/USD trims part of its initial advance in response to the jump in the Dollar's buying interest and the re-emergence of the upside pressure in US yields.
XRP tests support at $0.50 as Ripple joins alliance to work on blockchain recovery
XRP trades around $0.5174 early on Friday, wiping out gains from earlier in the week, as Ripple announced it has joined an alliance to support digital asset recovery alongside Hedera and the Algorand Foundation.
Week ahead – US inflation numbers to shake Fed rate cut bets
Fed rate-cut speculators rest hopes on US inflation data. After dovish BoE, pound traders turn to UK job numbers. Will a strong labor market convince the RBA to hike? More Chinese data on tap amid signs of slow Q2 start.