US Dollar: Services strength and Fed stance – TD Securities

FXStreet Insights Team FXStreet

TD Securities’ Global Strategy Team highlights that stronger ISM services data and higher US rates are shaping the backdrop for the US Dollar. The report notes that ISM services rose above expectations, driven by new orders and business activity, while employment stayed in contraction. The authors stress that the Federal Reserve remains data-dependent and sees no immediate case to change interest rates.

ISM services and Fed guidance

"Rates sold off on Wednesday, continuing to move higher after additional proposed tariffs on 60 countries were announced overnight."

"ADP rose in line with consensus, showing signs of labor market stabilization. ISM services came in above consensus at 54.5, stemming from increases in new orders and business activity."

"Note that even though the ISM index registered a notable m/m increase it remains well-below the pre-Covid norm."

"Fed's Williams spoke, saying that he does not see an argument to change interest rates right now and remains data-dependent."

"News from Iran negotiations showed that their response to the US has not been sent yet. Markets will remain largely focused on geopolitical news, while jobless claims and productivity & ULC data will be released on Thursday. Barkin, Bowman and Daly are all on the docket ahead of the blackout period which starts on Friday night."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

Author

FXStreet Insights Team

FXStreet

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

AUD/USD consolidates near 0.7000 as USD stays weak

AUD/USD holds steady above 0.7000 during Thursday’s Asian session, consolidating the previous day’s recovery gains from a near three-week low as the Democratic sweep in the US midterm elections and Iran diplomacy hopes continue to weigh on the US Dollar. Bulls, however, seem hesitant as focus shifts to Friday’s crucial US NFP report.

USD/JPY drifts lower to 158.25 on hawkish BoJ Minutes, weak USD

USD/JPY trades with a negative bias for the second straight day on Thursday as hawkish BoJ Minutes, showing members agreed to keep raising rates, and intervention risks support the Japanese Yen. Meanwhile, US midterm election results and hopes for Iran diplomacy keep the US Dollar depressed as focus shifts to Friday’s US NFP report.

Gold hits one-week top near $4,080 on sliding US bond yields and weak USD

Gold builds on the previous day’s blowout rally, climbing to $4,080 during the Asian session on Thursday as falling US bond yields keep the US Dollar depressed near a one-month low, touched in reaction to Democrats’ victories in the US midterm elections. However, December Fed hike bets might cap the non-yielding bullion ahead of Friday’s US NFP report.

US Democrats plan new Crypto Market Structure bill after midterm wins

House Democrats are reportedly discussing plans to introduce a broader crypto market structure bill in the next Congress, potentially reviving provisions they unsuccessfully sought to include in the Digital Asset Market Clarity Act (CLARITY).

US midterms 2026: Investor Q&A on the Democratic sweep

1. Gridlock replaces the stimulus narrative. A Democratic Congress would constrain Trump's ability to pursue additional fiscal expansion and legislative tax measures. But it cannot simply reverse the president's entire economic agenda. Executive powers, existing legislation and presidential vetoes remain important. 2. AI faces a higher hurdle, not an extinction event.

US Dollar breaks below 101.50 as Democrats sweep Congress

The US Dollar (USD) comes under heavy selling pressure on Wednesday, with the US Dollar Index (DXY) falling around 0.5% to trade near 101.35 after sliding below the 101.50 level. The Greenback retreats to its lowest level in four weeks as investors reassess the political and economic outlook following the Democratic Party's sweeping victory in the United States (US) midterm elections.