USD to be hit harder on weak US data given the Fed pricing - TDS

Ross J Burland FXStreet

Analysts at TD Securities explained the risks to Foreign Exchange in respect of the forthcoming US ISM manufacturing survey tipped by the analysts to show lower momentum.

Key Quotes:

"Given that a Fed hike over the summer is well priced, we think risk of a material data disappointment (i.e. sub-50 with soft details from new orders) will bear a greater impact on the USD than a positive surprise. We think the USD is particularly vulnerable to a temporary reprieve given the DXY has staged a solid rebound (~4.3%) from the May 3rd low but we emphasize that the dip may be shallow ahead of the payrolls report on Friday and Yellen’s June 6th speech.

We are watching EUR/USD where we spot crucial resistance in the 1.1200/1.1220 area for EURUSD, a region that broadly coincides with the April lows and the congestion zone following the breakdown on May 18th. In the event of a very strong ISM report, we think 1.1080/1.1100 will be the key support zone as this coincides with trend channel support established from the December 3rd 2015 low."

Author

Ross J Burland

FXStreet

Ross J Burland, born in England, UK, is a sportsman at heart. He played Rugby and Judo for his county, Kent and the South East of England Rugby team.

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