Fed in Focus

While USD has been out of the limelight recently, correcting lower last week amidst major market moves elsewhere, the underlying story is sill in favour of a higher USD. At the end of last week we heard Fed’s Brainard rounding out a week of hawkish Fed commentary. Brainard voiced her support for continued rate hikes and also highlighted the Fed’s desire to avoid scaling back from tightening too quickly. The Vice Chair said that the Fed was united in its battle against inflation and warned that rates would likely need to stay at restrictive levels for some time in order to sustainably bring inflation back down to its 2% target.

This week, we’ll hear from a further host of Fed speakers with Fed’s Williams and Mann due to kick things off today. We also have the latest ISM manufacturing reading today and the September jobs reports due on Friday. With this in mind, there is plenty of room for USD to catch some fresh upside momentum this week provided Friday’s data doesn’t disappoint.

Technical Views

DXY

The Dollar Index continues to push higher within the bull channel which has framed the upside action this year. Price is currently stalled at a test of the 114.08 highs. However, while price remains above the 108.84 level, the focus is on a further push higher and a break-out to fresh highs.