Dollar Remains Bullish Leading into Friday's NFPs
Our pre-Jackson Hole note put into perspective the potential outcomes of both a dovish and hawkish tone from Fed speakers and the impact it would have on, then, current technicals.
As expected, Fed Chair Yellen's speech lacked little inspiration. However, it was Vice Chair Fischer that provided the hawkish fireworks just as the dollar was grinding on support.
Here is the note in its entirety, originally published 8.23.16:
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"U.S. Dollar At Key Support Heading into Jackson Hole"
The U.S. dollar is modestly lower as the SPX hits an all-time high of 2,190 and a ripe valuation of 25.37x TTM – second highest valuation according to data going back to 1800 (yes, 216 years).
(DXY daily chart)
Technical position is moderately oversold with a z-score of -1.48 and an RSI of 44. Stochastics are suggesting a buy signal is close, but headline risk out of the Jackson Hole Symposium Thursday could sway traders.
Price action is resting upon minor trend support created during the May-lows, and a confirmed break (close underneath support or resistance) below would cause the dollar index to trend lower within a lengthy demand zone. Traders could send the DXY to 92.50 on the low end.
Conversely, a more uplifting and hawkish Janet Yellen could send it back to 95.35.
(Chart of dollar and U.S. 2-year note performance)
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Here is a tweet we sent out showing the benefits of our bull case, which lined up with a dollar rebound on multi-year momentum support.
twitter.com/Lemieux_26/status/770614262733692928
As expected, Fed Chair Yellen's speech lacked little inspiration. However, it was Vice Chair Fischer that provided the hawkish fireworks just as the dollar was grinding on support.
Here is the note in its entirety, originally published 8.23.16:
_______________________________________________
"U.S. Dollar At Key Support Heading into Jackson Hole"
The U.S. dollar is modestly lower as the SPX hits an all-time high of 2,190 and a ripe valuation of 25.37x TTM – second highest valuation according to data going back to 1800 (yes, 216 years).
(DXY daily chart)
Technical position is moderately oversold with a z-score of -1.48 and an RSI of 44. Stochastics are suggesting a buy signal is close, but headline risk out of the Jackson Hole Symposium Thursday could sway traders.
Price action is resting upon minor trend support created during the May-lows, and a confirmed break (close underneath support or resistance) below would cause the dollar index to trend lower within a lengthy demand zone. Traders could send the DXY to 92.50 on the low end.
Conversely, a more uplifting and hawkish Janet Yellen could send it back to 95.35.
(Chart of dollar and U.S. 2-year note performance)
_______________________________________________
Here is a tweet we sent out showing the benefits of our bull case, which lined up with a dollar rebound on multi-year momentum support.
twitter.com/Lemieux_26/status/770614262733692928
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