U.S. Dollar Index Recovers After Upbeat ADP Data
The U.S. dollar, measured by the DXY index, recovered ground on Wednesday following the release of a better-than-expected ADP report.
At the time of writing, the DXY index trades at the 111.50 area, recording a 1.2% gain on the day and staging a bounce from a two-week low struck on Tuesday.
Automatic Data Processing, Inc released the September report, which showed the private sector created 208,000 jobs. The reading surpassed market expectations of 200,000, while the August figure was upwardly revised to 185,000 (previous 132,000).
Attention now turns to the Nonfarm Payrolls report due on Friday as investors assess the job market's resilience in the face of tighter monetary conditions.
While the market mood was driven by the expectation of a potential Fed policy pivot on Tuesday, investors seemed to have second thoughts as Fed officials continued to deliver hawkish messages. Fed Governor Philip Jefferson stated, "We have acted boldly to address rising inflation, and we are committed to taking the further steps necessary. My colleagues and I are resolute that we will bring inflation back down to 2%." At the same time, Mary Daly from San Francisco Fed argued that if inflation remains stubbornly high, it "will require that we follow through on our commitments to bring inflation down, which does mean further rate hikes and holding those restrictive policies in place until we are truly done with bringing inflation back to target."
From a technical perspective, the DXY holds a neutral to slightly bullish short-term bias, according to indicators on the daily chart. Although the RSI has gained a positive slope above its midline, the MACD printed a higher red bar. Still, with the DXY breaking above the 20-day SMA, the short-term picture is tilted to the upside.
On the upside, immediate resistance is seen at the 111.90-112.00 area and then Monday's highs around 112.50. On the other hand, the immediate support level could be found at the 111.00 area, which is being reinforced by the 20-day SMA. A break below could mount the bearish pressure on the greenback and pave the way to the 110.00 threshold, a loss of which would expose the 109.35 area.
At the time of writing, the DXY index trades at the 111.50 area, recording a 1.2% gain on the day and staging a bounce from a two-week low struck on Tuesday.
Automatic Data Processing, Inc released the September report, which showed the private sector created 208,000 jobs. The reading surpassed market expectations of 200,000, while the August figure was upwardly revised to 185,000 (previous 132,000).
Attention now turns to the Nonfarm Payrolls report due on Friday as investors assess the job market's resilience in the face of tighter monetary conditions.
While the market mood was driven by the expectation of a potential Fed policy pivot on Tuesday, investors seemed to have second thoughts as Fed officials continued to deliver hawkish messages. Fed Governor Philip Jefferson stated, "We have acted boldly to address rising inflation, and we are committed to taking the further steps necessary. My colleagues and I are resolute that we will bring inflation back down to 2%." At the same time, Mary Daly from San Francisco Fed argued that if inflation remains stubbornly high, it "will require that we follow through on our commitments to bring inflation down, which does mean further rate hikes and holding those restrictive policies in place until we are truly done with bringing inflation back to target."
From a technical perspective, the DXY holds a neutral to slightly bullish short-term bias, according to indicators on the daily chart. Although the RSI has gained a positive slope above its midline, the MACD printed a higher red bar. Still, with the DXY breaking above the 20-day SMA, the short-term picture is tilted to the upside.
On the upside, immediate resistance is seen at the 111.90-112.00 area and then Monday's highs around 112.50. On the other hand, the immediate support level could be found at the 111.00 area, which is being reinforced by the 20-day SMA. A break below could mount the bearish pressure on the greenback and pave the way to the 110.00 threshold, a loss of which would expose the 109.35 area.
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