The US dollar (USD) is adding marginally to net losses during the week that began trading on Friday, but the broader tone of price action may be leaning towards consolidation in DXY losses, with the index climbing back into the 99 area, Scotiabank chief FX strategists Sean Osborne and Eric Theort said.
Markets are looking to the Fed ahead of an expected interest rate cut
“However, news and developments in overnight trade are limited, and the overall movement in the currency market reflects this. Markets may be starting to consolidate ahead of the Fed meeting. Although Fed policymakers will not be on hand on the late non-farm payrolls data when they sit to deliberate on interest rates at the FOMC on Wednesday, this week’s private sector data for November underscores the continued slowdown in the US labor market.”
“Yesterday the ADP report reported a 32k decline in private non-farm payrolls while the Revelio PLS series came in with a 9k decline in hiring. The data may not closely match the official non-farm payrolls data on a monthly basis but the trend is clear and should help achieve the now widely expected 25 basis point cut. More uncertainty revolves around the policy outlook through 2026. September personal income/personal spending data delayed this morning is expected to show a rise Moderate in spending and income, the core PCE rate is expected to decline slightly to 2.8%.
“University of Michigan preliminary sentiment data is expected to improve marginally (to 52) but remain close to record lows. While daily price action suggests a pause in dollar index losses, the dollar has not done enough to reverse negative technical drivers and a second weekly decline in the index keeps the broader focus on the downside (we remain targeting the mid-97 range). Seasonal trends are broadly negative for the dollar in December.”
