Image source: Pixabay
 

ISM Manufacturing Due Today

The latest US ISM manufacturing data due today will be the key data focus for the session ahead. Recent upside in US data, alongside higher inflation, has been a key driver of the shift in the market’s Fed expectations. Traders are now anticipating a more hawkish stance from the Fed in the coming months in line with evidence that the US economy is performing robustly despite a year of Fed tightening. Consequently, market pricing for a larger .5% hike in March has jumped to around 25% from around 10% a few weeks ago. Even if the Fed doesn’t hike by a larger amount, forward guidance is likely to outline a more hawkish plan for coming quarters which should keep USD underpinned near-term.
 

Today’s ISM Forecasts

On the numbers front, the market is looking for the reading to rise to 47.9 from 47.4 prior. While still in contractionary territory, a print at this level or above should be enough to keep the bullish USD narrative intact. Any firm upside jump, especially if seen taking the indicator back into positive territory would be firmly bullish for USD, especially on the back of yesterday’s weaker consumer confidence number.
 

Technical Views

DXY

(Click on image to enlarge)

The rally off the lows in the Dollar Index has seen the market trading up to a test of the 105.70 level. For now, price has stalled into this area. However, with momentum studies still bullish, while price holds above the 103.58 level, the focus is on a break higher and a test of the 107.39 level next. To the downside, a break of 103.58 puts focus back on 101.32 next. 

More By This Author: