Dollar Rallying Into FOMC Tonight
FOMC On Watch
The US Dollar remains firmly bid today ahead of the FOMC meeting this evening. A rebound in AI sentiment following strong Q3 earnings from Korean chipmaker SQ HYNIX has helped the USD recovery midweek. Given the importance of AI investment in the broader inflation picture the rebound this week has fed into stronger USD demand. Looking ahead, traders will now be watching today’s Q3 earnings update from Alphabet and Microsoft for further insight into the AI picture. Last week, earnings undershoots from Meta and Tesla shook markets so any similar weakness today holds the risk of unseating the USD recovery.
Tech Earnings
On the other hand, if today’s earnings reports come in on the upside, USD could see a fresh push higher as inflation expectations remain anchored. However, the bigger driver will of course be the FOMC meeting this evening. While the Fed is not expected to change rates at this point, there is a strong risk of hawkish signalling for the December meeting given the rise we’ve seen in US inflation recently. September CPI just below 4% and energy prices back up to recent highs is certainly a situation the Fed will need to address and any comments tonight pointing towards further tightening should see USD back up through YTD highs.
Technical Views
DXY
The index is now firmly back above the 101.91 level and with momentum studies pushing higher again, focus is on a continuation higher with 103.20 the next bull target to note. The bull channel lows remain the key support to note with the 100 level the main marker if we push lower.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.