JOLTS, Beige Book in focus – OCBC

The US dollar (USD) short squeeze was well underway, with the AUD, NZD and THB under pressure overnight, note OCBC FX strategists Frances Cheung and Christopher Wong.

There are some risks of further shorting

“ISM manufacturing fell (47.2 vs. 47.5 expected), along with new orders, while the employment sub-index remains in contractionary territory. Focus shifts to JOLTS job openings and the Fed’s Beige Book report. July’s Beige Book showed that most districts reported that employment was flat or up slightly, while a few districts reported modest employment growth.”

“We reiterate that the USD should remain sensitive to jobs data this week as the Fed’s focus has shifted to supporting the labor market. Good and bad data may continue to point to a USD rebound, while forecast data may see a lower USD response. DXY was last at 101.61.”

“Daily momentum is slightly bullish, but RSI growth has been moderate. We still see some risk of further short tightening. Resistance at 101.90 (21 DMA), 102.20 (23.6% fibo retracement from 2023 high to 2024 low). Support at 100.50 levels. The rest of the week brings JOLT jobs (Wednesday), ADP jobs, ISM services hiring (Thursday) and the US payrolls report on Friday.