The US Dollar is steady with JOLTS on file on Wednesday

• The US dollar is trading sideways in a tight range this week ahead of key US employment data.
• Markets brace for JOLTS numbers after ISM Manufacturing PMI failed to move the needle.
• The US dollar index remains just below an important technical level.

The US dollar (USD) is trading sideways on Wednesday ahead of key US economic data. Meanwhile, equity markets have a severe hangover, with tech stocks selling off. The cut came after NVIDIA (NVDA) received a subpoena from the US Department of Justice over whether the chipmaker violated antitrust laws.

In terms of economic data, all eyes will be on the appetizer ahead of US jobs reports with the release of Non-Farm Payrolls (NFP) on Friday, and that is Wednesday’s JOLTS Job Openings release. Although there is no correlation between the two numbers, the US JOLTS Job Openings report can reveal whether certain sectors are reducing their demand for labor. Markets have yet to decide whether the US Federal Reserve (Fed) will cut by 25 or 50 basis points in September.

Daily Market Summary: Focus on employment data this week

• During US trading hours on Tuesday, news reported that the US Department of Justice had subpoenaed NVIDIA (NVDA) for possible violations of antitrust laws. This triggered a sell-off in the broader technology space that spilled over into the Asian and European session.
• At 11:00 GMT, the Mortgage Bankers Association will publish its Mortgage Applications Index for the last week of August. The previous number was 0.5%.
• At 12:30 GMT, the American Gods and Trade Balance data will be released. For July, a deficit of $79 billion is expected after June’s deficit of $73.1 billion.
• At 14:00 GMT, the JOLTS Job Openings report for July will be released. June’s number was 8.184 million job vacancies, with 8.1 million expected for July. At the same time, data on factory orders is expected to emerge from contraction by 3.3% in June, to a positive level of 4.7% in July.
• Shares sell off following Nvidia subpoena. In Japan, both the Nikkei and the Topix fell nearly 4 percent. European shares open more than 1% lower on the day.
• The CME Fedwatch tool shows a 59.0% chance of a 25 basis point (bps) interest rate cut by the Fed in September, compared to a 41.0% chance of a 50 basis point cut. Another 25 bps cut (if September is a 25 bps cut) is expected in November at 40.0%, while there is a 46.8% chance that rates will be 75 bps (25 bps + 50 bps ) below current levels and a 13.2% probability of rates being 100 (25 bps + 75 bps) basis points lower.
• The benchmark US 10-year yield is trading at 3.81%, the lowest this week.

US Dollar Index Technical Analysis: JOLTS Can Do the Trick

The US Dollar Index (DXY) appears to be stuck in a tight range, staying there for now after Tuesday’s data failed to move the needle. With Wednesday’s JOLTS Job Openings report, the assumption is the same: Any number that is substantially above or below consensus will move the DXY in either direction. Meanwhile, markets are giving a higher chance of a 50 basis point rate cut by the Fed this month, while the data does not support that position.

Looking to the upside, the first resistance at 101.90 could be easily broken if the JOLTS report is stronger than expected. Above, a steep 2% rally would be needed to bring the index to 103.18. Finally, a high resistance level near 104.00 not only holds key technical value, but also carries the 200-day simple moving average (SMA) as a second heavyweight limiting price action.

On the downside, 100.62 (December 28 low) holds as support, although it looks quite weak. Should it break, the July 14, 2023 low at 99.58 will be the ultimate level to watch. Once this level breaks, early 2023 levels approach 97.73.

US Dollar Index: Daily Chart