USD firmer as euro slips on weak data – Scotiabank

The US dollar (USD) is generally firmer throughout the session, but has broken past highs against major peers, notes Shaun Osborne, chief FX strategist at Scotiabank.

The DXY consolidation may extend

“Weak Eurozone data weighed on the Euro in European trading, giving the USD a broader rally, but the DXY is still trading in last week’s range and the potential for significant gains in the USD remains limited, at least while markets continue to set additional, aggressive prices. cuts by the Fed before the end of the year, but USD relief today comes from the ECB’s mild hike in October, which reduced speculation after this morning’s data reports.”

“There is plenty of US data to contend with this week, but it may not have much of an impact on markets or the US dollar following the Fed’s decision. Friday’s core PCE data is expected to show a 0.2% increase over the month, slightly pushing the Y/Y pace. With the Fed’s focus (barring perhaps Bowman) shifting from prices to jobs, this may not mean much for the USD. There are a number of Fed speakers on the calendar this week, including Chairman Powell.”

“Kashkari said he supported the 50 bps rate cut and projects another 50 bps rate cut this year. Some consolidation in the USD is possible in the short-term after the index failed to push decisively below the 100.5 support area, but the possibilities for gains in the DXY are likely limited to the upper 101 area on the charts. DXY gains above 102 would suggest a bit more strength could emerge though.”