USD: Fed currently is minded to cut – ING
06.12.2024, 09:39

USD: Fed currently is minded to cut – ING

The market is long on the US Dollar (USD) after two months of a Trump-powered rally. Investors like the USD story into 2025, but the question is whether they have to suffer a position-led shake-out first. Today represents a risk to those positions in the form of the November jobs report, ING’s FX analyst Chris Turner notes.

Bounce in the euro has sent DXY back below 106

“The feeling is that weather and Boeing strikes knocked about 110k off last month's number (which saw nonfarm payrolls rise just +12k), which leads consensus to around 220k today. That suggests a number below 200k today will be read as weak, and it will probably take a number over 300k to seriously question whether the Federal Reserve will not cut rates on 18 December.”

“We think the Fed currently is minded to cut. Focus will also be on the unemployment rate, where a rise back to 4.2% slightly favours a Fed cut, while no change at 4.1% would support the dollar on the view that the central bank may well skip a cut in December after all.”

“The bounce in the euro yesterday has sent DXY back below 106. We have a strong preference that the dollar rallies into next year and suspect that DXY does not sustain a break below 105.60/70 even if NFP comes in on the soft side. Indeed, investors often use post-NFP liquidity to take strategic positions and we would have any weakness today present an opportunity to buy dollars.”

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