The US macroeconomic story increasingly points to a softening dollar. The three main data releases this week are the ISM survey results (manufacturing today, services on Wednesday), the FOMC minutes (Wednesday), the JOLTS job openings for May (Thursday) and the June employment report (Friday), reports Francesco Pesole, FX analyst at ING.
DXY to break below 105.00
“The ISM PMIs are expected to show a marginal improvement in the manufacturing sector – although remaining in contraction – and a softer, although still expanding services number. There is a chance that the surveys will not add much more to the narrative of activity. Instead, the employment figures should set the tone for markets outside of the impact of EU political developments until June CPI figures are released on July 11.”
“We’ll hear what Federal Reserve (Fed) Chairman Jerome Powell has to say about this at the European Central Bank forum in Sintra tomorrow. He has generally shown an optimistic tendency when it comes to disinflation, and that may finally neutralize the impact of the FOMC minutes on Wednesday, which could be more hawkish given the June dot plot.”
“While we see US macro data as mostly USD negative in the coming weeks, we doubt this will translate into a clear dollar decline due to EU political risk. The DXY may break below 105.00 on a weaker US jobs figure and a dovish Powell this week, but may then find rising support below that level.”
Source: Fx Street
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