Dollar Jumps As Rate Hike Bets Soar
Dollar Pushing Higher
The US Dollar is starting the week on a quieter footing after the rally we saw on Friday in response to stronger-than-forecast US jobs data. The headline NFP release came in at 172k vs 85k expected, up firmly from the prior 112k-reading which was itself revised higher to 172k, reflecting a much stronger jobs picture than previously thought. Naturally, traders’ Fed expectations have turned more hawkish with pricing for a hike by year end jumping sharply on the back of the data. The CME group is now pricing a more than 70% chance of a hike, up from 50% ahead of the data.
US Inflation Up Next
Focus now turns to US inflation data due tomorrow. If we see any further data strength this will no doubt see rate hike pricing rising again, creating stronger support for USD. The market is looking for headline annualised CPI to rise to 4.2% from 3.8% prior. If seen, this should be firmly bullish for USD this week with DXY at risk of breaking out to fresh highs for the year. At its last meeting, the Fed was seen sounding more hawkish with many members concerned over the path of inflation and the likely need for tightening to be discussed. This was reflected in the voting split which showed the highest level of dissent since 1992. Against this backdrop, USD looks likely continue higher near-term with any bullish data now seen feeding the hawkish Fed story.
Technical Views
DXY
The rally has seen the index breaking firmly above the 99.15 level, now fast approaching a test of the 100.36 level which has roughly capped the market now since early 2025. Above there, focus will be on the 101.91 level next, in line with bullish momentum studies readings.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.