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USD Index Sets Fresh Two-Decade High, Bolstered By Data

FOREX
  • The USD index (+0.86) rose to 109.98 on Thursday, printing fresh cycle/two-decade highs for the DXY. The resiliency of the greenback rally was bolstered by a stronger set of ISM data. In particular, the ISM employment index jumped in August while prices expansion eased dramatically which saw further upward pressure on US yields.
  • Firmer USDJPY price action means today the pair has cleared resistance at 139.39, the Jul 14 high, confirming a resumption of the technical primary uptrend which paved the way for a test above 140.00. Highs as of writing are at 140.22 with 140.86 the next resistance point of note, the 1.764 projection of the Aug 2 - 8 - 11 price swing.
  • Keeping it in the majors, today’s price action across global markets has weighed on EURUSD (-1.00%), which has seen a sharp turnaround from yesterday’s 1.0079 high to trade within 10 pips of the August lows at 0.9901. With the downtrend remaining intact and moving average studies still highlighting bearish sentiment, the focus is on 0.9883, a Fibonacci projection, as we approach tomorrows US employment report.
  • The greenback rally was broad based, with similar losses seen for the likes of AUD, NZD and GBP and the offshore Yuan outperformed, falling only 0.09%.
  • Consensus sees U.S. nonfarm payrolls growth moderating to 300k in August after the surprise acceleration to 528k in July in a resumption of a downward trend after four remarkably steady months. Market moves leading into the release may suggest the market is relatively unprepared for a “miss”.
  • Minor European data releases (German trade and Spanish unemployment) will precede the US employment report.
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