USD Daily Updates

03 October 2017

The US dollar has done well in early October, rising both yesterday and today. Yesterday saw the dollar do well throughout the day, opening with strength, particularly against the euro, and gaining later in the day following good ISM survey data. Today the currency is strengthening mostly on continued positive momentum. We have upgraded our short-term outlook on the dollar to bullish accordingly. Our medium-term outlook remains bullish. 

USD/JPY has now risen above 113, and is currently trading above 113.050. The euro continues to disappoint and is now struggling to stay above 1.17. The pair is trading just below 1.1710 presently.  

This week's data releases include a raft of survey, employment and durable goods numbers. Yesterday we saw ISM manufacturing data beat by a wide margin (60.8 vs 58 expected). US manufacturing is very strong thanks to the rebuilding effort following Hurricane Harvey. On Wednesday, we'll get both ADP jobs figures as well as Markit composite PMI and ISM non-manufacturing PMI data. On Thursday we'll see trade balance figures and factory orders. Finally, on Friday, we'll get the all-important non-farm payrolls figures and the unemployment rate. Last week saw better-than-expected GDP growth figures and worse-than-expected inflation (Core PCE) numbers. 

Updated 
Short term outlook
Bullish

After rising with strength in early October we are upgrading the dollar to bullish in the near-term. Earlier in September, rate hike expectations rose following Yellen's last speech and Trump released his tax proposal. Looking at a daily chart of the US dollar index, the currency is approaching overbought levels after achieving its most recent bottom in mid-September. Our analysis is based on various technical indicators. 

Medium term outlook
Bullish

For the first time in 2017, we are upgrading our medium-term outlook for the dollar to bullish. The dollar has been in oversold conditions since late June and is due for a rebound. The currency has been strengthening in the last week of September initially thanks to the Federal Reserve suggesting that another interest rate hike was likely later this year. This was followed by Trump's tax plan which was revealed on September 27, which has also led to dollar strength. While the currency remains oversold in the medium-term, we expect the dollar to re-enter normal trading conditions in the coming weeks. 

Updated