USD: DXY to remain in a range of 106.00-106.70 today – ING

Friday’s weak US jobs report only had a mild impact on the dollar and the Dollar Index (DXY) found good support below 106. Geopolitics is probably helping the USD a bit. Markets probably don’t immediately know what to make of the regime change in Syria, but the uncertainty in Korean politics and the underperformance of Korean asset markets is certainly notable, notes Chris Turner, FX analyst at ING.

November CPI dominates this week’s calendar

“Looking ahead this week, we see two themes. The first could be some big rate cuts in the rest of the G10 currency markets. Here we have rate meetings in the euro zone, Switzerland and Canada this week. The rate cuts Rates of 25bp or 50bp are options across all, although only Canada is more likely to see a 50bp rate cut. The narrative here is that while most G10 central banks (except Japan) are looking to cut rates. rates at neutral levels, the Federal Reserve will be slower than most trading partners and rate differentials will continue to be wide in favor of the USD.”

“The second issue is the US calendar this week, where the November CPI release on Wednesday dominates. The consensus expects another persistent 0.3% monthly core CPI reading. Although not ideal for the Fed, such a reading shouldn’t stop the central bank from cutting 25bp a week later. But a 0.4% monthly core CPI reading would really cause a stir and raise more serious questions about whether the Fed is right to cut rates after all. “

“The Fed is also now in mute mode ahead of its December 18 rate meeting, with the only thing more notable on the calendar being tomorrow’s release of the NFIB Small Business Optimism Index, seen as slightly positive for the There seems to be little reason to reduce long dollar positions at this time and after two weeks of consolidation, we see it more likely that the dollar will resume its uptrend. We favor the DXY to remain in a range. 106.00-106.70 today.”