Tomorrow morning brings another Non-Farm Payrolls report, and this will be the last jobs report that the Fed gets to look at before heading into their two-day meeting on June 13th and 14th. A hike is widely-expected at that meeting with odds currently over 90%, and it would likely take a big miss on the headline number tomorrow to elicit concerns that a hike may not take place. The expectation is for 180,000 jobs to have been added to American Non-Farm Payrolls in the month of May; but perhaps more pressing, and likely to be read between the lines, is just how strong the American economy appears to be in order for the Fed to start looking at balance sheet reduction. The prospect of balance sheet reduction was discussed at the most recent Fed meeting in early-May, and this was disclosed in the minutes from that meeting last week.
For its part, the U.S. Dollar had a rough month of May, extending the declines that have enveloped price action in the Greenback in 2017. At current levels, DXY has retraced the entirety of the post-Election spike, and the open price from Election Day (support) is now showing as near-term resistance.
Chart prepared by James Stanley
The declines in the Dollar really hastened throughout the month of May, and as you can see in the above image, this eventually led to a down-side break of the bearish channel that had governed a considerable portion of USD price action throughout the year.
But as prices broke down to set fresh six-month lows, buyers showed-up around 96.80-96.90 in DXY. And after multiple iterations of support over the past 1.5 weeks, price action had climbed up to a fresh weekly high earlier this week, until that resistance came-in around the election-open. But on a revisit of support in this range, buyers showed-up a bit earlier than they had previously, giving us a ‘higher-low’ to work with; and this may be indicating a near-term bottom in USD price action.
Chart prepared by James Stanley
