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Dollar bulls and bears saw mixed price action last week. Can this week’s catalysts inspire one-directional moves?

FOMC meeting minutes (Nov 20, 7:00 pm GMT)

  • As widely expected, the Fed cut its rates by 25 basis points in late October
  • In his presser, Governor Powell shared that FOMC gang is “not thinking about raising rates right now,” and that it would take “material reassessment” to change their hold stance right now
  • USD popped up on the Fed’s decision, then tanked across the board during Powell’s presser
  • Watch out for clues on the Fed’s sentiment on the trade war with China, the impact of GM’s labor strike on the economy, and its plans for the foreseeable future.

Manufacturing and services PMIs (Nov 22, 2:45 pm GMT)

  • Markit’s manufacturing PMI improved from 51.5 to 51.5 in October, the fastest in six months, as output, new orders, and employment improved
  • Services PMI also inched higher, from 50.9 to 51.0 for the month
  • USD jumped higher on the news and maintained its uptrend until near the end of the week
  • Manufacturing PMI is expected to improve from 51.3 to 51.5 in November
  • Services PMI could print at 51.2 from 51.0 in October

Overall USD demand

  • Chinese Vice Premier Liu He reportedly held a phone conversation with U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin over the weekend. Eyes will be on whether the Trump admin can pull back some of its tariffs enough to secure a “phase one” deal before the December 15 tariffs kick in.
  • Other top-tier events, such as RBA and ECB meeting minutes, can also affect the demand for the safe-haven dollar
  • Updates on Trump’s impeachment proceedings could also cause intraday spikes on the dollar’s price action

Technical Snapshot

  • USD is typically most volatile against GBP, JPY, AUD, and NZD
USD Volatility Profile from MarketMilk
USD Volatility Profile from MarketMilk
  • SMAs suggest GBP/USD is on a strong uptrend, while USD/CHF and AUD/USD are on downtrends
  • USD/JPY looks ready to trade above the 200 SMA on the daily time frame
USD SMAs from MarketMilk
USD SMAs from MarketMilk