The US Dollar Index was softer after two sessions of gains, trading around 102.20 in Asian hours on Monday. Near-term pressure came as crude oil prices retreated, easing inflation concerns after President Donald Trump said further military action against Iran is “highly unlikely”, provided progress continues on Iran’s nuclear programme and the Strait of Hormuz remains open. He also linked the unpopular Middle East conflict, which had lifted energy costs, to Republicans’ midterm election losses.
Labour Market Strength And Fed Policy Expectations
Attention is shifting to labour-market strength and expectations of tighter policy. The CME FedWatch tool puts the chance of a 25-basis-point rate rise at the December FOMC meeting at above 78%, following October Nonfarm Payrolls of 165,000 versus a 65,000 consensus and a revised September reading of 60,000. The Unemployment Rate dipped to 4.1% against a 4.2% forecast, and traders are watching Tuesday’s CPI and Friday’s PPI. Technically, DXY is above the nine- and 50-period EMAs, with a 14-day RSI near 57 and the FXS Fed Sentiment Index at 143.10; support levels sit at 101.95 and 101.36.
