Watching $USDX and the Fed's next move after recent job data
Interesting to see the $USDX holding relatively steady this morning, up a touch to 25.58 after yesterday's low of 25.51. It's been a bit of a mixed bag for the dollar lately, reflecting, I think, the broader uncertainty around central bank policy.
Today, I'm mainly focused on any further commentary or even just subtle shifts in tone from various Fed members after the stronger-than-expected jobs numbers we got last week. While the market's largely priced in a pause, a series of robust employment prints could very quickly swing the narrative back towards 'higher for longer' or even another hike. If we see any hawkish leaning emerge, that could provide a more significant catalyst for the $USDX to break out of this range. Conversely, any dovish tilt on the back of other lagging indicators could see it soften. My watchlist is really geared towards rate-sensitive sectors right now, looking for confirmation of either scenario before making any significant moves.
The $USDX move is less about immediate Fed tone and more about how the market is pricing in the long-term impact of those job numbers on rate hike probability. The nuance is important.