FX Daily: Mixed data, mixed markets


Taking stock after DXY hit two-week low
Philip Wee02 Sep 2021
    Photo credit: Unsplash Photo


    Wall Street was uninspiring on Wednesday. Although Nasdaq Composite rose 0.3% to its 33rd record high this year, the index fell 0.5% in the last two hours to the session’s opening level. US ISM manufacturing PMI came in at 59.9 in August; consensus had expected a fall to 58.5 from 59.5 in July. This was dented by reports of a second lawsuit by the US Justice Department against Google over its digital advertising practices. S&P 500 and Dow were lacklustre. They were not spared by the late sell-off and ended below where they started.

     

    The employment index in the ISM manufacturing PMI fell to 49.0 from 52.9 for the corresponding periods. The private sector, as per the ADP employment report, added 374k jobs in August, well below the 625k consensus. July was revised down to 326k from 330k. Hiring in the private sector slowed due to uncertainties from the Delta-variant. US 10-year treasury yield eased below 1.30% again to 1.294%, on concerns that a similar miss in tomorrow’s nonfarm payrolls could undermine the Fed’s plans to taper asset purchases in late 2021. Hence, another miss in tonight’s US initial jobless claims would not be welcome. San Francisco Fed president Mary Daly, who recently warmed to the idea of the Fed tapering asset purchases this year, speaks today.

     

    DXY is back around the mid-point of its 92-93 range seen in July. Although there is scope to revisit the floor at 92, it remains to be seen if DXY will repeat the pullback seen in April-May to levels just below 90. EUR/USD and GBP/USD need to push above 1.19 and 1.39 respectively. USD/JPY and USD/CHF have been fluctuating around 110 and 0.9150 respectively. USD/CAD has been supported around 1.26 since 24 August. In Asia, USD/CNY is near the floor of its 6.45-6.50 range established since mid-June. USD/MYR might start to consolidate around 4.15, the way USD/PHP kept bouncing back up to 50. USD/THB is near a support around 32 marked by its 100-day moving average. USD/SGD is also near the floor of its pre-Covid range of 1.34-1.39. As for USD/INR, 73 is viewed as a potential level supported by interventions.







    Philip Wee

    FX Strategist - G3 & Asia
    philipwee@dbs.com
     

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