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Hello everyone, today XM Forex will bring you "[XM official website]: ISM non-manufacturing data exceeded expectations, and the U.S. dollar index climbed towards the 200-day moving average." Hope this helps you! The original content is as follows:
In Asian trading on Thursday, the U.S. dollar index fluctuated near the 100 mark. The U.S. dollar remained fluctuating near a five-month high against a basket of currencies on Wednesday. Strong economic data continued to support the U.S. dollar. The U.S. dollar index was basically unchanged at 100.16 on the day, maintaining its highest level since late May.
U.S. dollar: As of press time, the U.S. dollar index is hovering around 100.08. The U.S. dollar currently has solid support: solid non-manufacturing demand, rising yields and the market’s cautious expectations for the Federal Reserve. However, the technical aspect is at a critical juncture, and a breakout of the 200-day moving average will open up the U.S. dollar index to 101.97. Failing a breakout, the U.S. Dollar Index could pull back to around 99.46 - especially if yield support weakens or the negative effects of the government shutdown begin to show. Fundamentals support the current trend, but technical confirmation is needed to consolidate the gains.
The U.S. Supreme Court held oral arguments on Wednesday on the legality of Trump’s large-scale reciprocal tariffs. In addition to the liberal justices of the Supreme Court, many conservative justices have also questioned the legality of Trump's tariffs. Supreme Court Chief Justice John Roberts said that Trump's tariffs are taxes on Americans, which has always been the core power of Congress. Neil Gorsuch and Amy Coney Barrett, two of the three justices appointed by Trump as president, also raised questioning questions and delved into the arguments of tariff opponents. The Supreme Court has a majority of conservative justices, with a ratio of 6:3. The Supreme Court is likely to announce its decision in December. The prediction platform Polymarket recently gave Trump a 27% probability of winning the case, which was lower than 40% before the debate, and briefly fell to a new low of 18% during the hearing.
A memo shows that the Bank of Canada plans to lay off 10% of its employees, involving about 225 employees, in response to Prime Minister Carney (who has served as the governor of the Bank of Canada and the governor of the Bank of England) to save government spending. The layoffs will take place over the next few months and will be centrdom.infopleted by the end of June 2026. This is part of the bank's efforts to achieve its target of reducing budget costs by 10% by the end of 2026. The bank is also centrdom.infomitted to achieving 15% budget cuts between 2026-28 and has pledged to cut corporate-level spending by a further 5% by the end of 2028.
ADP reported on Wednesday that employment growth in U.S. private centrdom.infopanies in October was slightly stronger than expected. Trade, transportation and utilities added 47,000 jobs, offsetting job losses in many other industries. Although artificial intelligence has fueled a boom in the technology industry, the centrdom.information services industry lost 17,000 jobs. Other industries seeing job losses include professional and business services, other services and manufacturing, which continues to struggle despite President Trump's attempts to bring factory jobs back to the United States through tariffs. All new jobs came from centrdom.infopanies with at least 250 employees, with 76,000 jobs added in this category, while small businesses lost 34,000 jobs. Nella Richardson, chief economist at ADP, said that small businesses account for three-quarters of the jobs, so the lack of job growth in small businesses is worrying and is one of the reasons for the weak economic recovery. Despite limited job growth, wages are rising. The annual salary of retained employees increased by 4.5% year-on-year, the same as in September; the salary of employees who changed jobs increased by 6.7%, slightly higher than last month.
The rise in the U.S. dollar index was due to the sharp rise in yields. The ISM non-manufacturing index recorded 52.4 in October, higher than the expected value of 50.5, pushing the 10-year US Treasury yield to exceed 4.14%. The new orders index jumped to 56.2, indicating solid demand at the start of the fourth quarter. However, the employment data remained weak, recording 48.2, in contraction territory for the fifth consecutive month. The market was unaffected by the weakness, with short-term Treasury yields also rising slightly. The yield on the 2-year Treasury note was around 3.62%, reinforcing the view that the Federal Reserve may keep interest rates stable but will not turn to rate cuts in the short term.
The longer the U.S. dollar’s rise lasts, the more incomplete the supporting data behind it will be. As the U.S. government shutdown enters its 36th day, official data such as third-quarter GDP has not yet been released. The U.S. Congressional Budget Office (CBO) estimates that the shutdown could reduce economic growth by 1-2 percentage points in the fourth quarter, causing permanent losses of $7 billion to $14 billion. Traders have not yet priced in this drag, but if the shutdown continues into NovemberLater in the year, related risks may emerge.
MonexEurope analysts said in a report that the euro has rebounded relative to the US dollar, but due to fluctuations in global risk sentiment, the gains may still be limited and short-lived. They noted that risk aversion after the stock market sell-off and concerns about an ongoing U.S. government shutdown had driven the dollar's early gains. In addition, disagreements among Fed officials on interest rates have also curbed short-term interest rate cut expectations. Given that the European Central Bank advocated keeping interest rates unchanged last week, analysts believe that the euro will remain within the range of 1.14 to 1.16.
Padhraic Garvey and Benjamin Schroeder, interest rate strategists at ING, said in a report that the 10-year U.S. Treasury yield "currently appears to be stable above 4%." Two strategists pointed out that "2-year and long-term U.S. Treasuries performed flatly and should have performed better during Tuesday's risk-off market." Although U.S. bond yields closed lower on Tuesday, the decline was limited. They added that 10-year yields "are not at particularly high levels."
This week, the Reserve Bank of Australia decided to keep the benchmark interest rate unchanged and predicted that inflation risks will continue until next year. Some economists are beginning to believe that the easing cycle that began in February may have ended. JPMorgan economist Tom Kennedy said the number of subdivided items where inflation levels are still high is worrying, posing the first substantial challenge to the "inflation slowing" narrative that the Reserve Bank of Australia has adhered to in previous quarters. He added that the easing cycle is likely to have centrdom.infoe to an end and the cash rate may remain at 3.6%.
The above content is all about "[XM official website]: ISM non-manufacturing data exceeded expectations, and the US dollar index climbed towards the 200-day moving average". It was carefully centrdom.infopiled and edited by the XM foreign exchange editor. I hope it will be helpful to your trading! Thanks for the support!
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