By Jay and Julie Hawk of www.TheFXperts.com
The U.S. Dollar Index (DXY) sold off today after yesterday’s U.S. Mid-Term Elections confirmed the Democrat’s majority in the House of Representatives, while the Republicans held a majority in the Senate. As of this writing, the DXY index was currently trading down -0.30 on the day at 95.84 and has support in the 95.48-95.55 region, with initial resistance showing on the chart at 96.00. If the 96.00 level is taken out, a rally to the 96.60-96.80 area could be forthcoming, while a decline below the 95.50 level could see the index drop to support in the 94.90-95.20 area.
On Monday, the U.S. ISM Non-Manufacturing PMI printed at 60.3 compared to an expectation of 59.3, while UK Services PMI printed at 52.2 versus an expectation of 53.4. Tuesday saw the RBA leave its benchmark Cash Rate unchanged at 1.50%, as was widely expected. Also, the Kiwi gained ground after New Zealand released very strong employment data, with the Employment Change increasing by +1.1% q/q versus the +0.5% anticipated, while the NZ Unemployment Rate dropped sharply to 3.9% from 4.4% compared to the market consensus of 4.4%.
Also on Tuesday, EU Brexit negotiator Michel Barnier said that the EU would not conclude an agreement with the UK without a deal that would prevent a “hard” border with Ireland. Barnier noted that, “We are still not at the 100 percent, what is missing is a solution for the issue of Ireland. Without an operational backstop there will not be an accord and there will not be a transition period. That is certain.”
Today, the Kiwi strengthened further after the RBNZ left its benchmark Official Cash Rate (OCR) unchanged at 1.75%, as was widely anticipated. The central bank’s Rate Statement noted that, “We will keep the OCR at an expansionary level for a considerable period to contribute to maximising sustainable employment, and maintaining low and stable inflation.”
Looking ahead, the FOMC will announce its Fed Funds Rate Decision on Thursday, which is expected to stay steady at 2.25%. In addition, the EU will release the EU Economic Forecasts. The week’s highlights conclude with Friday’s release of the RBA Monetary Policy Statement; UK GDP, Manufacturing Production and Preliminary GDP; and U.S. PPI and Core PPI.
TheFXperts’ Forex MarketWatch Reports are provided strictly for educational purposes and represent the opinions of the authors. No recommendation or endorsement for specific financial trading or investment purposes is offered. Subscribers are advised to seek financial, business and legal guidance from licensed professionals.Visit TheFXperts’ official website at www.TheFXperts.com. You can also view and purchase Jay and Julie Hawk’s six financial books at Jay’s Amazon author page here: amazon.com/author/Jayhawk