Dollar Steady Ahead of Trump/Xi Meeting
US Inflation Jumps Again
The US Dollar is on watch today as Trump and Xi prepare to meet later today in China following Trump’s arrival yesterday. Curiously, DXY has failed to see a breakout move higher in response to Tuesday bumper inflation reading. Headline annualised CPI was seen jumping to 3.8% last month, up from 3.3% prior and above the 3.7% the market was looking for. Now back at its highest level since 2023, inflation remains a key threat for the Fed and rate hike expectations have risen accordingly with the market now pricing in a roughly 35% chance of a hike by year end. The lack of a strong upside reaction in USD suggests that the broader focus remains on the Iran war.
Trump & Xi
Traders are now looking ahead to Trump’s meeting with Xi today amidst speculation that Trump will try to enlist Xi’s help in driving Iran towards a deal. Any positive headlines on the back of the meeting should see USD cooling accordingly as oil prices pull back and traders eye a greater chance of a deal being agreed near-term. However, if the meeting stumbles and no positive headlines regarding Iran materialise, this could see USD pushing higher as oil prices spike on the view that the standoff between the US and Iran will continue.
Technical Views
DXY
The index is tentatively testing above the falling edge top, moving higher above 98.24. While above here, focus is on a continuation higher with 99.15 the next resistance to note. To the downside, 96.63 is the big support to watch if we see any sharp reversal lower.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.