Forex Today: Strong US Data Reinforces Hawkish Expectations

Stronger than expected US jobs and consumer data boosted hawkish expectations of the Federal Reserve, boosting the Dollar and knocking stock markets back.

  1. Yesterday’s US economic data releases showed the US economy remains surprisingly strong despite being in a technical recession. JOLTS Job Openings came in at 11.24 million, well above the expected level and beyond capacity, showing there is still a very strong supply of new jobs. CB Consumer Confidence data also came in much higher than analysts had been expecting. These data raised expectations that the Fed will maintain a very hawkish path, boosting the US Dollar somewhat and knocking stock markets.
  2. The S&P 500 Index and the NASDAQ 100 Index both closed firmly lower yesterday but have regained ground during the Asian session. Asian stock indices such as the Nikkei 225 Index are also lower over the Asian session.
  3. The Forex market saw a small advance by the US Dollar yesterday. This is in line with the long-term bullish trend in the US Dollar. The British Pound is the weakest major currency, and the GBP/USD currency pair reached lows not seen since March 2020 and looks likely to see even lower prices over the coming days, attracting trend traders into short positions. Over the short term, the Australian Dollar is the strongest currency, while the US Dollar is showing weakness. The Euro is showing some relative strength on speculation the ECB will hike by 0.75% next month, which is keeping the EUR/USD currency pair trading above parity.
  4. The US 2-Year Treasury Yield reached a new long-term high yesterday on hawkish Fed expectations, attracting trend traders into long positions in this futures contract.
  5. Bitcoin is still trading above the $20k level which it had breached Monday, after finding support at $19,616.
  6. German Preliminary CPI data saw a 0.3% month-on-month increase as had been widely expected.
  7. There will be a key data release today: the ADP Non-Farm Employment Change forecast. Analysts are expecting new net 300k US jobs.
  8. Daily new coronavirus cases globally dropped last week for the sixth consecutive week.
  9. It is estimated that 67.6% of the world’s population has received at least one dose of a coronavirus vaccination, while approximately 7.7% of the global population is confirmed to have contracted the virus at some time, although the true number is highly likely to be much larger.  
  10. Total confirmed new coronavirus cases worldwide stand at over 607.3 million with an average case fatality rate of 1.07%.  
  11. The rate of new coronavirus infections appears to now be most significantly increasing in Haiti, Japan, Taiwan, and Russia.  
Adam Lemon

Adam Lemon began his role at DailyForex in 2013 when he was brought in as an in-house Chief Analyst. Adam trades Forex, stocks and other instruments in his own account. Adam believes that it is very possible for retail traders/investors to secure a positive return over time provided they limit their risks, follow trends, and persevere through short-term losing streaks – provided only reputable brokerages are used. He has previously worked within financial markets over a 12-year period, including 6 years with Merrill Lynch.
Learn more from Adam in his free lessons at FX Academy

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