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American macro statistics published on Wednesday turned out to be positive and managed to support the dollar. It rose on Wednesday, and its DXY index added 0.85% on the trading day. As of this writing, DXY futures are trading near 111.10, up 114 points from Tuesday's low this week.
According to Automatic Data Processing (ADP), U.S. private sector employment rose by 208,000 in September against market expectations of +200,000 growth and the previous value for August of +185,000, revised from +132,000. The ADP commented on the data, stating that "those who stayed at work saw a rise in wages, while those who changed jobs saw a decrease in annual wage growth in September compared to August."
Although the ADP report does not have a direct correlation with Non-Farm Payrolls, it still has a fairly strong influence on the dollar dynamics, and the growth of its indicators has a positive effect on the quotes of the American currency.
Other reports (from S&P Global and ISM) were also positive for the dollar. According to the data presented, business activity in the US services sector continued to grow in September, although slightly slower than in August. The Services PMI (from ISM), although it fell to 56.7 from 56.9, was better than market expectations at 56. The Employment Index (by ISM) improved to 53 from 50.2.
According to the ISM Services Business Survey Committee, "the services sector saw a slight slowdown in September due to slower business activity and new orders," but "improvements are being seen in terms of supply chain efficiency, operating capacity and availability of materials "—indicators remain "less than ideal".
In turn, S&P Global said that "in September, there were encouraging signals that business conditions may begin to improve."
Now, market participants will wait for the publication on Friday (at the beginning of the American trading session) of the report of the Department of Labor with data on the US labor market for September. Previous report values (average hourly wages / new jobs created outside the agricultural sector / unemployment rate): +0.3% in August, +0.5% in July, +0.3% in June, May and April , +0.4% in March, 0% in February, +0.7% in January 2022 / 0.315 million in August, +0.528 million in July, +0.372 million in June, +0.390 million in May, +0.428 million in April, +0.431 million, +0.678 million in February, +0.467 million in January 2022 / 3.7% in August, 3.5% in July, 3.6% in June, May, April and March, 3, 8% in February, 4.0% in January 2022. Forecast for September: +0.3% / +0.250 million / 3.7%, respectively. The indicators can be called, if not strong, then very positive. At the same time, unemployment remains at minimal levels.
It should be noted that market participants are waiting for further decisive steps from the Fed towards tightening monetary policy. Recent hawkish comments from Fed officials have revived expectations for another big rate hike in November.
The US dollar index (DXY) remains bullish, and market participants, according to CME Group, estimate the likelihood of a 75 basis point Fed hike in November at almost 70%.
Today's economic calendar will include new speeches by FOMC officials and a report from the Department of Labor with data on the dynamics of the number of applications for unemployment benefits.
Therefore, the volatility in dollar quotes will increase again at 12:30, 12:50, 17:00, 21:00, 22:30.
As we noted in our recent review, "the range of DXY fluctuation over the past partial 2 weeks was 4.34%. This is a fairly strong downward correction of the dollar." Now the dollar index (reflected as CFD #USDX in the MT4 trading terminal) is trying to resume its upward momentum, pushing off a 2-week low below 110.00.
Despite a rather strong correction, the dollar's upward momentum continues, pushing the DXY towards more than 20-year highs near 120.00, 121.00. The breakdown of short-term resistance levels 111.07, 111.75 will be the first signal that the dollar and the DXY index will return to growth.
Support levels: 111.00, 111.07, 110.26, 109.40, 105.55, 103.80
Resistance levels: 111.75, 112.50, 114.00, 114.74, 115.00
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