USDIndex, Daily
The Philly Fed bounced to 22.9 from 11.9 in August but a higher 25.7 in July, versus a 19-month low of 19.9 in June and a 1-year high of 34.4 in May. The ISM-adjusted Philly Fed rose to 56.5 from a 1-year low of 56.1 in August but a higher 59.7 in July, versus a 45-year high of 62.5 in May. We saw gains in every component but inventories and prices, with a big new orders pop after a big August drop. Monday’s Empire State headline fell to a 5-month low of 19.0 in September from a 10-month high of 25.6 in August and 22.6 in July, versus a 3-year high of 28.1 in October 2017. The components were stronger than the headline for that measure, and the ISM-adjusted measure fell only slightly to 55.9 from 56.4 in August but a lower 54.6 in July, versus a 12-year high of 57.9 in June. For later September surveys, we expect a Richmond Fed drop to 19.0 from 24.0, a Dallas Fed drop to 30.0 from 30.9, a Chicago PMI decline to 62.0 from 63.6, an ISM drop to 59.0 from a 14-year high of 61.3, and an ISM-NMI drop to 58.0 from 58.5. The mix should allow the ISM-adjusted average of the major surveys to slip back to 58 from a 59 cycle-high in August, as seen in May and June, versus 57 in July. The average has oscillated in the 57-59 range since September of last year.
US equities are on the mend as short-covering in the tech sector helped lead the FAANG group higher, along with chip makers. The Dollar Index sank 0.65% to 93.39 as stronger than expected data are helping overshadow and defy trade angst.
The USDIndex has broken over a key Support level at the confluence of the 3-month low and the 38.2% Fibonacci retracement level from February’s rally. A closing below this level today could suggest further decline for the Index. Next stop is the cluster of the 50% Fibonacci level and the important 200-day simple moving average, around 92.40-92.50 zone. A breach of both this level and 91.50 and 90.50 would become realistic. Intraday Support is now offered by S1 and the 3 down fractals printed in May and June, at 93.15.
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Andria Pichidi
Market Analyst
HotForex
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