Dollar showed us optimistic weeks after disappointing April as the market admitted that June is not the right time for liftoff, nevertheless September remains on the table with a positive-data condition.
The Federal Open Market Committee (FOMC) will hold a meeting in June to decide on monetary policy continuation, but poor first quarter postponed the possibility of rate-hike to H2 2015 and what we can focus now on are the data.
Today we will see again the most popular non-farm payrolls (NFP) report for the month of May, which has the potential to shake with the dollar’s strength.
What to expect from the report? More optimism comes from Challenger Jobs Cuts, dropping the most in 6 months, ADP and initial jobless claims proved to be better and even less watched indicators seemed to firm. Thus NFP seems to come out with more optimistic data.
We can expect the dollar’s volatility to be minimal until the report from Bureau of Labor Statistics, while some previous gains could be even erased ahead of the release.
Federal Reserve’s representatives already held speeches and provided an insight on the first quarter’s opinions, while the drag is expected to be only transitionary. Nevertheless, strengthening dollar and boosted later by rate-hike speculation could be a negative element on the export segment.
Second half of May saw two weeks of dollar’s strengthening and despite correction of euro on inflation data, we can expect it to advance further against its major european counterpart.
From the technical point of view, target for dollar remains at $1.0719, while long-term TP at $1.0491. If the NFP data come out positive, we may expect the supprt line at $1.1117 to be tested, with later support level at $1.0869, albeit this could be expected only in case of extremely positive suprise.
In case of negative data or any hints for liftoff postponement, we may see resistance level at $1.1357 to be tested with the next one at $1.1443.
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