The USD strength was led by a “risk on” environment and low yielders being sold, ie. EUR, GBP, CHF, and JPY. The USD Consumer Confidence Index increased again in October, following a modest improvement in September. The Index now stands at 137.9, up from 135.3 in September. Also, the Present Situation Index – based on consumers' assessment of current business and labor market conditions improved from 169.4 to 172.8 in October.
A few signs of a weakening housing market in the US are starting to show through but were brushed aside with the " risk on" environment, today and yesterday. Case-Shiller US home prices grew 0.1% (MoM) in August, leading to a slowing in % YoY home price appreciation to 5.8% from 6% in August. Similarly, the 20-city composite slowed to 5.5% from 5.9%, which was well below consensus at 5.8%.
For the Greenback, the USD Change in Non-farm Payrolls (OCT) is expected at 193,000, and the USD Unemployment rate (Oct) is expected at 3.7% this Friday. Any significant difference with the actual numbers can imply higher volatility for the US dollar vs. its crosses.
In the meantime, Donald Trump has become a severe market analyst tweeting yesterday that if the Fed ‘backs off and starts talking a little more Dovish, I think we’re going to be right back to our 2,800 target for the S&P’. The US equity market is in a price rally yesterday and today after Trump was lifting some of these ideas from Wells Fargo.
The USD dollar index continues on a steady path, touching new highs every day. It keeps its breakout of the 97.00 level seen yesterday, and it is trading at 97.17 at this moment with a strong move that might find resistance around 97.50.