US Dollar Index (DX) Futures Technical Analysis

December 4, 2013

London (Dec 4)  The December U.S. Dollar Index is trading better overnight, however, the market remains inside yesterday’s expanded range. The dollar is posting overnight gains against the Australian Dollar, British Pound, Euro and Japanese Yen. The Greenback is also being underpinned by speculation that today’s U.S. economic reports will be strong enough to encourage the U.S. Federal Reserve to begin reducing monetary stimulus.

Overnight, the Australian Dollar fell to a three-month low after a government report showed the economy grew less in the third quarter than analysts forecast. Traders are anticipating an interest rate cut or other stimulus from the Reserve Bank of Australia in the future after the RBA passed on a rate cut.

The British Pound slumped after an industry report showed U.K. service growth slowed in November. An index of services output based on a survey of purchasing managers declined to 60 from 62.5 in October. The Sterling may fall further today as investors are expected to pare positions ahead of tomorrow’s Bank of England monetary policy meeting.

The Euro is trading weaker on light volume. Traders may take to the sidelines today ahead of tomorrow’s European Central Bank monetary policy meeting. This could lead to a slight bias to the downside. Last week, a report showed that Euro Zone prices grew at a rate of 0.9 percent in November versus a 0.7 percent pace the previous month. Because of this a Bloomberg survey of economists calls for the ECB to leave its benchmark interest rate at a record low 0.25 percent.

Today, investors will get the opportunity to react to the latest ADP Non-Farm Employment report. Analysts expect the report to show that 172,000 new jobs were added by the private sector. The ISM Non-Manufacturing PMI is expected to remain unchanged at 55.4. New Home Sales are expected to rise slightly from 421K to 427K. Finally, later in the afternoon at 2:00 pm ET, the Fed will release its latest Beige Book.    (Source:  FX-Empire)

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