DXY: ADP, ISM Mfg today – OCBC

US Dollar (USD) traded a touch softer overnight in amid concerns of US government shutdown. DXY last seen at 97.62 levels. BLS has already confirmed that it will delay the release of the jobs report (due on Fri) if the US government shutdown occurs, OCBC's FX analysts Frances Cheung and Christopher Wong note.

Daily momentum is mild bullish

"This puts greater emphasis on Fedspeaks and other data releases, including ADP employment, ISM manufacturing today. Softer print is likely to weigh on USD. Proxy play may likely include long gold, JPY; short USD if the shutdown persists for longer, in turn affecting risk appetite or even economic activities. Elsewhere on the latest round of sectoral tariffs, Fed’s Goolsbee said the most recent round of tariffs may be causing businesses in his district to again pause decision-making in order to see where the levies settle. "

"Daily momentum is mild bullish while RSI shows tentative signs of turning higher. Resistance at 98.40/60 levels (100 DMA, 38.2% fibo retracement of May high to Sep low), 99 levels (50% fibo). Support at 97.60 (21 DMA, 23.6% fibo), 97.20 levels. On Fedspeaks overnight, Logan indicated that Fed should proceed cautiously on further rate cuts and there may be little room for more rate cuts. Susan Collins said further interest-rate reductions may be appropriate in 2025 given a weaker labor market, but officials need to remain on guard against the possibility of persistent inflation."

"This is consistent with the cautious remarks made by other Fed officials. Last week, Goolsbee said that he could be less willing to support 'overly frontloading a lot of rate cuts' on the presumption that inflation will just be transitory and go away as many midwest businesses are still concerned that inflation was not under control. Fed Chair Powell also said that market expectations for another 2 cuts this year were far from a done deal."