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A Whipsaw Week For The USD Index

Shain Vernier•Wednesday, September 18, 2019•1 min read

It has been a whipsaw week for December USD Index futures. Values have rotated around the 98.000 handle as traders attempt to price the on-again, off-again sentiment toward further FED rate cuts. Thus far today, the USD Index is in tight rotation within Tuesday’s range.

In addition to this afternoon’s much-anticipated FED Interest Rate Decision, there were a few economic metrics released during the premarket. Here is a quick look at the highlights:

Event                                                                             Actual       Projected     Previous

MBA Mortgage Applications (September 13)           -0.1%              NA                2.0%

Building Permits (MoM, August)                              1.419M          1.300M          1.317M

Housing Starts (MoM, August)                                 1.364M           1.250M          1.215M

This group of numbers suggests that July’s rate cuts have stimulated the U.S. construction industry. Building Permits and Housing Starts both jumped in August, a likely result of cheaper financing. Perhaps another rate cut later today will act as the catalyst for further construction sector gains in October.

USD Index Non-Committal Amid FOMC Uncertainty

At press time (11:00 AM EST), December USD Index futures are up moderately for the session. Rates are in a noncommittal technical area on the daily time frame and appear happy to wait for the FOMC’s verdict.

December USD Index Futures (DX), Daily Chart
December USD Index Futures (DX), Daily Chart

Overview: Given the market uncertainty surrounding this particular FED rate decision, it is anyone’s guess where the USD Index will settle today. However, the intermediate-term bullish trend is intact and rates are above daily support. If we see the FOMC hold policy firm, a rally toward the Spike High (98.900) may be in order.

One thing to watch this afternoon is President Trump’s Twitter feed. He has been a harsh critic of Jerome Powell and the FED, especially following last month’s Jackson Hole Symposium. Should another surprise policy move from the White House be announced following today’s FOMC decision, it will likely be issued via Twitter.

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ABOUT THE AUTHOR See More
Shain Vernier
US Analyst
Shain Vernier has spent over 7 years in the market as a professional futures, options and forex trader. He holds a B.Sc. in Business Finance from the University of Montana. Shain's career includes stretches with several proprietary trading firms in addition to actively managing his own accounts. Before joining FX Leaders, he worked as a market analyst and financial writer.
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