The USD went through a strong retreat during October and November as risk sentiment improved on less-hawkish rhetoric from the FED due to a slowing global economy. Many were predicting a deep recession in Europe and the US, as prices keep surging, energy expenses keep increasing ahead of winter.

But, winter has been warm besides Christmas week and the US economy is not showing signs of a “hard landing”. The figures of recent weeks have been showing resilience and the June Fed funds futures contract implies a Federal rate top at 5.06%. That’s considerably higher than 4.94% at the beginning of the week.

So, the FED is not giving signs of stopping and reversing down soon and the market is shifting towards the FED instead. Yesterday we saw some positive numbers from the ADP and initial jobless claims which point to a continued robust hiring environment. So, chances are that today’s non-farm payrolls report will be positive.

It is a critical piece right at this time in the employment debate but for now, it’s tough to see the US consumer hold back too much without pain in the jobs market. So, we’re seeing positive numbers from the labour market, which means that the US consumer will continue spending, which in turn will likely keep the US economy afloat. Kansas FED president George made some hawkish comments yesterday which added to the bullish momentum of the USD and if today’s data is positive again, including the ISM services, then the USD will likely get going again. Meanwhile, EUR/USD

EUR/USD H4 Chart – All MAs Have Been Broken

MAs have turned into reistance 

Comments from the Kansas City Fed President George

• Holding rates high until confident inflation coming down is our message
• I’ll be watching housing
• It’s hard to know what the timing is of cuts but my forecast is ‘well into 2024’
• I’m not forecasting a recession
• Bringing demand down is what we’re trying to do
• We see a global outlook that poses risks to the US
• We continue to see persistence around inflation that is going to require our attention
• If the buffer in pent up savings is spent out, it will be harder for us to get inflation under control

George is leaving the KC Fed at the end of the month by the way.