The US Dollar (USD) received support from better-than-expected jobless claims data, which helped it maintain gains after the recent Federal Reserve (Fed) decision, according to ING FX analyst Francesco Pesole.
Key Economic Data Highlights
- Initial jobless claims fell to 231,000 for the week ending 13 September, down from 264,000 the previous week. This suggests the earlier spike was likely a temporary anomaly.
- Continuing claims also dropped to 1.920 million, beating the 1.950 million consensus.
- The previous week’s continuing claims were revised lower from 1.939 million to 1.927 million.
This data signals mild strength in the US labor market, supporting short-term USD strength.
Market Outlook
- ING still expects the Fed to cut interest rates in October, due to signs of labor market weakening and persistent low inflation.
- The Fed’s Dot Plot, which signals two more rate cuts this year, will likely remain the market’s main reference for rate expectations.
- This keeps the bar high for any strong, lasting USD rally, unless there’s a major shift in economic data.
Geopolitical Focus: Trump-Xi Phone Call
- A call between US President Trump and China’s President Xi Jinping is scheduled for 9 AM ET / 3 PM CEST.
- The main topic is a framework deal for TikTok US ownership, but trade discussions may also happen.
- Positive headlines from the call could impact China-linked currencies, especially the AUD (Australian Dollar) and NZD (New Zealand Dollar).
Short-Term USD Outlook
- ING believes the USD remains overvalued following the Fed meeting.
- Some pullback is expected in the coming days.
- Cheaper funding costs may boost hedging demand for USD, helping to prevent sharp declines.
- Today’s data calendar is light, but dovish comments are expected from Fed Governor Stephen Miran (who supported a 50bp cut) and Mary Daly.