US Dollar Lacking Strong Direction Right Now, Says Jane Foley

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00:00Jane Foley of Rabobank writing, the dollar will be more sensitive to poor data releases in the coming weeks than to good.

00:06Either way, it's time to reassess the outlook for the greenback.

00:09Jane joins us now for more. Jane, welcome to the programme. What data are you focused on?

00:14You know what, any data, I think at this point, but particularly, of course, the Labour data and the CPI data, if and when we get it.

00:21But, you know, we all know that that's going to be pretty confusing, perhaps, and in October it will be affected by those shutdowns.

00:26But I think we learned something, particularly yesterday, about positioning for the US dollar.

00:32And that is probably going to tell us how the dollar is going to react.

00:34Because when that ADP data came out yesterday, the dollar sold off perhaps more aggressively than I thought it would on that data.

00:41And that, I think, tells us that the market isn't quite so short of the dollar anymore.

00:46And we've got to remember that whilst the dollar remains the worst performing G10 currency in the year to date,

00:51actually, it's done pretty well in the second half of the year to date.

00:55And yesterday, after that data, you know, it was the Norwegian krona that was the best performer.

01:00But, you know, last week it was the dollar that was the best performing G10 currency in the year, in the second half of the year to date.

01:08And now I think we're in this more balanced position for the dollar.

01:12And that, I think, is going to be crucial going into these data numbers.

01:15In your words, it's time to reassess the outlook for the green bank, Jane, against what?

01:19Is it against the single currency, the euro, or, the story of the moment, the Japanese yen?

01:24You know, I think all of these, but I think the yen has got its perhaps bigger fundamentals.

01:30We saw what seemed to be a little bit more verbal intervention by the new finance minister in the Japanese parliament this morning,

01:36a little bit more pushback.

01:38She appears to be becoming more uncomfortable with the yen.

01:40And actually, we had some indications out earlier in the week from the Bank of Japan with respect to their previous policy meeting.

01:48You know, we can't write off the risk of a December interest rate hike from the Bank of Japan.

01:55That is still going to be, you know, very much so a live meeting.

01:59So, you know, there is the possibility that we do get maybe an interest rate hike, that we may even get intervention.

02:05I think the market is going to be wary about 155 on dollar yen.

02:08So there is very much a yen story going on there.

02:12It's very much there is a cable story, a sterling story going on.

02:15But, you know, the common denominator here is is a dollar and it doesn't seem to have an awful lot of strong direction right now.