USD: Supported by the economic news flow - BBH

Research Team at BBH, notes that the US dollar finished September in a weak technical position however, the fundamental news, including mostly upside surprises from the economic data, and even some doves on the Federal Reserve, like Chicago President Evans seemed to warm to a year-end hike and lifted the dollar.

Key Quotes

“The less than spectacular jobs report saw the dollar give back some of this week's gains.  It still managed to close higher against all of them, though with the momentum stalling ahead of the weekend. 

We have consistently argued against the speculation of a November move.  There is no precedent for a change in policy so close to a national election.  That is one way the Fed has shown its independence from politics.  It will not overshadow the political process.  Also, the November meeting does not have a press conference; nor is there a scheduled press conference or updated forecasts.  These are not insurmountable hurdles, but it would seem to require a greater sense of urgency than is current expressed or embedded in the data. 

The US jobs data was solid even if disappointing. The private sector gained 167k jobs, more than August's 144k increase, and a little more than the 153k average jobs creation over the past six months.  The 11k government jobs lost was the most in the year, while the participation rate rose to 62.9%, matching the highest level since February 2014. 

Before the jobs report, the Dollar Index rose to almost 97.20, the highest since late-July.  Note that the top of the Bollinger Band was near 96.55.  The jobs data sent the Dollar Index to 96.40.  That met the 38.2% retracement objective (~96.50) of the rally from the September 30 low near 95.35.  The 50% retracement is at 96.25 (which corresponds to the five-day moving average).  The 61.8% retracement is 96.05.”