US dollar, riots, protests, ISM data – Talking points
- US dollars may increase if ISM data is insufficient and cause risk aversion
- Greenback gains could be boosted by riot liquidity demand
- NZD / USD could retest key uptrend as bullish momentum slows
Asia had a mixed start to the week. Initially, the markets appeared to show a risk tilt as the Japanese Yen and the US dollar rose at the expense of growth-oriented Australian and New Zealand dollars. US equity futures also indicated a decline at the time. However, this dynamic was later reversed and also saw the rise of the South Korean won against its APAC peers.
US Dollar May Rise Thanks To ISM Data And Riots
The US dollar could rise if data from the Institute of Supply Management (ISM) does not meet expectations and grant a premium to assets linked to paradise. Manufacturing should print a figure of 43.7, slightly higher than the previous figure of 41.5. The final reading of the analog Markit PMI should show a statistic of 40.0, slightly stronger than the previous impression of 39.8.
However, what policymakers and market players are likely to watch more closely are the large-scale riots that occur in various American cities. Businesses have been hit by reduced foot traffic and lower consumption, and may now also have to close to avoid looting and vandalism. In Oakland, California, 70 businesses were looted on Saturday evening.
Google’s search for “riots” and “protests” has increased in recent days with growing concern as to what the internal political debacle could mean for growth that is already under pressure. “Hong Kong” is another term that resurfaces in the total research volume in light of tensions between the United States and China over the former British colony. Learn more about the market implications here.
The NZD / USD is timidly approaching the familiar resistance at 0. 6353 (white dotted line) as the pair continues to climb along an uptrend of several weeks. The NZD / USD fell briefly in the middle of last month but quickly recovered – an example of why confirmation may be crucial – and resumed its upward trend. In the future, if the appreciation slope is invalidated, a significant short-term decline could result.
NZD / USD – Daily Chart
NZD / USD chart created using TradingView
— Written by Dimitri Zabelin, currency analyst for DailyFX.com
To contact Dimitri, use the comments section below or @ZabelinDimitrion Twitter