US Dollar Lacking Strong Direction Right Now, Says Jane Foley

Core Viewpoint - The US dollar is expected to be more sensitive to poor economic data releases than to positive ones, indicating a need to reassess its outlook in the near future [1]. Economic Data Focus - Key economic indicators to watch include labor data and Consumer Price Index (CPI) data, which may be influenced by recent shutdowns [2]. Market Positioning - Recent ADP data release led to a significant sell-off of the dollar, suggesting that market positioning has shifted, with less short interest in the dollar compared to earlier in the year [3]. - Despite being the worst-performing G10 currency year-to-date, the dollar has shown resilience in the second half of the year [3]. Currency Performance - The Norwegian krona was the best performer following the recent data release, while the dollar had been the top G10 currency performer in the previous week [4]. Outlook for the Dollar - There is a need to reassess the dollar's outlook against other currencies, particularly the euro and Japanese yen, as the latter shows signs of potential intervention from Japanese authorities [5][6]. Japanese Yen Dynamics - The new finance minister of Japan appears increasingly uncomfortable with the yen's performance, hinting at possible interest rate hikes or intervention from the Bank of Japan [6][7]. - The market is cautious about the yen's movements, particularly around the 0.55 level, indicating a significant focus on the yen's story in the current economic landscape [7].