DXY – Focus on Retail Sales

From the FXWW Chatroom – USD was broadly softer overnight amid a pare-back of risk sentiment following declines in US equities, commodity prices and hawkish comments from Fed officials. DXY was last seen around 98.55 levels. Bullish momentum on weekly chart remains intact but on daily chart, momentum appears to show tentative signs of waning. Stochastics has also started to show early signs of turning lower from overbought areas. We continue to reiterate interim support at 98.55 (76.4% fibo retracement of Mar high to Aug low) before bigger support at 97.40 (61.8% fibo). Key focus on Oct retail sales data tonight. Weaker than expected number could see USD –longs taking partial profit. We maintain our view that USD is likely to remain supported amid rising expectation of Fed to raise rates in Dec. The implied probability (from fed Fund futures) of rate hike in Dec 
remains near year highs of about 66%. Other data/events we are watching for the day ahead includes Fed’s Fischer speaks; PPI Final Demand (Oct); U. of Mich. Sentiment; Fed’s Mester speaks. [Maybank] 

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