The dollar dropped this week because jobs data came in weak and traders decided the Fed won't hike rates as much. This is called "reacting to new information." It's a thing people do when they treat the market like a book club where every chapter rewrites the previous one.
June's jobs report was tepid. That's the word they used. Tepid. Not bad. Not weak. Tepid. Like bathwater that's been sitting for twenty minutes. And based on this lukewarm data point, the entire currency market repriced Fed expectations and sent the dollar to its biggest weekly drop in three months.
Three months ago the dollar was apparently doing something else for completely different reasons that were equally urgent at the time. No one remembers what those reasons were. They've been replaced by these new reasons. Next month there will be newer reasons that make these reasons look quaint.
The technical setup says none of this matters. The dollar's trading range hasn't changed in six months. Every spike gets sold. Every dip gets bought. The headlines rotate but the price action stays inside the same box like a hamster that thinks running makes it free.
Retail traders read "jobs data dims Fed hike bets" and think they've unlocked alpha. They haven't unlocked shit. They've unlocked the same losing trade they make every cycle, buying a narrative three headlines too late while the institutions who moved the market on Tuesday are already fading their positions on Friday.
The dollar will probably bounce next week when some other data point comes in less tepid. Then it'll drop again when a Fed official says something in a speech. Then it'll chop sideways for two months while everyone pretends the chart has a direction.
But sure, this week's move was definitely about jobs data and not just noise dressed up in a suit.
Photo by engin akyurt on Unsplash
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