USD to be hit harder on weak US data given the Fed pricing - TDS

Analysts at TD Securities explained the risks to Foreign Exchange in respect of the forthcoming US ISM manufacturing survey tipped by the analysts to show lower momentum. 

Key Quotes:

"Given that a Fed hike over the summer is well priced, we think risk of a material data disappointment (i.e. sub-50 with soft details from new orders) will bear a greater impact on the USD than a positive surprise. We think the USD is particularly vulnerable to a temporary reprieve given the DXY has staged a solid rebound (~4.3%) from the May 3rd low but we emphasize that the dip may be shallow ahead of the payrolls report on Friday and Yellen’s June 6th speech.

We are watching EUR/USD where we spot crucial resistance in the 1.1200/1.1220 area for EURUSD, a region that broadly coincides with the April lows and the congestion zone following the breakdown on May 18th. In the event of a very strong ISM report, we think 1.1080/1.1100 will be the key support zone as this coincides with trend channel support established from the December 3rd 2015 low."