Data Preview: PMI Preliminary and Speech on the Same Stage
During the European and American trading sessions on Tuesday, the DXY dollar index was repeatedly tugging around the 97.30 line. After failing to break through 97.85 following a three-day rally, it showed a decline, technically leaning towards a range-bound approach. This week, two major catalysts will arrive almost simultaneously: the S&P Global's preliminary September PMI and a public speech by Federal Reserve Chairman Powell. The market pays more attention to the PMI preliminary, as it often influences order expectations, corporate spending, and exchange rate fluctuations before the final value; meanwhile, Powell's wording will calibrate expectations for the pace of future rate cuts, potentially altering the slope of the yield curve and the anchor for the dollar's valuation.
Critical Threshold: The Watershed Above 50 in Manufacturing
After a surprising return to the expansion zone in August manufacturing, investors will look to the September reading to verify whether "moderate growth" is sustainable. If the manufacturing PMI holds above 50 and approaches the expected 52, it indicates resilience in production and new orders, potentially providing momentum for risk assets; however, for the dollar, the direction depends not only on growth but also on the repricing on the interest rate front: when the combination of "stable growth + more hawkish rates" appears, the dollar typically benefits; conversely, if weaker readings trigger expectations of quicker and deeper rate cuts, the probability of the dollar coming under temporary pressure increases.
Inflation Clues: PCE Later, Price Sub-index Earlier
Although the PCE Price Index this Friday is the "final exam" for inflation, in the context of an important data gap and increased attention, the price sub-index in the PMI still holds trading guidance significance. If price pressures ease while demand continues to expand, it will reinforce the "soft landing" narrative; if price stickiness rises instead of falling, it compresses the space for easing, making the trade-off between "growth- inflation" more challenging. In trading terms, the dollar is more sensitive to a combination of "rising price sub-index + strong output," as it points to a higher path for real interest rates.
Policy Context: Precautionary Easing and Committee Divergence
The FOMC began its first 25 basis points rate cut of the year in September and signaled the possibility of two more cuts within the year. Several officials have defined this adjustment as a "precautionary move in the context of weakening employment momentum." However, there are still internal disputes regarding the pace and magnitude: the cautious camp emphasizes a "gradual approach based on data," while the dovish camp advocates moving closer to the "neutral rate" more rapidly. This divergence enhances the dominance of data over expectations—every change in high-frequency indicators could be magnified as a signal for the path.
Market Structure: Range Dominated, Awaiting Directional Catalyst
Technically, the DXY failed to stand effectively above 97.85, indicating a short-term bias to find an equilibrium point between 97.30—97.85. The one-week option market's implied volatility has risen moderately, reflecting heightened pricing for event-driven "directional jumps." If the PMI and Powell's stance are in sync (e.g., robust growth with emphasis on vigilance towards inflation), the dollar is likely to challenge the upper boundary; if the data is soft but language restrained, a return to internal range oscillations is more probable.
Trading Points: Look for "Resonance" Rather Than Single Signals
For short-term positions, focus on whether the three lines are aligned: first, whether the manufacturing PMI holds above 50 and approaches the expected range; second, whether the price sub-index continues its downward trend; third, whether Powell downplays the urgency of "consecutive rate cuts." If all three resonate with "decent growth, sticky inflation, cautious policy," the dollar's support is more solid; if they resonate with "weakening growth, moderated inflation, more accommodative policy," the dollar is more likely to retest the lower end of the range. A more reasonable approach currently is to capture marginal changes in rate expectations through the combination of data and wording, rather than betting on single-point events.
