The index continues respect resistance above the psychological 97.000 level (on a closing basis) and ahead of the recent range top at 97.370, as safer currency havens outperform amidst heightened geopolitical and global trade tensions. Moreover, the Dollar remains capped by growing expectations that the Fed will flag a rate cut next week following a run of macro data pointing to a more pronounced slowdown in the economy and benign inflation that that challenges the transitory theory put forward by Powell and other at the last FOMC gathering. On that note, impending retail sales and ip reports could cement an ease in July if not this month. DXY currently relatively contained within a 97.154-96.942 range.
The Yen has nudged back up towards 108.00 vs the Buck, and is only really lagging behind Gold in the aforementioned risk-off climate plus the Swedish Krona in the G10 stakes due to firmer than forecast CPI and CPIF metrics that keeps the Riksbank on track to raise the repo. However, Usd/Jpy is still encountering underlying bids ahead of the big figure and may also be propped by decent option expiry interest between 108.00 and 108.15 (1 bn). Back to Scandinavia, Eur/Sek has extended post-inflation data declines through technical support at 10.6500 (10 DMA) and briefly below 10.6400 vs 10.7100+ at one stage.
The major losers yet again, and with the Kiwi now underperforming after NZ manufacturing PMI only just held above the 50.0 threshold. Nzd/Usd has slipped under 0.6550 towards 0.6525 and Aud/Nzd is pivoting 1.0550 even though the Aussie has relinquished the 0.6900 handle and chart support a pip below amidst another round of more aggressive RBA policy easing calls (NAB now predicting 3 cuts in 2019 from 2 previously and RBC reckons the OCR will be lowered to 0.5% by May next year).
All lower against the Greenback as well, albeit to a lesser extent compared to the Antipodean Dollars and to varying degrees. The single currency is retreating further from 1.1300 where massive expiries run off (4.4 bn) and the Loonie has reversed to test support ahead of 1.3350 having lost some of Thursday’s oil-powered momentum as crude prices simmer down after the post-tanker attack spike. Meanwhile, the Franc has pared gains across the board with Usd/Chf at the upper end of a 0.9966-26 band and Eur/Chf back above 1.1200 on SNB reflection (renewed and reemphasised convictions to keep NIRP or even cut deeper and continue intervention). Elsewhere, Cable has is now pivoting 1.2650 with independent bearish impulses from the ongoing UK political hiatus and resultant suspension of any real Brexit developments, but BoE Governor Carney may provide some additional impetus later.
No respite for the Lira it seems as Usd/Try rallies through 5.9000 to 5.9300+ and not far from chart resistance around 5.9500, including a 50% Fib of the retracement from last month’s highs to earlier June lows. The latest catalyst, warnings from Turkey’s Foreign Ministry that any US sanctions will be reciprocated.
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