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Dollar Remains Solid as Post-Fed Buying Persists Through Europe

FOREX
  • The greenback continues to trade from strength to strength, and is outstripping all others in G10 early Thursday as the Fed-induced wave of buying persisted across Asia-Pac hours. The USD Index trades within range of two key resistance levels (96.906 and 96.938) which, if broken, put the dollar at the best levels since mid-2020.
  • The hawkish interpretation of the Fed press conference yesterday continues to underpin a tightening of financial conditions, with the front-end of the US yield curve pricing in much tighter policy front March onwards. STIR markets now price in close to 5 hikes across 2022.
  • Outside of the greenback, the single currency is suffering, with the stark perceived policy divergence between the ECB and Fed driving EUR/USD to fresh 2022 lows. Similarly, EUR/GBP is under pressure and lower for a third session. This puts the cross on track to test key support of 0.8305 should weakness persist.
  • The NOK trades well, second to just the USD as oil prices remain well elevated. Brent crude futures topped $90/bbl yesterday for the first time since 2014, with prices holding above that key psychological level at the NY crossover.
  • Advance US Q4 GDP data takes focus going forward, with weekly jobless claims data also due as well as prelim December durables data.
MNI London Bureau | +44 203-865-3809 | edward.hardy@marketnews.com
MNI London Bureau | +44 203-865-3809 | edward.hardy@marketnews.com

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