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FOREX: EUR/USD Consolidating, But Keeping Pressure on USD Index

FOREX
  • Having faded off the Wednesday high (and best level since January 1st) into yesterday's close, EUR/USD is consolidating, but holding just above the $1.10 handle. We wrote earlier this week that Fed pricing need not revisit the pricing extremes from earlier in the month of 125bps cuts this year in order for the USD Index to return lower - and yesterday's price action supports that theory. The USD Index bottomed out at 102.270 before recovering slightly - leaving this level, and 102.160, as key near-term support.
  • CHF is the poorest performer in G10 at typing, as markets continue to sell the sharp rally in the currency into the start of August. With AUD faring better on more stable equities, AUD/CHF is pressuring the weekly highs and horizontal resistance layered between  0.5750-51. Clearance here puts the cross clear of the 50% retracement for the downleg posted off the July high, opening 0.5809 and above.
  • Lastly, NOK has seen some buying interest following the Norges Bank rate decision, which kept policy unchanged - as expected, but moderately uprated their concern over the course of the currency, stating that the committee are "particularly concerned" with developments in currency rates.
  • US July retail sales data takes focus for the session ahead, with markets expecting advance sales to pick up to +0.4% from 0.0% previously. Import and export price indices are also due, as well as the weekly jobless claims release and July industrial production numbers. Central bank speaker highlights include Fed's Musalem, who address the economy and policy, followed by Harker at the Philly Fed. 

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