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FOREX: Softer US Data Weighs on Greenback, AUD Remains Weaker Following GDP

FOREX
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  • November's US ISM Services index saw its biggest drop since June, falling unexpectedly to a 3-month low 52.1 from 56.0. In sympathy, the USD index (-0.15%) immediately pared its prior advance and fell into negative territory on the session.
  • Despite the US dollar turnaround, the Australian dollar remains the notable underperformer, following the softer-than-expected GDP data overnight and associated dovish repricing for the RBA.
  • The trend condition in AUDUSD (-0.75%) remains bearish and today’s fresh cycle low reinforces current conditions. Note that moving average studies are in a bear-mode position too, highlighting a dominant downtrend. Scope is seen for a move towards 0.6350 (Aug 5 low) and 0.6339 (Nov 10 2023 low), a key area of support. Strength for the Euro has also seen EURAUD (+1.05%) extend higher towards 1.64, after firmly rejecting the brief slide below 1.6000 two weeks ago.
  • JPY volatility continues to be the key feature of currency markets, with reports initially weighing on Wednesday. The potential political reaction to rate hikes is making senior Bank of Japan officials tend towards normalising policy more slowly, and this narrative assisted USDJPY to an impressive 1.75% recovery from the Tuesday lows (151.23 high print).
  • However, the softer US data took the wind out of the pair’s sails and USDJPY spot is trading closer to 150.00 as we approach the APAC crossover.
  • The drift higher in European equities alongside broader dollar weakness has supported the risk-sensitive Swedish krona today. USDSEK is down 1.00% ahead of tomorrow’s release of flash November CPI in Sweden. Elsewhere, US jobless claims will provide a warm-up to Friday’s NFP release.
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  • November's US ISM Services index saw its biggest drop since June, falling unexpectedly to a 3-month low 52.1 from 56.0. In sympathy, the USD index (-0.15%) immediately pared its prior advance and fell into negative territory on the session.
  • Despite the US dollar turnaround, the Australian dollar remains the notable underperformer, following the softer-than-expected GDP data overnight and associated dovish repricing for the RBA.
  • The trend condition in AUDUSD (-0.75%) remains bearish and today’s fresh cycle low reinforces current conditions. Note that moving average studies are in a bear-mode position too, highlighting a dominant downtrend. Scope is seen for a move towards 0.6350 (Aug 5 low) and 0.6339 (Nov 10 2023 low), a key area of support. Strength for the Euro has also seen EURAUD (+1.05%) extend higher towards 1.64, after firmly rejecting the brief slide below 1.6000 two weeks ago.
  • JPY volatility continues to be the key feature of currency markets, with reports initially weighing on Wednesday. The potential political reaction to rate hikes is making senior Bank of Japan officials tend towards normalising policy more slowly, and this narrative assisted USDJPY to an impressive 1.75% recovery from the Tuesday lows (151.23 high print).
  • However, the softer US data took the wind out of the pair’s sails and USDJPY spot is trading closer to 150.00 as we approach the APAC crossover.
  • The drift higher in European equities alongside broader dollar weakness has supported the risk-sensitive Swedish krona today. USDSEK is down 1.00% ahead of tomorrow’s release of flash November CPI in Sweden. Elsewhere, US jobless claims will provide a warm-up to Friday’s NFP release.