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Greenback Bounce Extends Amid Souring Sentiment, USDJPY Nears 144.00

FOREX
  • Risk sentiment was dented on Friday as disappointing flash PMIs in Europe sparked global growth concerns once again. Amid pressure on major equity benchmarks, the greenback prospered with the USD index (+0.56%) extending the firm bounce to around one percent from Thursday’s lows.
  • Following the data, and the particularly poor prints in France and Germany, the Euro is among the poorest performers in G10 Friday, as ECB market-implied pricing has adjusted lower. The EURUSD pullback is considered corrective - for now. Attention turns to support at 1.0853, the 20-day EMA. A clear break of this average would signal scope for a deeper pullback and this would open 1.0804, the Jun 15 low.
  • With the price action so closely linked to risk and the commodity complex also under pressure, the Australian dollar was the weakest in G10, falling 1.10% on the session.
  • Despite marginally lower core yields, the greenback strength was most notable against the Japanese yen in the second half of Friday trade. A small dip to 1.4272 for USDJPY around the cash equity open was met with fierce support and the pair ramped to fresh-trend highs of 143.87. The pair trades close to the best levels as we approach the weekend close.
  • Market participants will be on close watch for any comments from officials as the yen slumps toward levels where the government intervened last year. The party line has remained consistent, that Japan will closely watch currency moves and won't rule out any options, last laid out by a top currency diplomat on May 30 after financial authorities met in the wake of the yen's slide to a six-month low against the USD. 144.40 is a notable target on the topside, the 1.382 Fibonacci projection of the Jan 16 - Mar 8 - Mar 24 price swing.
  • German IFO data kicks off next week’s data docket with potential comments from SNB’s Jordan and ECB’s Lagarde. The focus next week will be on a host of fresh inflation data across G10 as well as China manufacturing and non-manufacturing PMIs.
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