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Greenback Claws Back Losses As Equities Sink, EUR Outperforms

FOREX
  • Further relief for gas futures in Europe set a positive early tone for risk in the first half of Tuesday’s session which placed initial pressure on the greenback. However, a sharp turnaround for major equity benchmarks and a set of stronger US data (above estimate consumer confidence and JOLTS figures) altered market sentiment which allowed the USD to trade back to flat for the day.
  • The weaker risk sentiment along with sharp moves to the downside for crude futures weighed on the likes of AUD, CAD and NOK. CHF was also among the poorest performers on the day, with EUR/CHF printing a higher high for a sixth consecutive session and putting the cross on track to test the 0.9819 50-dma.
  • Outperforming on Tuesday was the Euro amid several more ECB governing board members hinting at the inevitable discussion of increasing the hiking pace at next week’s meeting. While this has already been alluded to since Friday, the ongoing rhetoric continues to bolster the single currency, alongside the retreating gas prices.
    • In turn, Euro crosses continue their bounce with EURAUD now an impressive 2.3% higher than Friday’s lows.
  • In emerging markets, the Hungarian Forint rallied 1.5% following the NBH rate decision and its commitment to a “decisive continuation” of its monetary tightening cycle. On the contrary, a weaker risk backdrop weighed on LatAm FX with USDMXN bouncing close to 1.5% from intra-day lows back to ~20.20.
  • Chinese Manufacturing PMI data is due overnight before the Eurozone HICP Flash Estimate for August, expected to rise to 9.0%. New methodology for US ADP will be released tomorrow before the MNI Chicago Business Barometer. The focus remains on Friday’s US employment report for August.
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  • Further relief for gas futures in Europe set a positive early tone for risk in the first half of Tuesday’s session which placed initial pressure on the greenback. However, a sharp turnaround for major equity benchmarks and a set of stronger US data (above estimate consumer confidence and JOLTS figures) altered market sentiment which allowed the USD to trade back to flat for the day.
  • The weaker risk sentiment along with sharp moves to the downside for crude futures weighed on the likes of AUD, CAD and NOK. CHF was also among the poorest performers on the day, with EUR/CHF printing a higher high for a sixth consecutive session and putting the cross on track to test the 0.9819 50-dma.
  • Outperforming on Tuesday was the Euro amid several more ECB governing board members hinting at the inevitable discussion of increasing the hiking pace at next week’s meeting. While this has already been alluded to since Friday, the ongoing rhetoric continues to bolster the single currency, alongside the retreating gas prices.
    • In turn, Euro crosses continue their bounce with EURAUD now an impressive 2.3% higher than Friday’s lows.
  • In emerging markets, the Hungarian Forint rallied 1.5% following the NBH rate decision and its commitment to a “decisive continuation” of its monetary tightening cycle. On the contrary, a weaker risk backdrop weighed on LatAm FX with USDMXN bouncing close to 1.5% from intra-day lows back to ~20.20.
  • Chinese Manufacturing PMI data is due overnight before the Eurozone HICP Flash Estimate for August, expected to rise to 9.0%. New methodology for US ADP will be released tomorrow before the MNI Chicago Business Barometer. The focus remains on Friday’s US employment report for August.