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Greenback Continues To Fade Approaching APAC Crossover

FOREX
  • The greenback spent the latter half of Thursday’s session drifting lower as bullish short-term price action following the sharp recovery from Tuesday’s lows has reversed course.
  • Downside USD momentum picked up a little around the WMR fix, with EURUSD (+0.77) popping above Wednesday’s highs at 1.0210 with the pair now trading in marginally positive territory ahead of tomorrow’s payrolls report. Similar price action being conversely reflected in the Dollar Index which has fallen -0.69%.
  • In similar vein, USDJPY briefly made fresh late session lows below the 133 handle. The Japanese Yen has once again traded in a volatile manner on Thursday, continuing the currency’s significant intra-day volatility throughout the week. Despite multiple 100+ pip swings throughout today’s session in USDJPY, the pair remained within the bounds of Wednesday’s range.
  • The nearest technical resistance point lies at 135.32, the 20-day EMA, however, given the fact that the short-term gains have been considered technically corrective, renewed weakness would place focus back on a sustained break of 131.50 and then 130.41, Tuesday’s low.
  • GBP the major move throughout the session following the Bank of England decision. Despite hiking by a slightly above-consensus 50bps, the rather bleak set of attached economic forecasts put immediate pressure on sterling. GBPUSD fell from 1.22 all the way to 1.2066 during the press conference, however, the most recent greenback weakness has seen cable pare losses to 1.2170 as of writing. GBP weakness does still exude through the cross with EURGBP rising 0.6% to a one-week high back above 0.8400.
  • Looking ahead to tomorrow, consensus sees US non-farm payrolls growth moderating to 250k in July in a resumption of a downward trend after four remarkably steady months as the gap on pre-pandemic employment levels is almost completely shut.
    • Particular focus will be on the strength of jobs growth plus any differences between establishment and household surveys, with FOMC speakers putting weight on labour market strength as evidence against the economy already being in recession.
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