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Greenback Registers Post-FOMC Reversal Higher Amid Stronger-Than-Expected Data

FOREX
  • The greenback completed a V-shaped recovery on Thursday, with the USD index trading back through the pre-FOMC levels and extending above 104 in late trade.
  • A dovish Swiss National Bank and Bank of England are providing significant headwinds for CHF (-1.25%) and GBP (-0.98%), the notable underperformers on the session, which are likely assisting the latest upswing for the dollar.
  • In addition, firmer than expected US data is likely providing an additional greenback tailwind. Higher-than-expected Philly Fed business outlook and Manufacturing PMIs were then complemented by lower initial jobless claims and a jump in existing home sales, all underpinning the dollar bid.
  • The close proximity of major resistance in USDJPY will likely continue to garner attention and could provide an obstacle for further protracted dollar strength as we approach the weekend.
  • USDJPY extended the overnight recovery and tracks close to 151.70, now up 0.28% on the day. The cluster of significant resistance starts at yesterday’s highs of 151.82, which precedes the multi-decade highs at 151.91/95. Clearance of this resistance would confirm a resumption of the long-term USDJPY uptrend, with a break opening 152.66, a Fibonacci projection.
  • Separately, AUD remains an outperformer following the strong post-holiday rebound in jobs, confirmed by data overnight. Earlier in the session, AUDJPY briefly printed above 100.00, a level that hasn’t traded since late 2014.
  • Japan National core CPI crosses overnight on Friday, before UK retail sales headlines the European data docket.
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