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Greenback Strength Extends Amid Strong US Data

FOREX
  • The US Dollar extended its strong recent form, emphasised by the dollar index printing a fresh year-to-date high for a fifth consecutive session. The index rose 0.5% during the trading session and the rally was aided by firm US retail sales and production data.
  • EURUSD remains pinned to the lows and has weakened another 0.45% on Tuesday, narrowing the gap with touted support at the 1.1305 bear channel base drawn off the Jun 1st high.
  • Additionally, supportive price action in USDJPY (+0.50%) has seen the pair creep up to significant horizontal resistance at 11470/73, threatening to break to the best levels since November 2017.
  • The worst performers on Tuesday were NZD and AUD, losing 0.75 and 0.6% respectively.
  • GBP, however, outperformed after some solid jobs data bolstered bets for a December rate hike, keeping the pound buoyant throughout European hours. This kept EURGBP firmly on the backfoot, and today's sell-off has resulted in a break of support at 0.8463, Nov 3 low. The move lower has exposed the key support at 0.8403, Oct 26 low, where a break would confirm a resumption of the broader downtrend.
  • Plenty of action in emerging markets where USDTRY surged to new all-time highs at 10.4426, up well over 3% at one point. Despite a 1.3% reversal from this high print, price action continues to be very aggressive as we approach the CBRT decision on Thursday, with touted local demand exacerbating the price spike. USDZAR and USDCLP also rose over 1.5% amid the continued dollar strength.
  • Wednesday's data focus will be on UK and Canadian October CPI data. Markets will also be alert for crude oil inventories and another slew of Fed speakers throughout the US session.
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