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Greenback Trades On Surer Footing Ahead Of Jobs Data

FOREX
  • Despite the dip lower for the USD index on Wednesday, today’s trading session provided a more favourable environment for the greenback, with the DXY advancing around 0.7% to trade back above 105 for the first time since December 13.
  • Leading the G10 currency weakness were the Australian dollar and GBP, both declining over 1%.
  • AUD underperformance largely a result of a tempering of yesterday’s significant rally where AUDJPY advanced the best part of 3%. Option interest has taken focus here, with sizeable expiries rolling off at the 0.6800 handle for AUDUSD at both today's and tomorrow's NY cut.
  • USDJPY extended its recovery from the 129.50 yearly lows to over 450 pips, briefly trading to a high of 134.05 amid the broad USD strength. This placed the currency between two initial resistance points of the 20-day EMA at 133.85 and the more significant level of 134.50 High Dec 28 and key resistance. Price has since moderated back toward 133 with the pair posting an impressive 235 pip range the day before payrolls.
  • Headlines surrounding a possible one-day ‘christmas’ truce from the kremlin were largely dismissed and the Euro maintained a heavy tone throughout the trading day, briefly making a new low on the week below 1.0520. Ahead of tomorrow’s US data, it is worth noting that key short-term support remains at 1.0443, the Dec 7 low, with the pair’s recent downturn being considered technically corrective.
  • USDCNY has continued its downward momentum with the Chinese Yuan strength extending since the turn of the year amid the relaxation of domestic covid curbs. USD/CNY touched new multi-month lows on Thursday and is now within realistic range of the 6.8294 200-dma for the first time since April last year.
  • Focus on Friday will be on Eurozone inflation data and then the US jobs report. The Bloomberg median sees nonfarm payrolls rising 200k in Dec after another stronger than expected +263k in Nov.
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