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Greenback Under Pressure, JPY and CHF Outperform

FOREX
  • Broad dollar indices lost ground on Friday on the back of weaker import price index data and a sharp drop in University of Michigan sentiment data.
  • The dollar index (-0.56% as of writing) had been on the backfoot, approaching the post CPI lows before the data, however the releases exacerbated the weakness, with the index sharply extending to the lowest levels of the week.
  • Notable advances were seen in historically safe haven currencies with the Japanese Yen and Swiss Franc seeing particular strength.
  • USDJPY (-0.72%) continued to trade with a heavy tone, extending losses for the week sub 110.00, hovering just above 109.50. Initial support not seen until 108.72, before more significant support at 108.47, a Fibonacci retracement.
  • USDCHF (-0.86%) reversed aggressively almost back to unchanged on the week after a strong breakout, initiated last Friday following the payrolls data. The pair may look to 0.9120 previous lows for some short-term support.
  • Elsewhere gains in line with the magnitude of DXY weakness were seen for GBP, AUD, NZD and NOK.
  • The laggards were the Chinese Yuan and the Canadian Dollar, unable to benefit from the USD weakness.
  • Attention will likely turn towards next week's US retail sales report as well as the latest set of FOMC minutes. The RBNZ will also meet where they are expected to raise the official cash rate to 0.5%. Additionally, the UK and Canada will report July CPI data.
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