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Initial Greenback Strength Reversed Into the Close

FOREX

Ahead of US hours, the USD index traded at multi-week highs as the mini-dollar recovery extended. This trend switched ahead of the 1600GMT WMR fix, however, with USD selling flow dominant to boost the likes of EUR/USD and GBP/USD back into the green ahead of the close.

  • This pressed the USD to the bottom-end of the G10 pile, providing some respite for haven currencies, although the USD pressure didn't stop USD/JPY inching higher to extend the current bullish sequence of higher highs.
  • Vols were subdued, with front-end implieds offered across G10 FX. GBP was the only exception, with curves holding their ground given the close proximity to last week's multi-year high.
  • Focus Wednesday turns to Australian GDP, final February PMI data and US ISM services index. Markets will be watching to see for further inflationary pressure after manufacturing ISM earlier in the week saw prices paid shoot to multi-decade highs.

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