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Initial Greenback Weakness Reverses Course, JPY Remains Outperformer

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  • US PCE inflation came in close to estimates on Thursday, leaving the greenback victim to weaker-than-expected US jobless claims figures, as well as a below-estimate MNI Chicago PMI. The USD index was quick to erase moderate gains and trade to a fresh session low of 103.66 right ahead of the month-end WMR fix.
  • However, with month-end positioning potentially well telegraphed, the greenback had a sharp squeeze into 1600 GMT and continued its reversal higher in the immediate aftermath. The USD index briefly extended its intra-day bounce to 0.5%, before trading a tenth lower into the APAC crossover.
  • Despite the late recovery for the greenback and USDJPY, the Japanese yen remains the standout performer on Thursday, largely on the back of the overnight hawkish commentary from BOJ’s Takata, who pointed to the Bank's inflation target being within sight.
  • USDJPY traded as low as 149.21 from the overnight 150.70 highs, although the pair trades mid-range in recent trade, supporting the viewpoint that dips remain corrective at this juncture. Initial support lies at 149.63, the 20-day EMA - a level pierced, but not convincingly broken on Thursday.
  • Elsewhere, the likes of EUR and GBP have fallen around a quarter of a percent, and the Swiss Franc scans as the weakest in G10, with USDCHF rising to a two-week high above 0.8840.
  • Overnight, RBNZ Governor Orr may speak again about the Monetary Policy Statement in Christchurch, however, focus will be on Chinese manufacturing and non-manufacturing PMI’s. Eurozone CPI then takes centre stage before US ISM Manufacturing PMI rounds off the week’s tier-one data.
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  • US PCE inflation came in close to estimates on Thursday, leaving the greenback victim to weaker-than-expected US jobless claims figures, as well as a below-estimate MNI Chicago PMI. The USD index was quick to erase moderate gains and trade to a fresh session low of 103.66 right ahead of the month-end WMR fix.
  • However, with month-end positioning potentially well telegraphed, the greenback had a sharp squeeze into 1600 GMT and continued its reversal higher in the immediate aftermath. The USD index briefly extended its intra-day bounce to 0.5%, before trading a tenth lower into the APAC crossover.
  • Despite the late recovery for the greenback and USDJPY, the Japanese yen remains the standout performer on Thursday, largely on the back of the overnight hawkish commentary from BOJ’s Takata, who pointed to the Bank's inflation target being within sight.
  • USDJPY traded as low as 149.21 from the overnight 150.70 highs, although the pair trades mid-range in recent trade, supporting the viewpoint that dips remain corrective at this juncture. Initial support lies at 149.63, the 20-day EMA - a level pierced, but not convincingly broken on Thursday.
  • Elsewhere, the likes of EUR and GBP have fallen around a quarter of a percent, and the Swiss Franc scans as the weakest in G10, with USDCHF rising to a two-week high above 0.8840.
  • Overnight, RBNZ Governor Orr may speak again about the Monetary Policy Statement in Christchurch, however, focus will be on Chinese manufacturing and non-manufacturing PMI’s. Eurozone CPI then takes centre stage before US ISM Manufacturing PMI rounds off the week’s tier-one data.