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Poorly Received 7-Year Auction Tilts USD Index Into Positive Territory

FOREX
  • A continued push higher in treasury yields after the poorly received 7Y auction has seen a moderate recovery for the greenback on Thursday, with the USD index rising around 0.3% as we approach the APAC crossover.
  • While the majority of major pairs have exhibited a more grinding price action, tilted in favour of the greenback, USDJPY has had a particularly volatile session which appears to have been exacerbated by holiday-thinned liquidity and potential month/year-end dynamics.
  • Importantly, the pair’s early weakness saw a clearance of support at 140.97, the Dec 14 low, which confirms a resumption of the downtrend that started Nov 13. Following the break, the pair traded down to within two pips of the next technical target at 140.23 (Fibonacci projection of Nov 13-21-22 price swing). Since then, USDJPY has had an impressive bounce, closely coinciding with the WMR fix and the potential flows relating to month/year end. The poorly received UST auction has enabled USDJPY to reestablish itself back toward 141.50 with initial firm resistance much further out at 144.15, the 20-day EMA.
  • A very notable outperformer is the Swiss Franc on Thursday, with EURCHF extending a breakout below the 2022 lows at 0.9410 and gaining momentum below the 0.9400 handle. The cross is currently consolidating just north of the 0.9300 mark, however, did briefly trade to a low of 0.9258 which represents the lowest level since the SNB removed the floor in January 2015.
  • The Norwegian krone fell around 1% against the dollar, its largest intraday drop since Dec. 4, as the greenback advanced and pressure was seen on oil prices. WTI crude futures fell to the lowest level since Dec. 18 amid slightly eased shipping concerns in the Red Sea and despite a larger than expected draw in US oil inventories.
  • A light end to the 2023 calendar with just Spanish CPI data and the MNI Chicago Business Barometer on the docket.
Energy BulletsCommodities
Energy BulletsCommodities

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