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Significant Greenback Swings Amid Nuanced US Data

FOREX
  • Expectations for heightened volatility surrounding the releases of both US employment and ISM Services data were fully justified, with some significant two-way flows for the greenback on Friday. Despite the USD index remaining close to unchanged on the session, the DXY exhibited an impressive 1.2% intra-day range.
  • Broad greenback strength was seen as the with AHE and headline NFP dynamics biased markets in that direction. However, delving deeper into the figures significantly took the shine off the report, prompting a sharp reversal. This ensuing turnaround was then exacerbated by a lower-than-expected ISM Services Index and a particularly weak employment component.
  • The price action is perhaps best emphasised by movements in USDJPY, whose sensitivity to major US data was amplified once more. The pair continued to take advantage of a change in sentiment in 2024 during the morning session, rising back above 145.00 where it consolidated before the data.
  • Following the payrolls release, USDJPY traded as high as 145.97, an impressive 3.66% above the week’s lows. In the aftermath, however, the Japanese Yen recovered well and traded in lockstep with the reversal lower for US yields. Eventually, USDJPY hit a session low of 143.81 as short-term positioning was squeezed in the aftermath of the ISM Services figure. The pair rose around one big figure into the weekend close.
  • In G10, GBP was a marginal relative outperformer on the session and EUR sentiment remained a touch bearish. The developments were well received by emerging market currencies, with the likes of MXN and BRL rising around 0.5% on Friday.
  • German factory orders and Swiss inflation data kick things off next Monday, however, the focus on the docket will be Thursday’s release of US CPI.
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