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Softer Greenback Helps Kiwi Extend Gains

FOREX
  • Federal Reserve Chair Jerome Powell reiterated that the central bank would continue its accommodative monetary policy despite a spike in CPI data. He described the U.S. job market as "still a ways off" from the progress the Fed wants to see before reducing stimulus.
  • The dollar had been weaker in the lead up to the event and extended losses in the aftermath, in a fairly gradual and contained manner. The dollar index is 0.38% lower.
  • USDCAD had a very brief spell of volatility following the BOC decision, where they left rates unchanged and tapered weekly buying to C$2B as expected. After a brief slip to 1.2428, USDCAD aggressively reversed, rising to 1.2521 as little indication was provided that these strong inflation readings are forcing the bank to re-evaluate their monetary policy.
  • RBNZ inspired gains were extended in the Kiwi, the best G10 performer, rising 1.2% on Wednesday.
  • EURUSD crept back above 1.18 and continued to slowly unwind yesterday's retreat to highs of 1.1836. Initial firm resistance is at 1.1881, the July 9 high.
  • USDCNH had a flurry lower ahead of Powell's text release as lows from July 6th, 7th and 13th were all broken and the pair traded to the lowest level for a month. CNH held on to the majority of gains despite late negative headlines from the white house concerning US-China economic dialogue.
  • Australian Employment data and Chinese GDP overnight before the UK also publish their employment figures on Thursday.
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