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Pullback Considered Corrective


Holding Above Recent Lows


BLOCK, Large 3Y Midcurve Put Condor

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  • A small miss in monthly U.S. Core CPI weighed on the greenback on Wednesday. The dollar index looks set to end a three-day winning streak, after briefly matching the July highs at 93.19.
  • EURUSD fell just two pips shy of key 1.1704 support before the data and ends the day a quarter of a percent higher around 1.1750. While less than 50 pips away, this level marks an important support and potential inflection point, bolstered by 1.1685 just below, which represents the 38.2% Fibonacci for the 2020 - 2021 rally. Importantly, little resistance is seen until the 1.19 highs, matching closely with the 50-day EMA at 1.1899.
  • Overall dollar weakness aided gains across the entire G10 space with notable gains for AUD and NZD, rising 0.4% and 0.6% respectively, following a second consecutive day of gains for broad commodity indices. For NZDUSD, multiple highs between 0.7090-7105 will prove the next resistance.
  • The Norwegian Krone outperformed, rising 0.72% against the dollar, bolstered by a strong rebound in oil prices following the DOE inventories data.
  • A strong US 10-yr auction precipitated some additional marginal dollar weakness, however G10 ranges overall remain unimpressive. The following sessions may be significant in determining the medium-term direction in which we will see PPI, jobless claims and sentiment data. Next week, retail sales and the FOMC minutes will be released.
  • Thursday will see the UK report their preliminary Q2 GDP data at 0700BST.