USD Bounces, But No Sign of Bullish Reversal

Having proved particularly resilient despite the equity rally over the past few months, CHF finally lived up to its safe haven status and dropped as equities rallied Wednesday. The CHF was the poorest performer in G10, prompting USDCHF to rally well above the 0.91 handle. Buoyant equities pressured haven currencies, with the cash S&P 500 hitting a new alltime high for a second consecutive session (although futures are yet to follow suit).

The USD generally traded well, rising against most others in G10, but there are few signs of a bullish greenback breakout just yet. It's more likely position squaring and profit-taking in EUR/USD pre-FOMC were responsible. EUR/USD's fade off the cycle high has helped the USD index rise Wednesday for the first session in six.

The Turkish rate decision is due Thursday, with markets expecting the CBRT to keep rates unchanged at 8.25%, although a number of analysts eye rate hikes of as much as 175bps. USD/TRY traded heavy throughout the Wednesday session, with TRY strength accelerating on headlines that Turkey had found a sizeable natural gas discovery in the Black Sea.

Elsewhere on Thursday, weekly US jobless claims and German PPI data are the highlights.