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USD Falters as Weekly Claims Rise at Fastest Pace in 8 Months

FOREX
  • EUR/GBP rallied sharply Thursday, reasserting the bullish theme in the cross as prices topped the 200-dma of 0.8605, opening key resistance at the mid-April highs of 0.8645. The cross gained on the back of the BoE rate decision, at which markets read dovish themes from Ramsden joining Dhingra in voting for a rate cut, a soft 3yr CPI forecast at 1.6% and accompanying phrasing from the BOE governor Bailey, who stated that inflation and the economy are "moving in the right direction".
  • Elsewhere, the dollar flipped from being the best performer in G10, to the worst, on the back of a higher-than-expected initial claims read. Initial jobless claims rose by 231k vs. Exp. 212k - with market sensitivity rising after Fed chair Powell flagged labour market data as key for the policy outlook.
  • Cross buying in EUR/GBP and a poorer USD helped press EUR/USD to new weekly highs. Despite the softening USD, most major pairs are within recent ranges, leaving notable resistance/support untroubled for now. The EUR/USD rally puts spot within range of a more sizeable option strike rolling off tomorrow at $1.0825(E1.1bln).
  • The move also provides some relief for USD/JPY, which has failed the test on Y156.00 overnight to reverse back to flat through the London close.
  • Focus for the Friday session turns to the prelim Q1 UK GDP release, industrial and manufacturing numbers ahead of the Canadian jobs report for April and the prelim University of Michigan sentiment release. Central bank speak remains thick and fast, with appearances from ECB's Cipollone & Elderson, BoE's Pill & Dhingra and Fed's Bowman, Logan, Kashkari, Goolsbee and Barr.
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