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FOREX: USD Index a Touch Softer as FOMC Approaches, EURJPY Above 50-Day EMA

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  • Initial gains for the greenback on Monday were short-lived, with the USD index slipping into negative territory. The DXY is down 0.2% as we approach the APAC crossover and higher equity indices in the US may be weighing at the margin.
  • Headlines surrounding the resignation of Canada’s finance minister Chrystia Freeland sparked some momentary CAD weakness, however, USDCAD has trade back to unchanged on the session around 1.4236 from a 1.4271 high.
  • Once again, the Japanese Yen is weakening, with USDJPY rising back above 154 and briefly reaching a recovery high of 154.48. The moves come amid the backdrop of media snippets suggesting the BoJ sees little risks in waiting for 2025 for its next policy move. Indeed, MNI has also highlighted the domestic political backdrop as a constraint on sharp policy shifts, diminishing the likelihood of a rate move later this week.
  • A firmer single currency has allowed EURJPY to rise a further 0.4%, piercing the 162 handle in the process. Gains today have seen the cross extend above the 50-day EMA, its first breach above the average since November 21.
  • GBP is an outperformer, rising against all others in G10 on the back of a better-than-expected UK Services PMI print, which has resultingly seen GBP/USD trade to a daily high of 1.2699. The release showed some similar themes to the EZ PMIs across the morning, with average prices increasing at the fastest pace for nine months, particularly in services. Dynamics may limit the potential for more dovish dissents at the BOE meeting this week.
  • UK labour market data highlights on Tuesday, before German IFO and ZEW sentiment data. Canadian CPI and US retail sales then highlight the North American data calendar.
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  • Initial gains for the greenback on Monday were short-lived, with the USD index slipping into negative territory. The DXY is down 0.2% as we approach the APAC crossover and higher equity indices in the US may be weighing at the margin.
  • Headlines surrounding the resignation of Canada’s finance minister Chrystia Freeland sparked some momentary CAD weakness, however, USDCAD has trade back to unchanged on the session around 1.4236 from a 1.4271 high.
  • Once again, the Japanese Yen is weakening, with USDJPY rising back above 154 and briefly reaching a recovery high of 154.48. The moves come amid the backdrop of media snippets suggesting the BoJ sees little risks in waiting for 2025 for its next policy move. Indeed, MNI has also highlighted the domestic political backdrop as a constraint on sharp policy shifts, diminishing the likelihood of a rate move later this week.
  • A firmer single currency has allowed EURJPY to rise a further 0.4%, piercing the 162 handle in the process. Gains today have seen the cross extend above the 50-day EMA, its first breach above the average since November 21.
  • GBP is an outperformer, rising against all others in G10 on the back of a better-than-expected UK Services PMI print, which has resultingly seen GBP/USD trade to a daily high of 1.2699. The release showed some similar themes to the EZ PMIs across the morning, with average prices increasing at the fastest pace for nine months, particularly in services. Dynamics may limit the potential for more dovish dissents at the BOE meeting this week.
  • UK labour market data highlights on Tuesday, before German IFO and ZEW sentiment data. Canadian CPI and US retail sales then highlight the North American data calendar.