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USD Index Opens Gap With Cycle High, Aids Broader Rebound in G10

FOREX
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  • The USD trades modestly softer, while antipodean currencies and commodity-tied FX extends a rebound off lows into the NY crossover. The USD Index is lower for a second session, opening a 0.6% gap with the cycle high posted earlier this week at 106.517.
  • USD/JPY's consolidation just below the cycle highs in recent sessions has prompted a minor unwind of the severely overbought condition, as detailed by the 14-day RSI - which touched 80 at the last session high, putting prices at the most overbought in 18 months. While the technical trend condition in USD/JPY remains positive, the next phase of strength could be harder to come by without another major shift in Fed policy pricing, as positioning looks stretched and diplomatic blockers to potential intervention appear to peel away - evident in the G7 statement overnight.
  • Australian jobs data overnight was mixed, as the unemployment rate rose at a slower pace than expected, however far fewer jobs were added over the period - sending mixed signals for RBA policy. AUD/NZD sits lower into the NY crossover, with yesterday's lows of 1.0861 acting as first support.
  • The data focus rests on weekly jobless claims ahead of existing home sales numbers for March. Central bank speak picks up, with Fed's Bowman, Williams, Bostic and Collins all on the docket, alongside BoE's Greene and ECB's Centeno, Simkus and Vujcic.
  • Policy divergence between the US and Europe/UK is likely to take the spotlight, as both the ECB and BoE look to prep markets for earlier local rate cuts relative to the Federal Reserve, which continues to push back on the timing of the first easing phase.
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  • The USD trades modestly softer, while antipodean currencies and commodity-tied FX extends a rebound off lows into the NY crossover. The USD Index is lower for a second session, opening a 0.6% gap with the cycle high posted earlier this week at 106.517.
  • USD/JPY's consolidation just below the cycle highs in recent sessions has prompted a minor unwind of the severely overbought condition, as detailed by the 14-day RSI - which touched 80 at the last session high, putting prices at the most overbought in 18 months. While the technical trend condition in USD/JPY remains positive, the next phase of strength could be harder to come by without another major shift in Fed policy pricing, as positioning looks stretched and diplomatic blockers to potential intervention appear to peel away - evident in the G7 statement overnight.
  • Australian jobs data overnight was mixed, as the unemployment rate rose at a slower pace than expected, however far fewer jobs were added over the period - sending mixed signals for RBA policy. AUD/NZD sits lower into the NY crossover, with yesterday's lows of 1.0861 acting as first support.
  • The data focus rests on weekly jobless claims ahead of existing home sales numbers for March. Central bank speak picks up, with Fed's Bowman, Williams, Bostic and Collins all on the docket, alongside BoE's Greene and ECB's Centeno, Simkus and Vujcic.
  • Policy divergence between the US and Europe/UK is likely to take the spotlight, as both the ECB and BoE look to prep markets for earlier local rate cuts relative to the Federal Reserve, which continues to push back on the timing of the first easing phase.