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USD Index Set Close At Five-Week Highs, GBP Plummets

FOREX
  • Broad greenback strength that built momentum late Thursday has extended into Friday’s trading session. The USD Index (+0.55%) looks set to close above 1.08 at a five-week high after advancing around 2.3% this week.
  • As the US Dollar rally gathered pace, notable moves down in NZD (-1.37%) and GBP (-0.94%) gained traction throughout the day.
  • The Kiwi was largely playing catch up to the dollar move after relatively outperforming on Thursday. Weaker domestic trade figures and retreating equities, however, weighed on the local currency which has also seen AUDNZD rally back above 1.11, closing in on the August highs.
  • The UK’s higher than expected retail sales data did little to cast aside the UK's bleak growth prospects. The break of 1.2000 in cable has seen significant follow through, while underpinning the EURGBP bid that sees the cross rising close to a half a percent.
  • GBPUSD briefly pierced the 1.1800 mark in late trade on Friday and technical focus is on the cycle low from July at 1.1760, which is also the bear trigger. Below here we have 1.1673, the 1.00 projection of the May 27 - Jun 14 - 16 price swing.
  • In similar vein, the higher US yields prompted USDJPY to print fresh highs for the week at 137.23 before moderating around 30 pips ahead of the close.
  • EURUSD price action remains heavy and despite consolidating in European trade around 1.0075, the pair has slowly grinded south since, gravitating towards parity. Overall, both fundamental and technical prospects for the Euro remain weak with eyes on 0.9952, the Jul 14 low as the key bear trigger.
  • A very light data docket on Monday will place focus on Tuesday’s release of European Flash PMIs.
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