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USD Index Slips As Equities Resume Rally, AUD and NOK Outperform

FOREX
  • The USD index is 0.3% lower on Friday amid front-end US yields shifting lower and major US equity benchmarks extending too fresh record highs. However, the DXY remains close to unchanged on the week, having traded in a tight 0.7% range, which appears to be in keeping with one-month implied vols for the index remaining close to two-year lows.
  • Equity outperformance is benefitting the higher beta currencies in G10, in particular the Norwegian krone and the Australian dollar are the standouts, rising 0.96 and 0.52% respectively.
  • For AUDUSD, trend signals remain bearish and a clear break of the 50-day EMA, at 0.6567 is required to suggest scope for a stronger recovery. On the downside, the bear trigger lies at 0.6443, the Feb 13 low.
  • A volatile 48 hours comes to a close in USDJPY, with the pair hugging tight to the 150.00 figure. Price action overnight saw the pair erase the entirety of Thursday’s move lower which was fuelled by some renewed verbal intervention calls from BOJ officials. After printing a low of 149.21 shortly before February’s month-end fix, the pair rallied to 150.71 on Friday, however, the greenback weakness sapped any further topside momentum. The bull trigger is 150.89, Feb 13 high.
  • Swiss CPI highlights the docket on Monday next week and is made slightly more interesting by today’s announcement that SNB’s Jordan will be stepping down this year and as EURCHF prints fresh three-month highs.
  • Elsewhere next week, there will be central bank decisions from the ECB and BOC, a UK budget and the March employment report from the US.
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