USD's Sharp Bounce Counters Month-End Flows

With markets primed for sizeable USD sales into the month-end Friday fix, it seems much of the flow had been worked through already as the greenback enjoyed a rare bounce into the close. The USD index rose Friday for just the 2nd session in 11, boosting the greenback to be the best performer in G10.

EUR's price action Friday reflected the moves in JPY and USD - early EUR/USD strength resulted in new cycle highs of $1.1909 but the pair quickly faded during NY hours as the greenback recovered. The bullish theme remains intact, however, following the breach of the Mar 9 high and Friday's pullback may relieve some of the overbought technical signals that had plagued the impulsive rally. Next resistance sits at $1.1978, with support at $1.1731.

The USD's gains came at the expense of the JPY, which erased early Asia-Pac outperformance to slip sharply to the bottom of the G10 pile. Selling pressure came in spite of the downside in European and US equities, which look to clock a disappointing July after the firm performance in prior months.

CAD traded well, rising against most others as GDP data fared slightly better than expected. Canadian GDP grew 4.5% over May vs. Exp. 3.5%. EUR/CAD pulled off cycle highs at 1.5979 upon release.

Focus in the coming week turns to ISM data for July, the US and Canadian jobs reports and rate decisions from Australia, Brazil, the UK and India.