FOREX: US Dollar Extending Lower, EUR & JPY Lead Gains
Sep-16 09:12
- Following a similar theme to Monday’s session, the USD index is down 0.2% today, extending its grind lower to reach the lowest levels since early July. The index is now within 1% of the multi-year lows as we approach tomorrow’s Fed decision, which reside at 96.38. Continued strong performance for major equity indices and the more activist approach to Fed personnel management from the White House are providing greenback headwinds.
- In slight contrast today, it’s the majors which are outperforming, led by the likes of EUR and JPY. This has prompted a EURUSD (+0.40%) print above 1.18, as the pair narrows the gap to the cycle highs and key resistance at 1.1829. Clearance of this hurdle would confirm a resumption of the primary uptrend and immediately target the Sep 10 2021 high at 1.1851.
- Unsurprisingly, action has been centred around the Japanese yen, with USDJPY trading a 146.70-147.54 range already on Tuesday. The Yen was supported overnight by agricultural minister Koizumi’s intention to run for LDP leader. Finance Minister Kato is set to run his election campaign, providing a more hawkish (with respect to both fiscal and monetary policy) option compared to opinion poll leader Takaichi. USDJPY has subsequently settled back at 147.00 and key short-term support to watch remains at 146.21, the Aug 14 low and a bear trigger.
- In line labour market data from the UK has allowed GBP to continue its ascent against the dollar this morning, following yesterday’s breach of key resistance at 1.3595. The break strengthens bullish conditions and opens 1.3681, the July 4 high.
- It’s worth highlighting that AUDNZD briefly broke to the highest level since 2022 at 1.1191, however, momentum quickly stalled with the cross reversing back to 1.1160. New Zealand GDP is due Thursday local time, shortly before Australian employment data for August.
- Today’s focus will be on US retail sales and Canada CPI data, with US import prices and industrial production also scheduled.
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AUSSIE 10-YEAR TECHS: (U5) Follows Fade in Treasuries
Aug-15 22:15
- RES 3: 96.501 - 76.4% of the Mar 14 - Nov 1 ‘23 bear leg
- RES 2: 96.207 - 61.8% of the Mar 14 - Nov 1 ‘23 bear leg
- RES 1: 95.960 - High Apr 7
- PRICE: 95.710 @ 15:17 BST Aug 15
- SUP 1: 95.415/95.300 - Low May 15 / Low Jan 14
- SUP 2: 95.275 - Low Nov 14 (cont) and a key support
- SUP 3: 94.707 - 1.0% 10-dma envelope
Aussie 10-yr futures received a boost from the US Treasury rally that followed both the recent poor NFP print as well as Tuesday’s inflation number. While this impact faded into the close of the week, 10-year futures remain toward the top end of the recent range. To the upside, next resistance is at 96.207, a Fibonacci retracement point. Next support undercuts at 95.420 (pierced), the Feb 13 low, ahead of 95.275, the Nov 14 low and a key support. Clearance of this level would strengthen a bearish condition.
FOREX: USD Index Pinned to 50-dma as Putin Shakes Hands with Trump
Aug-15 20:49
- USD slipped against all others Friday, with a poor set of retail sales and Uni of Michigan sentiment numbers meeting a higher-than-expected import price index to further stimulate concerns over a stagflarionary phase in the US economy. The USD Index trades either side of the 50-dma which, notably, has begun to flatten out after maintaining a solid downtrend throughout 2025.
- JPY is the strongest currency in G10, extending the breakout and bearish conclusion of the consolidation phase in USD/JPY. Recent weakness puts the price through support drawn off the early August lows as well as 146.71, a key retracement. Price action this week marks a full reversal of the previously overbought condition, keeping the downside argument in focus.
- Anticipation ahead of the Putin-Trump meeting has reached fever pitch. Footage showing the Presidents shaking hands in Alaska has helped ease concerns over a hostile meeting, but it's the outcomes that will matter to markets - particularly as equities hold at alltime highs. Any signs of progress toward a ceasefire would be warmly received by risk sentiment - although both Trump and Putin cautioned against a optimistic outcome in comments to press.
- We noted earlier in the week the pressure building on USD/HKD, with price action not matching the pattern of HKMA intervention. That move extended overnight, and is still building at typing, putting spot down to new pullback lows of 7.8119 shortly after the European open. Overnight swap rates have surged further still Friday (hitting 1.7% at typing), well ahead of the 0.3% prevailing rate mid-week and should continue to support a recovery in HIBOR fixes ahead. Today's 1m HIBOR fixed higher by 41bps, hitting 1.45% for the highest fix since mid-May. It's these factors that should work against the HKD carry trade (selling HKD, buying USD), evident in the further tightening of the HKD forward discount today: down 975 points from as high as 1270 this month.
- Focus in the coming week shifts to Jackson Hole and Powell's comments on Friday. With the September meeting still in flux - any conviction toward tipping the board toward a rate cut at the next FOMC will be carefully watched, but it's a hawkish outturn that could be more consequential for markets, as OIS prices a near 90% chance of easing on September 17th.
MNI: US TSY TICS NET FLOWS IN JUN +$77.8B
Aug-15 20:00
- MNI: US TSY TICS NET FLOWS IN JUN +$77.8B
- US TSY TICS NET L-T FLOWS IN JUN +$150.8B
