FOREX: USD Index Only Modestly Lower, Holding Bulk of Post-NFP Advance
Jun-09 09:18
- The Dollar index sits moderately lower on Tuesday, reflective of President Donald Trump saying on Tuesday that he was in the "final throes" of reaching a peace deal in the Middle East. While the cross-asset impact is displaying this renewed cautious optimism, the greenback adjustment has been relatively small. The DXY remains within 30 pips of yesterday’s recovery high as the market continues to digest the strong US data and increased chances of a fed hike this year.
- Lower energy prices and higher equities have assisted NZD back firmly above 0.5800 following the aggressive reversal last week that saw NZDUSD erode the entirety of the post RBNZ advance.
- Sterling also outperforms today after yesterday’s GBPUSD low print came within 3 pips of the key support at 1.3303, the May 18 low. The pair has drifted back to 1.3380 ahead of the NY crossover.1.33 will remain in focus ahead of June 18 which remains a pivotal date for GBP, given it is the BOE meeting and the Makerfield by-election, with added potential to stoke political and fiscal uncertainty in the UK.
- USDJPY has traded in a tight overnight range, consolidating above the 160.00 mark. Despite last month’s intervention, spot remain uncomfortably close to pre-intervention highs of 160.72. Positioning and price action signals the market's doubts around the ultimate feedthrough of the MOF’s efforts.
- Separately, the BOJ will consider halting its quarterly reductions in bond buying from April 2027 according to matching overnight sources reports, with an updated plan to be laid out at next week's meeting alongside an expected rate hike.
- ADP Weekly Employment Change, trade data, existing home sales, and wholesale trade are scheduled in terms of data. ECB's Moulin is scheduled to appear but is unlikely to speak on monetary policy as per the ECB's pre-decision quiet period; the FOMC also remains in blackout.
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