The positive reaction for the dollar from yesterday’s Fed was very short lived as the FX markets returned to it’s recent patterns and sold the dollar across the board throughout the last couple of sessions. We open the Asian session with the Usd sitting once again near recent lows, the Dxy is trading just 20 points above its January low at 88.64 and the Euro is only 30 points away from it’s 1.2537 high.
The commodity currencies are also still looking sprightly against the greenback with Cad and Kiwi close to range extremities, although the Aussie is struggling with Wednesdays worse than expected CPI print still weighing on the currency, especially on the crosses. Numbers out of the states last night were actually quite mixed but this didn’t deter the doubters in currency land and any rallies in the dollar were just considered better levels to sell.
There was a different story across the other markets as we had a bit of mixed bag in the equities with more of a leaning towards the downside and in the treasuries we saw 10y UST’s trading higher again up to 2.78%.
Today is all about the Non Farm Payrolls, but we’ve still got a good 14 hours of trading to go before then and with a few currencies sitting close to extreme levels it wouldn’t surprise me if we see some stop loss runs to clear the books before the big number. There’s little else out today to bother the scorers, especially in the Asian session, but we do have the UK Construction PMI numbers due early in the London session although expect the reaction to be short lived as traders turn their focus swiftly back to the big event. The expectation is for a 181k print in the main number but once again there will be as much interest in the Hourly Earnings data (exp 0.2%) as we look for signs of inflation coming into the economy – strong numbers to the topside of both could see a good turn in the currencies and possibly the start of a change in dollar sentiment.
Subscribe to RSA's FX Insight and get access to our daily market commentary.
If you have any questions or queries, please contact the team at info@sec.rakuten.com.au or visit our website.