Sterling Stars Again Before Weak US Data Hits the Dollar

It was a bit of a strange trading day on Friday, initially we were hit with another missile launch over Japan from North Korea which many thought would lead to a big risk off move in line with the previous market reaction, but the early dip was bought into and the market shook off the threat well. The UsdJpy rose from a post missile low around 109.50 to a high at 111.32 prior to the US data.

The main move of the day came in the UK session as we got further Hawkish indications from the MPC, as known ‘dove’ Vlieghe commented that he see’s a rate hike may be needed in the coming months. This saw the Sterling surge against the dollar and crosses with the cable once again making fresh highs for the year and approaching the 61.8% of the pre Brexit high – flash crash low at 1.3655.

Later in the US session we saw the dollar drop off after retail sales numbers in the US came out worse than expected along with Industrial production figures, this led to a sell off in the Dxy and pulled UsdJpy back from it’s resurgent highs.

Looking ahead and it’s much quieter this week in terms of fundamental data releases although we do have the blue riband event with the Fed meeting on Thursday morning. That will be the real focus of the week, however, we will hear from other central banks with the RBA’s meeting minutes out tomorrow and the BOJ meeting on Thursday afternoon.

For today, it’s a holiday in Japan so expect more range bound markets for the Asian session with little out to inspire us in the London and New York. However, traders will still maintain a close watch on the news wires as they have been providing a lot of the catalysts for the big moves in recent weeks.

Rakuten Securities Australia Review