USD Buying Gathers Momentum

Published 08/30/2016, 10:53 AM
Updated 07/09/2023, 06:31 AM
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After a quiet start to the day where markets returned to full strength on the return of London, we saw USD buying gathering a little momentum later in the day, though into the European close, notable resistance levels started to kick in and temper some of the moves in the major pairings.

USD/JPY looked to be leading the way early on, bolstered by comments from PM adviser Hamada that the MoF should make good on their intervention threats if the JPY continues to strengthen. As we pushed through 102.40-50, better than expected US consumer confidence added fuel to the fire, pushing spot into the 102.75-103.00 resistance zone, but stopping well short of the topside limits for now.

EUR/USD pressure was exacerbated by softer German inflation and lower EU sentiment indices, as well as real money flow going through in EUR/GBP, with the latter cross rate dipping under .8500 and still looking vulnerable. EUR/USD tested through 1.1150 after much work, but has stopped 5-10 ticks short of its respective support levels ahead of, while GBP/USD has been elevated back through 1.3100 but with limited progress. UK borrowing stats for Jul were much weaker than forecast, but discounted due to the Brexit factor.

The Canadian current account deficit narrowed while Jul PPI rose 0.2%, but USD/CAD was only heading one way, and still eyeing a move on 1.3100 despite relatively steady oil prices (albeit buoyed by OPEC hopes). AUD and NZD have both been pressed back towards .7500 and .7200 respectively, but both figure levels holding up for now, but AUD/NZD now testing 1.0400 again.

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