USD Recoups Modest Ground Against Major Counterparts

It has been a relatively quiet end to the week, but not without event as the USD has recouped some (very) modest ground against its major counterparts away from the JPY. Strong retail sales figures and industrial and manufacturing data out of the US had a strong impact on EUR/USD in particular, which looked to be grinding higher for a retest of the upper 1.1100’s, but USD buying pushed the lead rate back under to consign the pair to ongoing range trade. USD/JPY has been pressing higher all week on Japanese stimulus expectation, but through 106.00, we have run into some decent selling, where exporters are seen all the way up to 107.00. Not quite overbought, but we have cover a little over 6 JPY in the space of a week, and the tiredness is showing. GBP has had a rocky ride courtesy of the BoE decision to keep rates on hold yesterday. The MPC did qualify Thursday’s decision with potential action in Aug, and it was this reiteration from Haldane early Friday which saw GBP gains reined in. Asia continued to push cable through to 1.3480 before the selling intensified and after a brief retest to 1.3440 on the subsequent dip, we have since traded back to sub 1.3300. EUR/GBP also looks to have bottomed out, but the EUR/USD pullback now weighing here also. AUD/USD saw a strong reaction post US data today, but continued attempts into the mid-upper .7600s are clearly proving a struggle – pre .7700 said to be well offered. CAD also running out of steam, again stalling in the mid 1.2800s. Oil prices have stabilised in the meantime along with general risk sentiment, so overall ranges here are much tighter. NZD/USD losses from .7300 now see .7100 under threat – AUD/NZD buying has contributed and looks to have been the major factor. Into next week and we have more UK data to look to – inflation, employment and retail sales all on the agenda, but it is the ECB meeting which will be the focal point, though expectations of any market moving impact are low despite Brexit considerations. Canadian CPI (and retail sales) at the end of the week.