FX Weekly Wrap: Dollar ending off worst levels, but still weak vs last Friday

DXY

The Index looks a bit more stable above 93.500 in wake of US industrial production data, as a back revision more than outweighed a small miss on the month in question. However, the Dollar is heading for weekly losses despite claims from President Trump that his tax reform bill will be passed early next week. Another dovish Fed hike and no material change to the dot plots has been the main Usd weight into the end of the week, but it was the Republican loss in Alabama and resultant narrower Senate majority that did the damage early on. DXY looks to be in a broader 94.000-93.000 range.

AUD/NZD

The 2 big gainers and sharply outperforming G10 peers on a combination of bullish data and less dovish if not hawkish Central Bank developments. In short, Aussie jobs data blew away the consensus, and with permanent placements accounting for some 2/3 of the 60k+ rise, while ex-RBNZ deputy Governor Orr will return as head at the end of March and is seen less inclined towards loose monetary policy. The antipodeans took turns to outpace each other through the week, but the Kiwi is Friday’s clear winner above 0.7000 vs the Greenback after better than expected NZ manufacturing PMI overnight. Aud/Usd stopped just shy of the 0.7700 level which is close to a tech resistance zone ahead of 0.7733.

CAD

Another Dollar that managed to break higher vs its US counterpart, and with the aid of the BoC as Governor Poloz said he was more confident about removing some stimulus, albeit not averse to allowing the economy to run hot for a while. Usd/Cad below 1.2800 at one stage and close to testing bids/support around the big figure below before the late Greenback reprieve on positive tax developments.

GBP

Sterling continued to reverse Brexit breakthrough relief gains during the course of the week, with UK key data largely ignored (even a CPI overshoot) as the BoE maintained dovish forward guidance after leaving rates unchanged, and phase 2 of the UK-EU divorce negotiations began formatively. On that note, PM May stated that the next stage of talks (transition and trade terms) will start right away, but the EU response is that the real business will not be discussed until March 2018. Cable down to the bottom end of the wider 1.3300-1.3550 range and Eur/Gbp above 0.8800 and a key 0.8805 chart pivot having traded either side on conflicting Brexit headlines.

EUR

Very rangebound between 1.1700 and 1.1800 vs the Usd, with rallies above the upper end quickly faded and large option expiries exerting influence along the way. The ECB meeting and President Draghi’s press conference prompted more volatile trade, but ultimately left the single currency weaker on no discussion about a fixed QE end date and inflation pressures still deemed to be muted.

JPY

Usd/Jpy also very confined, but veering towards the bottom of 112.00-113.00 parameters on safe-haven grounds and keeping tabs on some hefty option interest evenly spread. Further downside protected by big bidding interest at 112.00 and key DMAs below the figure (111.70 and 111.63).  

NOK

A marked change in the Norges Bank rate hike path (to Q3 next year from Q2 2019 previously) boosted the Krona vs the Eur, Usd and its Scandi peer the Sek.

15 Dec 2017 - 15:44- Forex- Source: ransquawk

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