US FX WRAP: Dollar recoups some of its Wednesday's losses as JPY lags

Analysis details (20:54)

The Dollar Index was firmer on Thursday and hit a high of 104.620, attempting to recoup some of its post-CPI and retail sales losses where it saw a low of 104.070. There was a slew of data, nothing changed the dial too much. As a brief recap, import and export prices rose more than expected, while initial jobless claims edged lower but well within recent ranges, and Philly Fed disappointed with internals mixed. Industrial production was flat. On the Fed footing, Goolsbee (non-voter), Williams (voter), Barkin (voter), and Mester (voter) were on the wires, with Williams noting April CPI was a "positive development", optimistic inflation will continue to retreat, still lacks confidence inflation moving sustainably to 2%, and doesn't see need for a "near term" rate cut or hike. The calendar on Friday is very quiet as participants await the next catalyst, arguably FOMC Minutes, Nvidia earnings, and Core PCE. 

JPY and CHF were the G10 underperformers against the Buck, although only noticing slight losses. USD/JPY hit a peak of 155.52 vs. an earlier trough of 153.61. Overnight, Japanese Q1 GDP declined marginally more than forecasted, but Annualised was much greater than anticipated. The Japanese weakness came despite the Yen being one of the main beneficiaries of Wednesday's post-data Buck weakness with the move higher in yields.

Antipodeans were mixed. NZD was flat while AUD saw slight losses vs. the Greenback, paring some of Wednesday's gains. Overnight, Australian unemployment unexpectedly ticked higher to 4.1% (exp. 3.9%, prev. 3.8%) while they added 38.5k jobs to the economy (exp. 23.7k, prev. -6.6k). NZD/USD and AUD/USD traded between 0.6096-6140 and 0.6655-6714, respectively.

CAD, GBP, and EUR have seen ever-so-slight losses on account of the broader Buck recovery, as opposed to anything currency-specific. Nonetheless, EUR/USD ran out of steam ahead of 1.09, printing a high at 1.0894. ECB speakers provided little movement, however, Centeno, who tends to sit at the dovish end of the spectrum, stated a preference for gradual rate cuts. GBP held onto a bulk of Wednesday's notable gains. Cable went as high as 1.2700 but failed to breach above the level. If Cable manages to resume its ascent higher and breach 1.27, the April high sits just above at 1.2709. Comments from BoE's Greene highlighted that data released ahead of the June meeting will give a clearer indication of how far along the "last mile" the MPC has come.

EMFX was mixed. Yuan and MXN were flat, BRL, ZAR, and CLP saw gains, while the COP was lower. For the Real, Brazil Finance Ministry upped its inflation forecasts, with 2024 now seen at +3.7% (prev. +3.5%), and 2025 at +3.2% (prev. +3.1%). For GDP, 2024 is seen higher at +2.5% (prev. +2.2%), but 2025 was left unchanged at +2.8%.

16 May 2024 - 20:54- Fixed IncomeData- Source: Newsquawk