USD Probing Higher As ADP Adds To Fed Hike Expectations

Daily FX Wrap: USD still probing higher as ADP ‘adds’ to Fed rate hike expectations – JPY and CAD paths of least resistance. More n/t support for GBP.

Another active session in FX, and one where we continue to see the USD making fresh gains across the board as US data reads underpin rate hike expectations suggested at Jackson Hole last week.

August ADP earlier today was the focus, and coming out in line with expectations, the upward revision for Jul added encouragement to USD bulls.

The JPY and CAD look to have been the paths of least resistance in this respect; the former on recent talk out of Japan (Hamada) that intervention is justified, as is further BoJ action, while the latter has been weighed by oil prices, which were given a fresh push lower today after the DoE report showed a larger than expected build in crude, which was also greater than that reported in the API last night.

USD/JPY has met resistance just above the 103.50 mark, while USD/CAD gains have stalled in the mid 1.3100’s, but both pairs have travelled some way already in recent sessions, and are showing some near term exhaustion.

Canadian GDP over Jun up 0.6%, but qoq annualised painted a different picture. Elsewhere, the EUR came under attack vs both the USD and GBP, but the spot rate has run into a bank of buy orders just above the 200dma (circa 1.1120), which as yet remains intact.

EU inflation soft, as suggested by the German data yesterday. EUR/GBP has pushed below .8500 again, but so far, .8470 is holding for now.

This is giving cable a near term bid under 1.3100 and ahead of 1.3050, but plenty of sellers north of 1.3150. AUD/USD has taken out .7500, but losses against the NZD are attracting more attention, with the cross rate now printing lows just under 1.0350.

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