Daily FX Wrap: USD goes on another ramp to – JPY rate through key resistance zone to high highs just shy of 113.00 while the EUR now targets 1.0500.
Today’s session was set to be focused on the pound, with the UK Autumn Statement in focus and the pound accordingly. However, it was the USD which moved – seemingly behind the scenes, with a sell off in Gold and Treasuries leading to a sharp move higher in USD/JPY which is still pushing for better levels and now eyeing a move on 113.00.
Plenty of stop losses have been tripped along the way, with plenty of calls for a USD correction, but none forthcoming. EUR/USD selling has gathered pace as a result and is now targeting 1.0500, where barrier defence and range limits are set to produce some decent demand, but the momentum is with the sellers. Trade may start to thin out post London as pre Thanksgiving holiday profit taking may take hold.
USD/CHF got to within 25 ticks of the 1.0200 target, but this USD demand is all on expectations that the fed are set to embark on a series of rate hikes through 2017, with a 25bp move in Dec priced in by a little over (!) 100% at one stage yesterday. US durable goods orders were very strong to add to the USD rally, but this is a notoriously volatile series which is usually ignored.
10yr yields have now printed 240bps, and we are now 10bps off the highs seen in Jun 2015! In GBP itself, EUR/GBP has been dragged back to .8500 – and just under, while the 1.2400 Cable pivot has been instrumental either side of UK Chancellor Hammond’s statement.
Infra structure spending and OBR forecasts, which were revised lower as expected, along with the corporation tax rate cut to 17% were all part of the fiscal stimulus deemed necessary in these ‘uncertain’ times. In the USD ramp, the commodity currencies still fared well, with notable gains in Copper helping to stabilise AUD/USD which saw minimal deviation from .7400.
USD/CAD spiked above 1.3500, but is still best placed for a retest higher once the USD catches its breath. NZD/USD based out around .7000, and also saw limited volatility in today’s Treasury rout.