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USD Loses Ground Against Its Major Counterparts

Published 08/23/2016, 10:41 AM
Updated 07/09/2023, 06:31 AM

Once again, today was a relatively light session in terms of newsflow as summer-induced thin volumes and positioning ahead of Fed’s Yellen speech on Friday dictated the state of the play. As European participants entered the fray, the USD had lost ground against its major counterparts amid bets that Fed Chair Yellen could be non-committed at the Jackson Hole Symposium.

Furthermore, softness in USD was also exacerbated by selling pressure in USD/JPY, which approached the 100.00 level and momentarily wiped out all the gains seen since Kuroda's dovish comments over the weekend.

This continued throughout the early stages of the European session to see USD/CAD break below 1.2900, while EUR/USD and GBP/USD moved above 1.1350 and 1.3200 respectively, with the latter moving above the level for the first time since early August.

Elsewhere, one of the main movers from the overnight session was NZD, one of the standout performers after reclaiming 0.7300 following comments from RBNZ Governor Wheeler who warned against rapid rate cuts and stated rapid easing is unnecessary, with NZD managing to hold on to gains throughout the session.

Thereafter, FX markets were relatively steady ahead of US manufacturing PMI and new home sales. In terms of the data, it was somewhat of a mixed picture for the US economy, with manufacturing PMI (52.1 vs. Exp. 52.7) falling short of expectations and showing employment growth at its slowest pace in 4 months, while US new home sales saw a significant beat on the headline (12.4% vs. Exp. -2.0%), with this month’s report being offset by downward revisions to the prior.

Looking ahead to tomorrow, participants will have the opportunity to digest the latest US existing home sales and DoE inventories, which often have the propensity to move commodity-related currencies, particularly CAD.

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