The dollar's short-covering rebound fizzled on Thursday after disappointing U.S. jobless claims nL1N2FL1UK and Philly Fed nZON000MOI data blunted the previous session's Fed-inspired rise, lifting EUR/USD while sterling vaulted ahead.
Ten-year Treasury yields, which were already well off Wednesday's Fed minutes and poor-auction highs, only marginally weakened on the data, in part because of the unexpected drop in continuing claims and some seemingly hopeful news about a COVID-19 vaccine nFWN2FM0NS that also helped steady U.S. stocks.
The overbought and historically spec long EUR/USD pierced 10-day moving average support, but rebounded before testing the 21-DMA at 1.1792, that after Tuesday and Wednesday’s highs were rebuffed by the upper 21-day Bolli, last at 1.1944.
Rising COVID-19 cases in parts of Europe nL8N2FM3X8nL8N2FM4EZnS8N2CC0A3 -- though still well below U.S. levels -- and falling equities favored the haven Swiss franc and yen, while the disappointing U.S. data left the dollar down against all the majors, only managing gains against emerging market currencies caught in the wake of global risk-off flows.
Sterling outpaced the top three majors and even the haven Swiss franc and yen, with the bulk of the move coming from EUR/GBP losses spilling over into other currency pairs and decent GBP/USD demand ahead of the 21-DMA at 1.3045 nL1N2FM1GT.
Apparently there remains hope of a last-minute UK-EU Brexit deal, despite scant progress thus far.
USD/JPY’s recovery from Wednesday’s low was already capped by the 10-DMA before the U.S. data made the 106.215 high on EBS a harder hurdle to clear nL1N2FM1N6nL1N2FM0R1.
Fairly modest losses followed after that high, with the main influence being soggy Treasury-JGB yield spreads.
USD/JPY is close to its seasonal bottom over the past five years nL1N2FM1DV.
Risk-off flows and OPEC+ production cut shortfalls nL4N2FM0X1 weighed on oil, while gold and silver got haven bids and copper dropped on unease about the pace of the global recovery.
The primary focus on Friday will be August PMIs nL1N2FM11G as an early gauge of the global recovery.
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