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Sep 07 - 05:55 PM

EUR/USD - COMMENT-US Recap: EUR/USD Loses Ground But Claws Back From Claims-Fueled Lows

By Randolph Donney  —  Sep 07 - 02:45 PM

The dollar index rose on Thursday after an unexpected fall in U.S. jobless claims though it came off its highs as concerns about data distortions from the Labor Day holiday and as the main effects of this month's deluge of corporate bond market supply appear to have moderated.

EUR/USD fell 0.29% having recovered slightly from Thursday's 1.0686 low on EBS that neared the 76.4% Fibo of this year's uptrend at 1.0669.

Two-year bund-Treasury yields spreads rose 5bp, but they remain only about 15bp above this year's most negative levels as the stronger U.S. and weaker euro zone economies could continue to weigh on EUR/USD.

USD/JPY began NorAm trading weaker and slid further amid falling Treasury yields versus virtually motionless JGB yields and the threat of Japanese intervention to support the yen.

Traders were also put off by Thursday's new 2023 high at 147.875 on EBS barely beating Wednesday's 147.82 peak.

Two-year Treasury-JGB yields spreads fell 6bp.

Sterling was down 0.27% but had bounced off its low of 1.2445.

The deeper early losses followed the drop in U.S. jobless claims, which extended a previous slide that was fueled by tumbling UK house prices and a disinflationary BoE report on business expectations.

In the end, sterling's 200-day moving average at 1.2426 was left intact.

USD/CNH was up 0.3% after hitting its highest since November while USD/CNY rose to its highest since 2007.
Worries about China's economy and trade frictions with the West were aggravated by Beijing's widening curbs on iPhone use by government staff.

Beyond the throng of Fed speakers later on Thursday, Friday features Japanese labor, current account and GDP data as well as Canada's jobs report.
Next week's top event risks are U.S. CPI on Wednesday and the ECB meeting and U.S. retail sales on Thursday.

For more click on FXBUZ

Refinitiv IFR Research/Market Commentary


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