EUROPEAN FX UPDATE: DXY continues its rebound ahead of front-loaded US data

USD: DXY +0.2%, 108.87

• Continuing the strength from Tuesday which was facilitated by the hot ISM Services PMI data and as JOLTS data topped analysts' forecast range.


• Prior comments from Fed's Barkin which provided very little new fresh insight.


• DXY re-approaches 109.00 to the upside (in a current 108.55-91 range) as it sets sights on the 6th Jan high (109.06) and then the 3rd Jan peak (109.22) before the current YTD high set on 2nd Jan (109.53).


• Attention now turns to the FOMC Minutes, ADP Employment and Initial Jobless Claims data.

EUR: EUR/USD -0.2%, 1.0319

• Attempted to regain some composure overnight after its slide beneath the 1.0400 level before feeling more pressure from the continued rebound in the USD.


• German data this morning consisted of mixed Retail Sales (YY +2.5% vs exp. +1.9%; MM -0.6% vs exp. +0.5%) and downbeat Industrial Orders (MM -5.4% vs exp. 0.0%), although for the latter, the main reason for the negative development in incoming orders in the manufacturing sector in November 2024 compared to the previous month was extensive large orders in other vehicle construction (aircraft, ships, trains, military vehicles) in October 2024; incoming orders in this sector for November were 58.4% lower M/M SA.


• EUR/USD resides in a 1.0319-57 range with downside levels including the 6th Jan low (1.0294).


• OPEX: EUR/USD: 1.0300 (235mln), 1.0350 (720mln), 1.0370-80 (665mln), 1.0385 (450mln).

JPY: USD/JPY +0.1%, 158.10

• Traded indecisively overnight and on both sides of the 158.00 level amid a quiet data calendar for Japan and the mixed risk tone.


• Similar price action in Europe with the current intraday parameter between 157.91-158.28, with the pair eyeing yesterday's highs (158.42).

GBP: GBP/USD -0.2%, 1.2447

• Subdued in tandem with G10 counterparts on the back of the stronger USD.


• Sterling struggled for direction overnight after reverting to the sub-1.2500 territory and amid a lack of fresh UK-specific catalysts.


• GBP/USD resides in a current 1.2441-94 range with the next downside level the 6th Jan low (1.2410).

Antipodeans: AUD/USD -0.2%, NZD/USD -0.2%

• Feeling pressure from the firmer greenback and in the absence of major newsflow this morning.


• AUD/USD was choppy following the latest monthly inflation data from Australia in which the Weighted CPI printed firmer than expected but the annual trimmed mean CPI softened from the previous.


• Capital Economics suggested that would provide greater confidence the RBA is on track to meet its inflation mandate if the result is replicated in the quarterly figures due later this month, and noted the data increases the risk that the RBA will begin rate cuts earlier than May.


• AUD/USD trades within 0.6213-42 and NZD/USD within 0.5619-41.

SEK: EUR/SEK +0.2%, 11.5155

• Modestly weaker after softer-than-expected consumer inflation metrics across the board.


• Following December's CPIF (cooler than expected) and the Minutes from the December meeting CapEco now expects the Riksbank to cut by 25bps in January (prev. exp. March).

08 Jan 2025 - 09:55- ForexData- Source: Newsquawk