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USD Brushes Off Soft Retail Sales

USD Brushes Off Soft Retail Sales

Daily FX Wrap: Despite the list of event risk today, FX markets remain well contained. Modest GBP weakness post BoE; USD brushes off soft retail sales.

Given the list of data and events, Thursday failed to live up to its promise, as conservative central banks keep the respective currencies in check by giving very little away. The BoE delivered an unchanged rate decision, with the vote split as expected (9-0 on all counts), but in the minutes, a modest upgrade in growth forecasts along with positive rhetoric on the economy post rhetoric were tempered by ongoing suggestions of another rate cut later in the year if ‘projections’ are met.

After some initial hesitation, we saw GBP weaken a little, but not enough to test the limits of the previous session. EUR/GBP has tested into the .8500’s again, but continues to hold off .8550, ahead of which we saw some large sell orders coming in yesterday.

Cable traders also had to negotiate the US retail sales number, which was the major risk event for the broader market, but despite coming in weaker than expected, USD yields pushed back off the lows to lift the greenback across the board.

EUR/USD rallied to highs just shy of 1.1285 and came back just as sharply to underline pre 1.1300 selling, and alongside this, USD/JPY dropped to just under 102.00 before recovering through 102.50. BoJ easing expectations will continue to weigh on the JPY in the meantime, with steady stock markets aiding quiet trade in the crosses.

In the commodity currencies, it was the CAD once again hogging the limelight, testing the 1.3250 level, but coming short once again for now. The is the late July high which was pretty resolute, and despite heavy oil prices continues to hold.

AUD and NZD trade is very quiet as a result, but today’s price action suggests most of the market is waiting on next week’s FOMC meeting before fully committing on direction.

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