US dollar shows continued strength against the major currencies

The main event of the overnight session was the US dollar’s continued strength against most major currencies including EUR, GBP, AUD and CAD predominantly on weaker risk sentiment and following disappointing Chinese PMI figures. However, the US dollar was not the only currency to make gains overnight as the yen strengthened against both the USD and EUR reaching lows of 78.05 in USD/JPY and 101.05 in EUR/JPY, potentially fuelled by a weaker equity market. It also seems that BoJ’s commitment to a further JPY 10trillion of easing, was not convincing enough as USD/JPY quickly reversed any initial gains, and the JPY continued its winning streak. Perhaps following the ECB and Fed, we have become accustomed to unlimited easing? Either way, risk is well and truly ‘off’, but as to the reason, it seems no one can be entirely sure.

The euro has continued to fall away overnight and early in the London session, printing this week’s low against the USD at 1.2950 following disappointing French Manufacturing and Services PMI data. Forecasted at 46.5 and 49.5 respectively, the actual figures showed 42.6 and 46.1. German Manufacturing and Services PMI followed shortly, both of which exceeding forecasts, so a real mixed bag on the data front so far this morning.

Coming up later this morning, we will see the release of UK Retail Sales at 9.30am forecasted -0.3%. However, the focus really is on this afternoon with important data releases from Europe and the US. See below for the full schedule:

1.30pm – US Unemployment Claims
2.00pm – US Flash Manufacturing PMI
3.00pm – Consumer Confidence
3.00pm – Philly Fed Manufacturing Index
7.00pm – BoE Gov King speaks

EUR/USD

Support 1.2880 | Resistance 1.3050

USD/JPY

Support 77.80 | Resistance 79.20

GBP/USD

Support 1.6070 | Resistance 1.6250