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USD was marginally lower in Tuesdays session , trading in a tight range amid thin newsflow and market participants awaiting the key June CPI reading released later today. After breaking the psychological 102 level in Mondays session, DXY tested a re-entry into the range but found the previous support at 102 acting as stiff resistance, seeing DXY finish at the session lows around 101.65.
NZD was the G10 underperformer with NZDUSD hitting a low of 0.6168 where it found support at Mondays lows as the currency traded defensively ahead of the RBNZ rate decision today. Futures markets are expecting rates will be held at 5.5%, confirming the RBNZ as being the first developed Central Bank to reach the end of its tightening cycle.
AUD was marginally firmer against the USD, after initially struggling in tandem with the Kiwi before later reversing losses on a USD pull-back. AUDNZD moving higher, back above the mid-price of it’s 2023 range.
Safe-havens, JPY and CHF, saw gains despite risk-on equity markets on some defensive positioning ahead of big data releases later in the week. USDCHF retraced from a peak of 0.8863 to a low of 0.8791 with the cross pair hitting its lowest level since January 2021. USDJPY traded between 141.46-140.17, continuing its strong down move after testing the 145 “intervention” zone last week. USDJPY appears one of those most at risk of any upside surprises in the US CPI data given its sharp decline over recent sessions.
GBPUSD saw gains with Cable breaking it’s 1.2850 resistance level, surpassing 1.2900 to a peak of 1.2934, its highest level in over a year. A strong UK Labour market figure saw futures markets re-price a 50bp hike as the favoured outcome of the BoE policy meeting on August 3rd, driving gains in the Pound.
EUR was flat with EURUSD just about clawing back above 1.10 at the US session end amid a USD pullback, with EURUSD trading in a narrow range despite a weak German ZEW survey.
CAD saw slight gains against the USD, bolstered by the continued upward momentum in crude oil with WTI crude settling at 10-week highs and seeing USDCAD break its 4h trendline. CAD traders have the BoC rate decision later today to look forward to, where after a five-month ‘pause’, the consensus looks for rates to be lifted by 25bps for the second straight meeting, taking its key rate to 5.00%
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