Headlines:
- Dollar course corrects towards the end of the week
- Dollar slides further, down 1% against the euro and sterling
- Risk trades rejoice on dollar correction
- USD/JPY falls further on the day amid softer dollar, Kuroda jawboning
- Heads up: BOE postpones September policy meeting by one week
- ECB's Villeroy: Inflation should be back to around 2% by 2024
- ECB's Villeroy: Our hands are "completely free" on next policy move
- ECB's Kažimír: 75 bps rate hike was inevitable and right
- ECB's Knot: Curbing the dynamic in inflation is the only concern
- China August M2 money supply +12.2% vs +12.1% y/y expected
Markets:
- AUD leads, USD lags on the day
- European equities higher; S&P 500 futures up 0.8%
- US 10-year yields down 2.2 bps to 3.269%
- Gold up 1.1% to $1,726.50
- WTI crude up 1.9% to $85.16
- Bitcoin up 8.2% to $20,981
The US dollar is seeing a significant correction towards the end of the week and that is the key story in markets today.
You can point to a more hawkish ECB, jawboning by Japanese officials, a better outlook on the UK economy amid support from the fiscal side, or even a rally in stocks as main reasons for the move. But I would say it is all of that put together alongside a confluence of technical levels holding in place against the dollar this week.
EUR/USD defended daily support at 0.9900 in the past few days before running up 1% earlier to 1.0112, settling up 0.5% at 1.0040-50 levels at the moment. Daily resistance at 1.0075-90 remains a key spot to watch.
GBP/USD held at the March 2020 lows near 1.1400 on the week and has rebounded to 1.1648 earlier before keeping up by 0.5% around 1.1555 at the moment.
Meanwhile, USD/JPY is continuing its retreat after coming within a whisker of touching 145.00 two days back and has fallen further to a low of 141.50 earlier before holding around 142.50-60 levels currently.
USD/CAD also saw a rejection at daily resistance at 1.3200 on the week before sliding back today to just below 1.3000 and is now barely hanging above the figure level. AUD/USD kept a defense of key trendline support on the weekly chart just near 0.6700 before seeing a strong rebound today to 0.6877 - keeping around 0.6830 now, up 1.1% on the day.
Elsewhere, equities are looking to finish the week with a flourish with European indices trying to eat into the weekly losses while US stocks are hoping to snap a run of three straight weeks of declines. The risk rally has also helped to see oil be up by nearly 2% to above $85 and Bitcoin rally back above $20,000 on the day.