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The dollar is keeping steadier so far today with light changes across the board, after having put up a modest advance in trading yesterday.
The aussie and kiwi are slightly higher, helped by a strong NZ labour market report earlier in the day. That said, AUD/USD is still keeping below near-term resistance @ 0.7744-55 while NZD/USD is in a similar position below 0.7195-03.
EUR/USD continues to hold just above 1.2000 but faces stiffer resistance from its 100-day moving average @ 1.2049 and key near-term levels @ 1.2062-71.
USD/CAD continues to keep more choppy in and around 1.2300 for now with large expiries also seen rolling off at the figure level later in the day.
Looking at market sentiment, there is a sense that investors are continuing to keep a keen focus on inflation but is awaiting a firm catalyst to really kick things into gear.
Meanwhile, equities have been looking frothy and I would argue that it wouldn’t take much to scare the market into profit-taking and a more modest correction. That said, any dips will definitely be bought up so timing is everything in that regard.
There is still some months away before the supposedly anticipated Jackson Hole ‘pivot’ by the Fed but who knows if Powell & co. will actually deliver.
I would say that US economic data is likely to be supportive until then and the bigger picture reflation narrative should hold in the months ahead. But if the Fed doesn’t stick to that timeline, we could see a bit of a tantrum among market players.
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