The dollar traded higher versus the euro and pound in N.Y. trade on Friday, though lost ground to the yen, as risk-on conditions receded into the weekend, weighing modestly on equities. Higher yields on the back of better U.S. retail sales and industrial productions largely supported the greenback. USD-JPY consolidated recent gains, heading into 10525 lows, after topping over 106.30 overnight. EUR-USD again gave up the 1.1100 handle, falling under 1.1055, as cable retreated to 1.3133 lows, after opening near 1.3400 early in the session. USD-CAD bottomed at 1.2862, though soft Canadian manufacturing data, strong U.S. data, and fading oil prices later lifted the pairing to 1.2988 highs.
EUR-USD traded to session lows after the London close, touching 1.1054, and back under the 1.1100 mark, which has defined the middle of the euro’s trading range for better than two-weeks. We remain bearish of EUR-USD in the bigger picture on the view that Brexit-related economic headwinds will have a bearing as the second half of the year unfolds. A break under 1.1000 will likely bring the post-Brexit vote low of 1.0912 into view, though that would appear to be a ways off at this point.
USD-JPY gains ran out of juice into the Asian close, topping at 106.31, just about 50 point shy of the 106.83 top seen on June 24, ahead of the Brexit outcome. The paring has rallied nearly 6% from Monday’s lows this week, on the back of stellar global equity gains, and prospects for Japan stimulus later this month. Many now see the pairing fully priced in for fiscal easing measures, and squaring of long positions has been a driver through the morning session.
Cable fell on the back of dollar gains, post U.S data. This pushed the pair to the 1.3300 area. Sell-stops were tripped under 1.3250 later, ultimately resulting in a low of 1.3133 in thins Friday N.Y. afternoon trade. The clearing political picture in the UK and the fact that the Brexit vote didn’t cause a systemic breakdown has assuaged market participants after the initial panicked reaction, though sterling does not appear to be out of the woods just yet.
EUR-CHF pulled back to 1.0885 lows in N.Y, though retained its recent bid tone, reflective of the recent risk-on vibe in global markets and the calmer view of the Brexit issue, which hasn’t sparked a 2008-style breakdown in the financial system (though its effects will be insidious and ongoing). The SNB confirmed that it had intervened in EUR-CHF in the day following the Brexit vote. The central bank stated that it has “intervened in the foreign exchange market to stabilise the situation and will remain active in that market.” The SNB said last month after its quarterly policy review that it has been monitoring the impact of the Brexit issue on the “significantly overvalued” franc.
USD-CAD rallied 1.2862 following the mix of data, where Canada manufacturing shipments were soft, but in line with expectations, and U.S. retail sales and industrial production beat the street by big margins. Since then, oil prices halted their gains, falling toward $45.50 from near $46.30, which took USD-CAD up to 1.2988 into the London close.