FX Analysis – AUD, NZD drop on China data ,USD up, JPY underperforms, EUR whipsaws

USD saw gains on Thursday with the US Dollar index (DXY) pushing above 104 before again finding resistance at the 100-day SMA. A rise in UST yields after a better than expected jobless claims figures. In data ahead Dollar traders will be focussing on the US CPI revisions.

EUR was mostly flat vs the Dollar with EURUSD trading down to 1.0750 before rebounding. ECB speak saw Wunsch state he sees some indications, not strong ones, that wage growth is softening, while Holzmann suggested there is a chance the ECB will not cut rates this year.

JPY was the G10 underperformer after commentary from BoJ officials that was perceived as dovish. Deputy Governor Uchida hinting that the BoJ will not aggressively hike rates, even after ending NIRP. USDJPY jumped to a high of 149.46 with the move higher in rate differential also lending support to this pair.

AUD and NZD sold off after softer than expected China inflation data. AUDUSD dropping back below the key 0.65 level, NZDUSD testing support at 0.6075 before retracing modestly. This also saw AUDNZD drop for a 4^th straight session, down to 1.0650.