USD burdened from all directions - BBH

Nearly all the major currencies have risen at least two percent against the US dollar this week with the exception of the Canadian dollar as it has risen one percent this week ahead of today's local session, explains the research team at BBH.  

Key Quotes

“Sterling is becoming another exception after disappointing retail sales.  It is up just shy of two percent.  The Dollar Index is off 2.3% on the week, which would be the biggest weekly loss since 2015.  The dollar has firmed a bit on the European morning, but look for North American operators to see the upticks as a selling opportunity.”

“The greenback slumped to nearly JPY105.50 in Tokyo, which appears to have led this week's decline.  It is the biggest weekly loss since July 2016.  Japanese officials are becoming more concerned.  Reports suggest a high-level meeting was held today between the BOJ, MOF and FSA on the yen's strength.  Although Finance Minister had said earlier this week that the yen's movement did not require intervention, the MOF's point man on FX, Asakawa, expressed greater concern for "one-sided" move that was "not in line with fundamentals." 

“This still seems to be low level concerns.  Reiterating the G7/G20 boilerplate line about "excessive volatility" needs to be avoided, and hints that there are talks among G7 officials about the recent foreign exchange market developments, would be additional rungs on the escalation ladder.  Still, we suspect that the Japan's cabinet submission to the Diet of Kuroda's nomination for a second term (leaked in the media for the past several days) and the appointment of two deputies (Amamiya, a key Kuroda ally within the BOJ, and a dovish academic Wakatabe), is not really much of a yen protest.  It underscores the continuity of monetary policy.  Still, nearly half of a Bloomberg survey expect the BOJ to tighten policy late this year.”

“The euro reached near three-year highs today near $1.2555.  It is the sixth consecutive advancing session.  The euro has appreciated 2.2% this week.  The dollar was sold through CHF0.92 to see its lowest level since June 2015.  Sterling has been dragged off its high near $1.4145 by the soft retail sales report.  It has advanced every day this week and is straddling the unchanged level today.”