Forex today: clouded by nonfarm payrolls / Fed's two-day meeting yesterday

Forex today was clouded by nonfarm payrolls coming up on Friday early doors while the outcome of the Fed's two-day meeting yesterday leaves the dollar hanging in the balance amongst bulls and bears. The Yen and Kiwi were the strongest currencies on the day while the pound and greenback (commodity complex bid) were the weakest. 

There was a sour taste in the markets today, (China trade war angst simmers away), and that was weighing on sentiment, (stocks, DOW recovers 400 point loss to end higher, S&P 500/NASDAQ both end lower), the dollar and yields. The 10 year Treasury note yield fell from 2.98% to 2.93%, before steadying while the DXY drifted towards the lower end of the 92.3450-92.7600 range. 

As for the euro, it was unable to capitalise fully on dollar weakness against a backdrop of lower inflation results from the European session where the core release came in at 0.7% vs 0.9% expected (headline 1.2% y/y vs 0.9% expected), underpinning the notion that the ECB is on hold for the foreseeable future. The euro was also pressured when risk soured on the lower than forecast ISM N-Mfg data was released in the US and euro was trading at 1.1949 before whispers of progress on trade talks lifted spirits a bit, encouraging a bid in EUR/JPY and subsequently, EUR/USD rebounded towards the 1.20 handle again. 1.1989 was the closing price. 

Sterling was under pressure yet again with additional data misses in European trade where UK services PMI arrived below expectations, (52.8 vs 53.5 exp. and 51.7 prior). GBP/USD closed in NY flat at 1.3576, moving in the same fashion as the euro and between a range of 1.3606-1.3537. There were some late headlines around Brexit that were shrugged off ahead of Friday's nonfarm payrolls, (see the Fundawrap link below for details). The cross subsequently climbed to 0.8840 in the US session from 0.8804 European lows closing at 0.8830.

USD/JPY was tacking stocks and yields closely and was unable to get much higher above the 109.20 resistance. The yen traded between 109.37 and barky recovered from the 108.92 low, ending the session at 109.17.

The commodity complex was propped by lower yields but there were no distinct arguments for higher oil or gold. Copper also bounce in NY and the Aussie rose from 0.7498 to 0.7540, (underpinned by positive data in Asia, trade and building approvals) and closed near 0.7530 ahead of the RBA's quarterly Statement on Monetary Policy.  The Kiwi managed a 20 or so pips bounce as the yen/stocks dropped and when risk bounced on positive trade chatter. NZD/USD traded with a low of 0.7018 and a high of 0.7047.

Key notes from US session:

Wall Street bulls buy the dip

Fundawrap: Fed, geopolitics and nonfarm payrolls spark up market jitters

Key events ahead:

Analysts at Westpac noted that the RBA’s quarterly Statement on Monetary Policy is due at 11:30am Syd/9:30am Sing/HK. "The main interest in the SoMP will be its forecasts."