FX Daily: Data-dependency and commodity-dependency – MENAFN.COM

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FX Daily: Data-dependency and commodity-dependency – MENAFN.COM

The price action in FX yesterday denoted how markets are fully endorsing the Fed's data-dependent approach, as a strong read in June's ADP payrolls prompted a rally in the dollar despite the Dow and S & P500 closing in positive territory. The Asian session has been soft for equities, although futures point at a good open in European and US markets later today. Earlier this week, we had noted how the dollar's strength was seeing commodity currencies as biggest losers, but that we expected to see a re-alignment with the previous week's dynamics where low-yielding funding currencies such as JPY, CHF and EUR were the worst performers. With the exception of NOK, we are indeed seeing again the low-yielding segment being more vulnerable than commodity currencies, and we would not be surprised if this is dynamic will repeat when it is positive US data surprise driving the market. Commodities are indeed taking centre stage this week, with two main developments to follow: (a) the OPEC+ meeting that starts today, and (b) the rally in natural gas prices. On the first, markets appear fully positioned for a 500Mbbls/d output increase in August, which is what our commodities team expect. Any hike

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