The USD is under severe pressure these last two days with the selloff continuing for the second day in a row. USD has dropped the most in 2 days since Q1 2009 when the FED introduced the QE program. Weak US data such as jobless claims today which unexpectedly rose by 8000 give traders doubts as to the FED’s previous communication that will proceed with 4 rate hikes this year. These expectations that were largely priced in the value of the USD which enjoyed strong gains over the last 18 months, are now being reversed to accommodate the fresh expectations.
Now to the markets and a description of the action: GOLD continues to rise further on a weak USD and after breaking 1130 200 day MA yesterday, has now touched 1155. GBPUSD had large intraday swings after BoE kept rates unchanged, and USDJPY is once again dropping following the negative stock market sentiment of the day.
AUD, NZD are all upbeat – taking advantage of the USD weakness and record large gains today as well.
Focus now shifts to tonight's NFP report from the US and its significance will be unprecedented. A weak number, much below consensus carries the potential to drag the USD lower than it is even today, as the rebalancing of long USD positions that took place for the last year will undoubtedly have to be adjusted. The news will be at 13:30 GMT.
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