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Forex Flash: Consolidation the theme - OCBC Bank

FXstreet.com (Barcelona) - Emmanuel Ng of OCBC Bank notes that the majors ended the day mixed against the dollar after managing to partially retrace intra-day losses and with outright dollar strength taking a brief hiatus with the US data flow (Empire manufacturing, PPI) coming in on the wrong side of expectations.

Specifically, he notes that EUR was weighed by disappointing GDP readings and underperformed across G10 space while the GBP ended the day none the worse for wear following the BOE Quarterly Inflation Report. He adds that early in the overnight session, the region however received a positive blip with a better than expected Japan GDP number for 1Q 13, but still commented “We don’t think this would even remotely dent structural bearish JPY expectations with the softer than expected GDP deflator.”

He continues to add that yesterday’s somewhat soft global data flow may serve as an interim counter argument against exit expectations surrounding the Fed, with the latter grounded on an improving economic outlook. However, he notes that if negative economic headline risk persists, the major currencies see a further loss of confidence, leaving the dollar a de facto beneficiary. He writes, “This scenario may not play out at this juncture however, given that the cyclicals (CAD, AUD, and NZD) were not stark under performers overnight.”

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