Dollar recovers some ground.

US initial jobless claims increased marginally to 216,000 in the latest week from a revised 214,000 previously and were again below consensus forecasts of 222,000. Continuing claims declined marginally to 1.67mn from 1.68mn and were marginally below market expectations.

The final estimate of third-quarter GDP was revised higher to 3.2% from 2.9% with a further upgrade in consumer spending.

Treasuries lost ground after the stronger than US data releases with the 10-year yield trading close to 3.70% on Friday, although trading volumes were low.

Wall Street stocks posted sharp losses on Thursday with notable selling after the market open with further sharp position adjustment and an on-going debate whether the 2023 outlook can justify buying at these levels.

US indices did, however, recover from intra-day lows in choppy trading.

The dollar recovered some ground on Thursday with an element of defensive demand as equities moved lower. There were also some concerns that the Federal Reserve would not be able to pivot on monetary policy.

Liquidity in global markets will be very low during the holiday period with no major data releases.

On Friday, the latest US PCE prices index will be released which will be important for expectations surrounding monetary policy.

Consensus forecasts are for the core annual rate to retreat to 4.7% from 5.0%.

The Euro held a firm tone in early Europe on Thursday, but EUR/USD only briefly moved above 1.0650. The dollar secured an element of defensive support as equities moved lower. EUR/USD dipped to test support below 1.0600 before trading just above this level on Friday.

USD/JPY briefly strengthened to 132.70 after the US open but failed to hold the gains. Higher US yields curbed yen support with USD/JPY back to 132.70 on Friday.

The Swiss franc lost ground despite weaker equity markets. EUR/CHF strengthened to above 0.9850 with USD/CHF strengthening to 0.9320.

Sterling came under further pressure with a lack of confidence in UK fundamentals. Weaker equities also sapped support for the currency. GBP/USD dipped to test 3-week lows at 1.2000 before a tentative recovery to 1.2030.

Commodity currencies lost ground amid weaker equities and a firm US dollar. AUD/USD dipped back below 0.6700 with lows at 0.6660 before a recovery to 0.6690. USD/CAD strengthened to 1.3670 before a retreat to 1.3625 on Friday.

Economic Calendar