Risk recovery curbs dollar buying.

US durable goods orders were unchanged for July compared with expectations of a 0.6% increase and followed a revised 2.0% increase the previous month. Underlying orders increased 0.3% on the month which matched consensus forecasts.

Pending home sales declined 1.0% for July after a revised 8.9% decline the previous month, but stronger than expectations of a 4.0% decline.

US inflation expectations increased to a fresh 10-week high on Wednesday.

Bond yields continued to move higher after the Wall Street open on Wednesday with the 10-year yield just above 3.10% with yields holding at higher levels on Thursday.

There was a further shift in UK futures market on Thursday with expectations that base rates would be increased to 3.50% by the end of 2022 from 1.75% now.

The 2-year gilt yield also increased to a fresh 14-year high to 2.96%.

China announced an additional fiscal stimulus of CNY1.0trn to support the economy which helped underpin risk appetite in Asian trading on Thursday.

The dollar also dipped lower as equities rallied.

The Kansas City Jackson Hole symposium will start on Thursday with initial remarks watched closely, although reaction is likely to be muted ahead of Friday’s keynote speech from Fed Chair Powell.

Underlying confidence in the Euro-Zone outlook remained notably fragile. German energy-saving measures had little net impact amid fears over gas prices.

Money markets priced in a more aggressive ECB rate-hike path due to higher inflation expectations. EUR/USD dipped to lows at 0.9910 before recovering some ground later in the day.

Defensive dollar demand faded on Thursday after Chinese fiscal support measures. EUR/USD advanced to just above parity in early Europe.

USD/JPY was supported by higher yields, but failed to hold above 137.00 before retreating to near 136.50. Higher global yields limited Swiss franc support, but USD/CHF failed to hold above 0.9650.

Sterling was dominated by global moves with weak underlying confidence in the UK economy. GBP/USD rallied to near 1.1850 on Thursday as risk appetite improved while GBP/EUR edged lower to 1.1830.

Commodity currencies pared losses as the US currency retreated from intra-day highs with further gains on Thursday as risk appetite improved.  AUD/USD strengthened to 0.6970 in early Europe. USD/CAD dipped to near 1.2920.

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