Published: 2023-12-29T14:16:06.000Z
USD/JPY, EUR/USD flows: Divergence Today
Director of Research , Macroeconomics and Strategy
-
NY trading has seen the divergence in the G10 currencies remaining with CHF and NOK the clear winner; EUR doing well and AUD/CAD/JPY and NZD on the defensive.
Traders indicate that this is flow related and not a wider view of divergence that will last into the first week of 2024.
As well as data, the FX market is focused on clues over policy, with some wanting to see if the Dec FOMC minutes on Jan 3 provide hints on timing. However, in reality money market are so aggressive in the scale of cuts that Fed officials (Barkin on Jan 3) will likely try to temper the early rate cut, especially as data suggests that the U.S. economy is not slowing rapidly. This could cause a partial USD correction.