Forex snapshot

Risk aversion has set in slightly today, as the Ukrainian situation that many thought was quiet became more concerning, but the US dollar found buyers after more good economic news from the world’s largest economy. 

Japanese yen US dollar notes
Source: Bloomberg

The reports from Ukraine, indicating that Russian troops are operating in that embattled country, sent the US dollar down versus the yen, but the effect was limited by news of an upward revision to US Q2 GDP and a slight drop in jobless claims.

US economic growth was revised up to 4.2% from 4% for the second quarter, which confounded expectations of a slightly weaker reading of 3.9%. Meanwhile, jobless claims dropped to 298,000 from the expected 299,000, and the four-week moving average slipped below 300,000 for the first time since late 2006.

USD/JPY had been overbought for over a week, so a pullback had been expected, but the uptrend off the July lows should provide rising support, and would even allow for a drop back almost to ¥103. With USD/JPY now back below ¥104 this will once again provide upside resistance, with some support possible around ¥103.50.

There has been little to stand in the way of further gains for the US dollar against the Swiss franc, even if the Ukraine situation unsettled traders slightly.

Here again more positive data has given the US dollar the upper hand, and if it can hold above the CHF0.9150 level then we are still looking at a potential break of the CHF0.9175 area that marked the high point this month.

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