Whipsaw the rule; USD ends off the highs - Morning Session - GMT

Today’s US Dollar Trading

•    Whipsaw the rule; USD ends off the highs
•    Volumes light, conditions thinner
•    Traders note sovereign interest in EURO on dips

Overnight Preview

•    Look for the Greenback to continue two-way
•    Expect volatility

Looking Ahead to Thursday
All times Eastern (-5 GMT)

•    8:30am USD Core Retail Sales m/m
•    8:30am USD Retail Sales m/m
•    8:30am USD Unemployment Claims
•    10:00am USD Business Inventories m/m
•    10:30am USD Natural Gas Storage

Summary

The USD   continues to trade mixed today after US data failed to inspire traders one way or the other. GBP fell to a new traded low of 1.4315 before reversing back to the 1.4370 area in lighter volumes; cross-spreaders continue to work the sell side of the rate into the New York close. Overnight UK data was also benign and remarks somewhat dovish but the rate remains firm on the 1.4300 handle ahead of more US data tomorrow. Traders expect more two-way action near-term so aggressive traders looking to buy the dip under the 1.4380 area remember to be nimble. EURO was unable to score a new low-print in afternoon trade and remained mired around the 1.2880 area after testing both sides of that zone; offers above the 1.2910 area capped the upside while bids around 1l2850 supported. Traders note that the rate is inside range and off the weekly lows ahead of the end of week looking very much like a technical bottom may be in for the end of week. If the lows for the week are in look for a test of the 1.3050 area near-term as the bottoming effect may attract bids on dips. Traders also note official and sovereign bids on the dip into the lows overnight. USD/CHF failed to hold gains on the 1.1600 handle; high prints at 1.1635 in thin volume followed by a dip under the 1.1580 area. Overnight lows continue to hold around the 1.1500 area but a test of stops around the 1.1480 area looks inevitable after today’s failure to hold the 1.1600 handle. USD/JPY held the top half of the range today making a bid for the 90.80 area but failing just under; highs at 90.77 went offered during New York trade and the rate drifted lower. Closing around 90.50 area certainly looks like the rate will continue two-way but aggressive traders can look to sell the rate around the 90.80 area as the upside is on light volume. Rounding out the day on the defensive was USD/CAD; high prints at 1.2535 overnight went unchallenged during US trade topping out around the 1.2510 area before heading south. Lows at 1.2386 remained unchallenged but into the end of day the rate is down to the 1.2410 area suggesting the rate is losing upside momentum. Look for the USD/CAD to test the 1.2200 handle again before the end of week. In my view, the USD is setting up for another try for the low end of the range. Expect high volatility and whipsaw but also for the USD to end lower on the week.