The dollar edged higher on Thursday, taking a breather after previous day’s rally when the greenback hit highest levels since Apr 2003 against the basket of major currencies. The dollar remains supported by hopes that the Fed is on track to hike interest rates this year, and might also take further action next year. The expectations were further supported by comments from Philadelphia

Federal Reserve President Harker on Wednesday, who favoured raising interest rates and that the U.S. central bank might have to hike more aggressively if the incoming Trump administration enacts a fiscal stimulus.

The dollar index was marginally lower but held steady above 100.00 mark on Thursday, after posting fresh 13 ½ year high at 100.59.
Sterling jumped against dollar in late Asian trading, after finding temporary support at 1.2400 zone and being resilient on recent dollar’s strength, as investors focus on implications on Brexit process.

The Euro inched up in early Thursday’s trading, but remains under strong pressure, after Wednesday’s trading closed below 1.0700 handle. The single currency hit fresh nearly one year low against the dollar on Wednesday.

The dollar eased from fresh 5 ½ month high against yen at 109.74, posted on Wednesday, but maintains strong bullish bias and awaiting further confirmations of Fed’s rate hike action. The pair is consolidating recent strong rally, ahead of final attack at psychological 110.00 barrier.

The Australian dollar slipped lower against its U.S. dollar Thursday and retested Wednesday’s low at 0.7458, coming under pressure on release of disappointing Australian employment data.
New Zealand dollar was higher in early Thursday’s trading, up 0.41%, but remains under strong pressure after Wednesday’s weakness touched 0.7033 target, which marks the upper boundary of strong 0.7033/00 support zone.
Spot gold ticked higher on Thursday but remains within near-term range and awaiting comments fro Fed’s Chief Janet Yellen, later today, for clearer signals of near-term direction.

Asian stocks were slightly weaker on Thursday as investors are awaiting remarks by Fed Chair Janet Yellen later in the day in congressional testimony that may include comments on president-elect Donald Trump’s fiscal policies and the links to rate increases.

The Nikkei 225 was down 0.07%, the S&P/ASX 200 fell0.14% and the Shanghai Composite was down 0.31% on Thursday’s trading.
European stocks followed negative mood from Asia and were mainly in red after opening on Thursday. DAX was down 0.40%; CAC40 fell 0.31%, while FTSE was flat in early Thursday’s trading.

Highlights of the day

Asia
Australian employment numbers disappointed in October, as the number of employed people was 9.8K in October, the result that fell well below forecast of 20.3K . Strong downward revision of Septembers figures from -9.8K to -29.0K, further soured the negative sentiment.
Australian Unemployment remained unchanged at 5.6% in October, missing the forecast at 5.7%.
Europe
UK retail sales are in focus of European session on Thursday. Retail sales are expected to rise by 0.4% in October from 0.0% in September.
Core retail sales are forecasted at 5.4% in October, significantly higher from September’s 4.0% release.
Data is due at 09:30 GMT.

America
US weekly jobless claims are expected to rise to 257K from 254K previous week.
October inflation numbers from US are the highlight of the US session. Inflation is expected to tick higher in October, according to forecast at 0.4% (m/m) vs Sep 0.3% and core CPI expected at0.2% (m/m) vs 0.1% in September.
Both releases are due at13:30 GMT.

Important levels
USDJPY
The pair shows signals of hesitation on approach to 110.00 barrier, after Wednesday’s trading was shaped in Doji candle. Corrective easing was not deep for now, keeping focus at 110.00 barrier and above. Initial supports lay at 108.50/00, followed by 107.70.
Key near-term support lies at 106.45.

GBPUSD
The pair extended higher from near-term base at 1.2400 zone, but remains within range-trading, entrenched within 1.2375/1.2510 range. Break of either side is needed to signal fresh near-term direction, as technical studies are mixed.
Lift above 1.2500 zone would open barriers at 1.2600 and 1.2670, while violation of 1.2375 support would expose next strong support at 1.2350, then 1.2300., Market Analysis