A microcosm of the price action in the dollar

A microcosm of the price action in the dollar

Cable is now back to square one.

It was caught in a downdraft to 1.3727 as the US dollar surged but is now back to unchanged at 1.3782 on the day.

The 55 pip round trip is typical of NY trading today as the dollar surged broadly and then gave it all back. There's no a great explanation for what happened in either direction but the dollar buying peaked into the London fix so I tend to blame flows.

I think it's fair to say that cable held the Sept 1, despite the brief dip below. I'm not convinced that points to further upside from here though as it will need to clear 1.3800 to get the momentum back.

Today's BOE comments suggested a more-hawkish bent while remaining extremely cautious. That's going to take a number of months to resolve in any meaningful way.

Expect the euro to be the bigger driver in the day ahead with the ECB decision upcoming.