Dollar strengthened overnight after FOMC minutes showed that majority of Fed officials expected interest to enter into restrictive region down the road. Treasury yields also ended up mildly higher. And more importantly, stock markets showed no particular negative reaction to the minutes. USD/CHF's break of 0.9954 high and USD/JPY's break of 112.52 minor resistance, in additional to EUR/USD's fall, are signs of Dollar strength. Though, it clearly lags behind Australian and New Zealand Dollar, for no apparent reasons. Elsewhere in the currency markets, Yen is the second strongest for today on risk aversion as China is leading Asia down. But Australian Dollar bucks the pattern and is the strongest one. The fall in Australian unemployment rate might be a factor. Sterling is trading as the weakest one as UK Prime Minister Theresa May achieved nothing in the EU summit. Canadian Dollar is the second weakest as WTI crude oil dropped below 70. Euro is the third weakest on Italy budget concern. Technically, EUR/AUD's break of 1.6145 minor support today would now sent it back to 1.5984 support. EUR/USD is heading to 1.1431 low too. A focus is on whether EUR/JPY would take out 129.11 to resume the choppy fall from 133.12. As mentioned above, Dollar is showing sign of strength against Euro, Swiss Franc and Yen. But more is still needed. In particular, we'd prefer to see a break of 1.3081 minor support in GBP/USD and 0.7098 in AUD/USD to confirm the underlying momentum of the greenback. |
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