 Dollar tried to stage a reversal overnight after initial selloff, but upside is so far limited and there is no confirmation of bottoming yet. There are a couple of factors behind the move. Post ADP employment decline was largely undone by better than expected ISM services. In particular, the employment component of ISM service improved notably by 4.4 to 58.1. The upcoming non-farm payroll report may not be as bad as ADP suggests. Also, while more Fed officials expressed their openness to rate cuts, the development remain very fluid. At least, economic data don't point to any reversal in the trend in employment, not the economy yet. Inflation outlook is just subdued but not deteriorating. Trump's tariffs threat to Mexico is a main risk to the economy. Yet firstly, once imposed, the impact on inflation is unknown. Secondly, even if there is no agreement between the two countries in non-trade issue of migration flow, US Congress could challenge Trump's tariffs and block the move. For now, it's probably too early to overly bearish on Dollar even though technically it's not doing very well. Staying the currency markets, Dollar is currently the weakest one for today, followed by Swiss Franc and then Australian. Yen is the strongest one for today, followed by Kiwi and then Euro. Over the week, Dollar is undoubtedly the weakest one, followed by Yen and then Sterling. Kiwi is the strongest followed by Canadian. Technically, for now, further rise is expected on EUR/USD as long as 1.1215 minor support holds. And current rebound from 1.1107 could target a test on key resistance level at 1.1448. However, break of 1.1215, possibly on dovish ECB, could turn its focus back to 1.1107 low. USD/CAD recovered ahead of 1.3357 support, thanks to selloff in WTI oil. Further decline is in favor with 1.3349 minor resistance intact. And break of 1.3357 will indicate larger bearish reversal. However, above 1.3449 will revive near term bullishness and turn focus back to 1.3564 high. GBP/USD was held below 1.2747 minor resistance so far. Thus, it remains near term bearish for now. In Asia, currently, Nikkei is up 0.22%. Hong Kong HSI is up 0.08%. China Shanghai SSE is down -0.77%. Singapore Strait Times is down -0.29%. Japan 10-year JGB yield is up 0.0088 at -0.117. Overnight, DOW rose 0.82%. S&P 500 rose 0.82%. NASDAQ rose 0.64%. 10-yer yield rose 0.004 to 2.123. |
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