“Scope for short covering is growing,” Mitul Kotecha, head of global currency strategy in Hong Kong at Credit Agricole Corporate & Investment Bank, wrote in an e-mailed note today. Short covering is when investors end bets an asset will decline.
The euro may face resistance around $1.2505, Kotecha wrote. Resistance is a level where sell orders may be clustered.
The dollar snapped a three-day drop against the yen after Japanese Finance Minister Jun Azumi pledged on June 1 to take “decisive action” on his nation’s currency should “excessive moves” persist. Azumi declined to comment on whether Japan has intervened in the currency market at a press conference today.
Japan’s Vice Finance Minister for International Affairs Takehiko Nakao said today he discussed currencies with Bank of Japan Executive Director Hiroshi Nakaso as part of an exchange of views on global markets.
The greenback has advanced 3.1 percent this year, the best performer among the 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. The yen has gained 1.3 percent, while the euro declined 1.6 percent.
China’s non-manufacturing purchasing managers’ index fell to 55.2 in May from 56.1 in April, the National Bureau of Statistics and China Federation of Logistics and Purchasing said yesterday. That’s the lowest reading since March 2011 when the federation started seasonally adjusting the data.
The Dollar Index, which IntercontinentalExchange Inc. uses to track the greenback against the currencies of six U.S. trading partners, was little changed. It fell 0.3 percent on June 1 after after a report showed U.S. payrolls climbed by 69,000 last month. The jobs figure was lower than the most pessimistic forecast in a Bloomberg News survey. The jobless rate rose to 8.2 percent from 8.1 percent.
In Australia, interest-rate swaps indicate better-than-even chances the Reserve Bank of Australia will lower its 3.75 percent overnight cash-rate target to 3.25 percent tomorrow and to a record 2.25 percent by November.
Net shorts for the Australian dollar also climbed to an all-time high last week, rising to 35,527. The so-called Aussie dollar was little changed at 97.01 U.S. cents today after dropping as much as 0.8 percent to 96.28.