Session close (Monday, Feb. 5): Settled at 1.24315, down 54 ticks
Fundamentals: The U.S. dollar started the week off on a stronger footing on the heels of a good Nonfarm Payroll report that showed job growth at 200,000 in January and Average Hourly Earnings growth at +0.3% on the heels of +0.4%. Services data in the Eurozone this morning was strong and Markit Composite PMI and Services PMI in the U.S. missed expectations. It was the bigger ISM Non-Manufacturing read that strongly beat expectations and helped the Dollar gain additional ground.
ECB President Mario Draghi warned today that the rise in the Euro brings headwinds to stabilizing inflation and this will be closely watched. His comments didn’t swing the Euro much after the ISM read but the Euro closed the electronic session on the lows near 1.24 in the face of the S&P trading as much as 10% from its all-time high in a violent selloff to start the week. Bundesbank President Weidmann speaks at 3:00 am CT tomorrow and St. Louis Fed President Bullard speaks at 7:50 am Ct
Technicals: The technical picture has turned weak after a failed attempt late last week to take out the January 25th highs.
Session close: Settled at .9138, up 46.5 ticks
Fundamentals: The yen has extended gains since Friday’s close by as much as a penny after equity markets went into a free fall. In the face of a 10% correction in the S&P, the U.S Dollar has gained ground against other major currencies on strong economic data. The yen has been lifted on safe-haven buying. Our target to the downside late last week was achieved at .9089-.91035 and we are now Neutral due to our belief that the U.S dollar has further upside.
As a safe-haven, we believe an oversold Treasury complex provides a better hedge, especially after seeing today’s push. However, tomorrow St. Louis Fed President Bullard speaks, and we can’t but help to remember his dovish comments in October 2014 that helped form a V-shaped bottom in equities. While this would take the safe-haven sails out of the Yen, it would reinvigorate the downside in the dollar.
Technicals: We are neutral the yen but believe a move out above its recent range defined by major three-star support and resistance would encourage directional selling or buying.
Session close: Settled at .7900, down 35 ticks
Fundamentals: The Reserve Bank of Australia meets tonight and is due out with a policy decision at 9:30 pm CT. First, traders get Trade Balance and Retail Sales data at 6:30 pm CT. These will be the major and only driver in the Aussie dollar into tomorrow morning. For now, the Aussie has seen weakness on a strengthening U.S. dollar but more so because traders have taken profit from longs ahead of tonight’s meeting and on overbought conditions.
Technicals: The Aussie marked its sixth straight losing session since trading to a high of .8135 and a 14-day RSI of 80.
Session close: Settled at .79985, down 78 ticks
Fundamentals: The Canadian took a beating today, seeing pressure due to losses in the equity markets and Crude. Additionally, sellers are coming to the table ahead of a big week of data for Canada. Tomorrow is Trade Balance at 7:30 am CT and Ivey PMI at 9:00 am. Traders should keep an eye on Crude Oil and the $63 mark as a close below here will likely cause further selling that will weigh on the Canadian. In the near term, we see U.S. dollar.
Technicals: We have been calling for a session like this in the Canadian as we are long-term bullish and are looking for a test to major three-star support below here as a potential buying opportunity.