USD Opens Weaker For Third Consecutive Week

Tuesday, July 9, 20131comments



THE TAKEAWAYDollar Index meets resistance at $11,000 > USD weakens against most major FX pairs
The USD is weakening today after strong gains on Friday on the back of positive US labor figures. The US Change in Nonfarm Payrolls report shows a +195K expansion in jobs during June, marking the third consecutive month of near +200K employment additions. These optimistic figures expanded investor speculation that the Fed would begin tapering QE soon, causing 10YR US treasury yields to spike to 2.700%.
However markets are reversing many of Friday’s gains today. The reversal is most apparent in bonds. The 10YR US treasury yield is down -7.9bps (-2.88%) to 2.660% at the time of writing. FX markets are also following suit: the Dow Jones FXCM Dollar Index (Ticker: USDOLLAR) falls -40 (-0.36%) to $10956 at the time of writing. The Dollar Index met fairly strong resistance at 11,000 shortly after Sunday Open and subsequently declined thereafter. This is the third straight week that the Dollar Index has opened the week lower. Further note that this is the first day after a US holiday weekend and even still, FX markets are trading somewhat lightly.
Turning to commodities, crude oil is trading mostly flat while base metals continue to fall sharply: WTI -0.05%; Brent -0.10%; LME Copper -2.32%; LME Tin -5.75%; COMEX Copper +1.03%; Shanghai Copper -1.50% at the time of writing.
Lastly, equity markets ex-Asia are trading strong today with Europe leading the pack: S&P +0.52%; Euro Stoxx +2.09%; FTSE +1.17%; Nikkei -1.40%; Hang Seng -1.31% at the time of writing.
AUDUSD 15-minute Chart: July 8, 2013
USD_Opens_Weaker_For_Third_Consecutive_Week_body_Picture_4.png, USD Opens Weaker For Third Consecutive Week
Charts Created using Marketscope – prepared by Kevin Jin
The AUDUSD is rebounding today after consolidating during most of the Asian session. The pair started to gain towards London Open and continued to move past $0.9100 until meeting resistance at .9136.
GBPUSD 15-minute Chart: July 8, 2013
USD_Opens_Weaker_For_Third_Consecutive_Week_body_Picture_3.png, USD Opens Weaker For Third Consecutive Week
Charts Created using Marketscope – prepared by Kevin Jin
The GBPUSD was lifted midway through Asian trading after trading down towards $1.4850. The GBPUSD has not traded below 1.4850 since March 12. Into London Close, the cable has moved nearly +100 pips higher from the low, although bulls are unable to take the pair past 1.4950 at the time of writing.
EURUSD 15-minute Chart: July 8, 2013
USD_Opens_Weaker_For_Third_Consecutive_Week_body_Picture_2.png, USD Opens Weaker For Third Consecutive Week
Charts Created using Marketscope – prepared by Kevin Jin
The EURUSD is unable to break below $1.2800 as dollar weakness pushes the pair as high as 1.2877 on the trading day. The modest bull run began near London Open and continued throughout most of London trading before the pair sold off slightly through London Close.
USDJPY 15-minute Chart: July 8, 2013
USD_Opens_Weaker_For_Third_Consecutive_Week_body_Picture_1.png, USD Opens Weaker For Third Consecutive Week
Charts Created using Marketscope – prepared by Kevin Jin
The USDJPY is trading in a 50 pip range between ¥101.00 and 101.50. The pair is slightly net lower today at the time of writing. However it seems that traders are unsure whether to move the USDJPY significantly higher or lower on the back of the previously referenced lighter trading volatility today.
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