US dollar rises in Asia

Yen, euro start week with losses

The US dollar moved sideways in New York on Friday, the dollar index finishing almost unchanged at 98.80. However, with the Bank of Japan standing in the JGB market today to cap rises in yields the dollar index has risen sharply, boosted by a weaker yen and euro. The dollar index is 0.33% higher at 99.13. In the bigger picture, 99.50 and 97.75 remain the levels to watch.

USD/JPY has surged 0.80% higher to 123.05 this morning, a 100 point gain. Short of a spectacular reversal lower by US yields, USD/JPY is now on track to retest 125.00, potentially this week, with the BOJ having now shown its hand. Attempts by Japanese officials to talk down USD/JPY will have a short-lived impact and are likely to be dips to buy.

The Biden, Putin must go, rhetoric over the weekend is weighing heaving on the euro today as it sparks fears of wider escalation from Russia. EUR/USD has fallen 0.30% to 1.0950, and rallies above 1.1000 are going to be challenging to sustain at the start of the week. The fall today leaves EUR/USD mid-range between longer-term support at 1.0800, and resistance at 1.1150.

Weak Retail Sales data weighed on GBP/USD into the end of the week, and it has moved lower in sympathy with the euro today. GBP/SD has fallen 0.25% to 1.3145, mid-range between major support/resistance at 1.3000 and 1.3300.

AUD/USD and NZD/USD continue defying a stronger US dollar as markets price in a faster pace of rate hikes on both, and commodity prices remain in space. Also helping is a relatively quiet Ukraine news ticker, reducing risk aversion sentiment for now. Both currencies continue to consolidate at the top of their ranges, at 0.7325 and 0.6950. A rise through 0.7550 and/or 0.7000 signals more gains ahead.

Asian currencies are modestly weaker across the board today as USD/JPY soars, amid worries about a covid slowdown in China. In the bigger picture, rising US interest rates and soaring commodity prices will weigh on Asian currencies. As we start the week though, Asian currencies prefer to wait for directional inputs from the northern hemisphere heavyweights.

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