FX: The US Dollar maintains its gains.

The US Dollar finished little changed overnight but is still holding on to all its gains this week. The dollar index edged 0.03% lower to 92.26, rising 0.11% to 92.36 in Asia today. The dollar index’s downside breakout point last week was at 92.60, and this is my initial resistance level. Support is distant at the 91.80 double bottom, followed by the more import 91.50 level, which is also the 100-day moving average. A firm payrolls number should see the greenback strengthen once again as the taper-nistas return to the fold. I suspect that more than a little risk-hedging buying has been supporting the US Dollar these last few days, and I expect that to continue into the US data.

EUR/USD continued moving lower overnight and has fallen another 0.10% to 1.1820 in Asia. Most of the weakness is due to EUR/GBP selling after the Bank of England left policy unchanged yesterday but hinted at future tapering. That has lifted GBP/USD to 1.3920 as of this morning, with a rise through 1.4000 signalling a 250+ point rally. EUR/GBP fell 0.35% to 0.8493 overnight, just shy of the April low at 0.8472. A daily close below 0.8472 would be a breakout of EUR/GBP’s multi-month 0.8470/0.8720 range, and the cross could fall to 0.8250 in the weeks ahead in this scenario.

USD/CNY remains anchored at 6.4650, a situation I don’t expect to change until next week at the earliest. Regional Asian currencies range-traded overnight. The Won, Ringgit, Indian Rupee, and Indonesian Rupiah made modest gains, but the Thai Baht remains under severe pressure after a dovish Bank of Thailand and the increasing onslaught of Covid-19. USD/THB has risen to 33.388 today and could well tell 34.000 next week if the virus situation does not rapidly improve. I wouldn’t be breaking the champagne out yet on the Ringgit or Rupiah either. The RBI will be good for some volatility in USD/INR soon. USD/INR is trading at 74.000 at the moment, and it wouldn’t surprise me post-decision if it traded at either 73.80 or 74.40; just don’t ask me which side it will be.

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