Currencies on hold awaiting US return

A US holiday overnight was enough to send currency markets into hibernation, with the majors almost unchanged from yesterday and showing few signs of life in Asia. The dollar index rose 0.10% to 92.20, only to edge lower to 92.15 in Asia as the major currencies remain in range-trading mode. 

One exception was GBP/USD, which slipped 0.20% to 1.3835 overnight, only retrace all those losses, rising to 1.3850 in Asia. As long as its 200-day moving average (DMA) holds at 1.3820, it remains on track to rally through 1.3900 on its way to retesting 1.4000 over the next week, perhaps sooner. Similarly, EUR/USD should rise through 1.1900 and retest 1.2000. 

Both AUD/USD and NZD/USD appear to be consolidating before resuming their recoveries once New York returns. The RBA will be good for some short-term volatility on AUD/USD, but I can’t see it falling through 0.7400, even if the RBA is uber-uber dovish.

Asian currencies are very quiet, content to consolidate their recent gains. The Malaysian Ringgit has outperformed over the past few sessions, helped by a new Prime Minister and rising oil prices. With oil rising today, USD/MYR is poised to fall from 4.1400 to 4.1200. 

Of course, much of this outlook assumes that New York will return to work with an invigorated risk appetite after Fridays’ Non-Farms torpedoed the Fed taper anytime soon. That should see the Commonwealths and Asian currencies continue to outperform, and the US Dollar selling is resuming. Mrs Halley “fondly” calls me a Kiwi Kentang. (Bahasa Indonesia for potato) Let’s see if I am a genius tomorrow or a potato. 

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