US dollar loses all of its previous gains

US dollar eyes nonfarm payrolls

There was a wax on, wax off feel to currency markets overnight. Soft ADP Employment data spurring a risk-on rally across asset classes as the Fed hiking outlook was tempered. The US dollar staged a broad retreat, unwinding all its gains from the day before in the major space except for USD/JPY. Asian market volatility is being dampened by holidays across the region today, including mainland China and Hong Kong, and the UK later today.

The dollar index tumbled by 0.78% to 101.75 overnight, an exact reversal of the rally from the day before. It is unmoved in Asia and support/resistance lies at 101.40 and 102.70. Its fate will be decided by this evening’s US Non-Farm Payrolls.

EUR/USD reversed all its previous day’s losses, rising 0.91% to 1.0750 where it remains in Asia. Resistance between 1.0770 and 1.0830 remains a formidable barrier, with support at 1.0650. Sterling reversed all its previous day’s losses, rising 0.75% to 1.2575 where it remains in Asia. It has support/resistance at 1.2460 and 1.2670. USD/JPY was almost unchanged at 129.85 as US bond yields barely moved. It remains unchanged in Asia. It has support/resistance at 129.00 and 131.30. Their fate will be decided by this evening’s US Non-Farm Payrolls.

AUD/USD staged a bullish outside reversal day overnight, making a new low before closing higher than the high of the day before, thanks to the broad-based risk-on rally after the US data. It leapt 1.27% higher to 0.7260 overnight where it remains today. AUD/USD has support at 0.7150, and the overnight rally took it above its 50/100/200-day moving averages (DMAs) between 0.7230 and 0.7255 as well. A soft Non-Farm print tonight could see AUD/USD rise to test 0.7350, with a weekly close at these levels being a bullish signal technically. Its fate will be decided by this evening’s US Non-Farm Payrolls.

Asian FX currencies booked modest gains overnight, with the rise in oil prices tempering the fast money inflows. Both the Malaysian ringgit and Philippine peso actually fell overnight, a result I suspect, of rising subsidy bills as oil prices climb higher. The Indonesian rupiah has rallied 0.70% to 14,420.00 today, while the KRW and MYR have risen by 0.10%. With a swathe of holidays across the region today, and no PBOC USD/CNY fixing, Asian markets look content to watch from the sidelines as we head into US data this evening and the weekend. Their fate will be decided by this evening’s US Non-Farm Payrolls.

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