The US dollar eases in Asia

The Byte Dance decision and the follow-on performance by US stock index futures this morning has lifted sentiment, leading to a slightly weaker US dollar as the week starts. However, except for USD/JPY, the G-10 currency grouping remains in range-trading no-man’s land.

Asian currencies rise against US dollar

Currency trading volumes will be muted by the Japanese holiday today, but USD/JPY has fallen 25 points to 104.35 this morning. Having broken long-standing support around 105.00 last week after a lower for longer FOMC, USD/JPY is now just above its 6-month low at 104.20 and could target 103.00 this week. EUR/JPY also broke support at 124.20 last week and has fallen to 123.75 this morning. That has activated a head and shoulders formation on the EUR/JPY chart, which has a target around 122.00, also its 100-day moving average (DMA). EUR/JPY’s breakout should temper any exuberance on EUR/USD amongst the pro-cyclicals. EUR/USD still has the potential for more downside corrective price action despite the positive tone in currency markets this morning.

Asian currencies continue to outperform, boosted by a dovish FOMC, robust China data, and now the Byte Dance decision. The CNY, THB, PHP and SGD, KRW and TWD all between 0.20% and 0.30% higher versus the greenback this morning. With a quiet data-week ahead, the sentiment is likely to continue to favour the pro-cyclical Asian currencies over developed market currencies.

The week ahead is a desolate one on the data front around the globe. China had just released its one and five-year Loan Prime Rate decisions, with rates remaining unchanged, as expected. That is entirely consistent with the intention of Chinese policymakers to stimulate the economy as needed in a much more targeted way and attempting to avoid another explosion in asset prices such as we saw post the GFC. The calendar is uneventful until US Durable Goods at the end of the week.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Jeffrey Halley

Jeffrey Halley

Senior Market Analyst, Asia Pacific
With more than 30 years of FX experience – from spot/margin trading and NDFs through to currency options and futures – Jeffrey Halley is OANDA’s senior market analyst for Asia Pacific, responsible for providing timely and relevant macro analysis covering a wide range of asset classes. He has previously worked with leading institutions such as Saxo Capital Markets, DynexCorp Currency Portfolio Management, IG, IFX, Fimat Internationale Banque, HSBC and Barclays. A highly sought-after analyst, Jeffrey has appeared on a wide range of global news channels including Bloomberg, BBC, Reuters, CNBC, MSN, Sky TV, Channel News Asia as well as in leading print publications including the New York Times and The Wall Street Journal, among others. He was born in New Zealand and holds an MBA from the Cass Business School.
Jeffrey Halley
Jeffrey Halley

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