The US dollar edges lower in Asia

Dollar starts week with a yawn

Despite the noise, major currencies finished the week comfortably ensconced within their one-month ranges. A lack of headline action over the weekend; notably no fireworks on US/China trade; has seen some gentle US dollar selling resume in Asia. Most notable was the indefinite postponement of the US/China trade agreement review, to give China more time to buy more goodies from the US.

Japan released abysmal GDP data earlier on Monday. Preliminary Annualised GDP for Q2 declined by 27.8%, slightly worse than projected. The Preliminary Q2 QoQ data also came in slightly worse, at -7.80%. The GDP data has not shaken up the financial markets, mostly because it was expected. Still, the numbers reinforce the fact that the Japanese economy is in deep trouble.

The EUR/USD has edged 0.20% higher to 1.1860. The 1.1920 region remains the critical resistance zone for the single currency. GBP/USD has edged higher to 1.3105, almost precisely at its one-month 1.3000/1.3200 mid-point. AUD/USD has climbed 0.30% to 0.7195 today, boosted by a lack of US/Chinese trade fireworks. It is, however, still well shy of its 0.7240 triple top, and like GBP/USD, remains anchored in the middle of its one-month range.

Asian currencies have edged higher after the postponement of the US/China review session and another strong CNY fixing by the PBOC. USD/CNY has fallen 0.15% to 6.9400, with the SGD, THB and MYR all edging 0.10% higher versus the greenback.

Markets should continue to take their cue from the EUR/USD pair for future direction. Having led the US dollar rotation initially, euro’s ascent stalled at 1.1940. A daily close above 1.1940, or below 1.1700, will give strong clues to the next big move in currency markets. In the meantime, summer doldrums persist, and patience is required.

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Jeffrey Halley

Jeffrey Halley

Senior Market Analyst, Asia Pacific, from 2016 to August 2022
With more than 30 years of FX experience – from spot/margin trading and NDFs through to currency options and futures – Jeffrey Halley was 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 and Channel News Asia as well as in leading print publications such as 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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