Dollar Edges Up Again After U.S. Jobs Data, While Euro Stalls

  • Traders take profit on short USD positions, Saxo’s Hardy says
  • Euro fails to hold above 1.18; support at Aug. 4 low of 1.1728

ING's Patel Sees Three Main Parts to U.S. Dollar Weakness

The dollar rose against most of its major peers, extending its gains after Friday’s stronger-than-expected jobs report.

The Bloomberg Dollar Spot Index edged up less than 0.1 percent in generally muted trading after rising the most since January on Friday. The currency also drew support from investors who were taking profits on short positions, according to John Hardy, head of foreign-exchange strategy at Saxo in Hellerup, Denmark. It then pared its advance as Federal Reserve Bank of Minneapolis President Neel Kashkari said a shortfall in inflation matters for the Fed’s credibility.

  • Dollar pares gains after dovish comments from Kashkari and St. Louis Fed President James Bullard; USD/JPY eases to the area of light bids ~110.70, with stops resting under 110.40 and layered offers above 111.00
  • “The U.S. employment report is still supporting the dollar,” said Georgette Boele, a currency strategist at ABN Amro Bank in Amsterdam. “The market is very long euro now and it may be difficult to find a driver that pushes the EUR/USD higher” 
  • EUR failed to hold above 1.1800, with spot weighed down by retracing bund yields, nearly EU896m of option expiries and profit-taking by levered names in relatively thin markets. Support at 1.1728, Aug. 4 low, eyed on further retracement as EUR completes fifth wave pattern  
  • USD/CAD touched a high of 1.2715 after stops were triggered above key resistance at 1.2701. The move higher was sparked by a series of option purchases in a thin market amid a Canadian holiday. Spot rests atop the key pivot level of 1.2681, the intraday low recorded after the BOC raised rates 25bp on July 12
  • GBP dipped to 1.3014 low amid renewed EUR/GBP buying by spec accounts, oil weakness and a noticeable drop in gilt yields. Support is seen at 1.3000 ahead of 1.2923 55-DMA as strategists turn decidedly bearish on the pound
  • NZD was the worst performer on day against the USD, trading near a low of 0.7348 as speculators short the currency ahead of the RBNZ meeting later this week. The RBNZ is expected to leave rates steady at 1.75%, according to economists surveyed by Bloomberg. NZD support is seen at 0.7335
  • ZAR rose more than 1% after a motion of no confidence in President Zuma was brought before parliament, which will vote Tuesday
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