Dollar Starts the Week on the Back Foot

Once again the dollar is starting the week on the back foot as Friday’s news and data was all pretty much negative for the green back – the Core PCE was off significantly and the healthcare failure in the senate pushes the administrations fiscal plans even further away. Despite all the bad news, the dollar index appears to have found a bit of support just above last week’s low around 93.20. Traders will now be asking if we are likely to see a continuation of this move as the week progresses or if a lot of it is now priced into the currencies. The IMF are certainly backing the former as they came out on Friday claiming that the dollar is still 10-20% over valued at current levels.

The main ray of hope on the horizon for dollar bulls this week is the fact that tomorrow is the start of a new month and that of course means a very data and risk event heavy week ahead with the blue riband Non Farms looming at the end. This could lead to some profit taking in the market in the next couple of days and possible relief rallies. However, everything else really points to traders looking for these opportunities to get back into short dollar positions.

Not surprisingly for the last day of the month, it’s pretty quiet on data releases today (with just Chinese PMI and Chicago PMI the only events likely to move the market) but, it’s the calm before the storm of tier 1 data and central banks action later in the week.

Rakuten Securities Australia Review