Dollar recovers as the week starts following comment from PBoC Governor Zhou that there are no sudden changes in China's stable foreign exchange reserve policy. Zhou emphasized that the policy aims at liquidity, safety and returns. The dollar was sold off last Friday after PBoC called for a super-sovereign reserve currency that's delinked from the economies of the issuers in the annual financial stability report. Traders pare some speculation that China will be speeding up diversifications of its $1.95T reserve soon after today's comment from Zhou.

However, the dollar's strength was limited as the news was countered by comments from comments from head of the Arab Monetary Fund. Jassem al-Mannai, director general of AMF, said that dollar is underway a heavy burden through accumulating huge debt in the current crisis and China and Russia are proposing a more international reserve currency other than the dollar. He said that these developments could affect the dollar negatively and cannot be ignored. He also mentioned that the Gulf region's central banks could adoption options other than a strict dollar peg, including basket, floating exchange rates, dollar options, managed float.

Dollar index is back above 80 level, also helped by oil's break of 69 level as well as pull back in global stocks. Though, the overall outlook in dollar remains rather mixed. EUR/USD is still bounded in range of 1.3826/4137, GBP/USD in range of 1.6185/6617, AUD/USD in range of 0.7931/8117, USD/CAD in range of 1.1418/1636. Dollar index is still in range of 79.56 and 80.94. We continue to favor the case that fall from 89.62 has completed at 78.33 even though the view is a bit shaky. We'd prefer to stay neutral for the moment and wait for a break of 80.94 resistance to confirm resumption of rebound form 78.33 to key resistance 82.62 (38.2% retracement of 89.62 to 78.93 at 82.64). Meanwhile a break below 79.19 support will suggests that a new low below 78.33 should be seen before bottoming. Though, even in such case, we'd still expect downside to be contained by 77.69 key support to conclude the fall from 89.62. In any case, a breakout is anticipated this week considering the line up of key events of ECB ISM and NFP.

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Confederation of British Industry said that UK's conditions still remain rough but there are signs of some improvement expected in the coming months. However, Profits, employment and investment remain on a downward trend, and financial services companies cut about 17,000 jobs in the first quarter and probably shed 15,000 in the second quarter.

On the data front, New Zealand trade surplus jumped by largest level in history from 319M to 858M in May. Japan industrial production rose 5.9% mom in May and retail sales dropped -2.8%. Eurozone confidence indicators are the main focus today.