Overnight Asia/Europe

• USD mixed, volumes modest

• UK news disappoints Cable

• Technical trade overnight

Today’s Economic Reports

All times EASTERN (-5 GMT)

• 10:00am USD ISM Manufacturing Index

• 10:00am USD ISM Manufacturing Prices

• 10:00am USD Construction Spending m/m

Looking Ahead to Tuesday

All times EASTERN (-5 GMT)

• 9:00am USD Fed Chairman Bernanke Speaks

• 10:00am USD Factory Orders m/m 0.0%

• Tentative USD Domestic Vehicle Sales 10.8M


The USD is starting the week mixed in New York this morning as overseas news drives early interest in the USD. Negative news in the UK prompted a strong selling day in the GBP today, Cable dropping to a low print at 1.9595 before attempting a recovery. Reports of traders increasing short sales of UK retailers’ stocks, negative press on Prime Minister Brown and reports that a large number of UK households have slipped into negative equity weighed on Sterling to start. Cross spreaders have had a great start to the week as the Sterling side of everything has pushed all the rates sharply higher. This has hurt EURO as the two pairs are tracking each other; EURO unable to extend gains from Friday and is trapped in the lower end of its early range; low prints at 1.5513 and highs at 1.5571 are making for dull trade. Good demand from Asian sovereign names was seen traders say around the opening range at 1.5550 area but offers from a well-respected German name capped the potential rally early. EURO trading right down the middle of the range in early New York at 1.5530 area. USD/JPY is slightly weaker with lows at 104.64; traders note stops on the break triggered at 104.90 area and the USD bulls are now on the defense. Asian volumes were lighter but the USD/JPY will likely remain on the defensive this week as no real news from the Japanese is seen as potentially market moving but US data due later will likely have an impact; look for the rate to continue to trade two-way with a lower bias for the week. If holding shorts in the rate look to add soon depending on the quality of the close today. Ideally, you would like a failed low-volume rally to sell into. Swissy continues to grind lower as well but has found some technical support overnight at the May daily pivot point at 1.0390; Monday’s low so far at 1.0389. Traders note that large stops are building in the 103.80/90 area suggesting that the late longs form last week are set to bail. Support is not heavy until the 1.0280 area and a hard break could be in the works there. In my view, the USD is set to resume its downward action this week. I would look for two-way action into the NFP data on Thursday with a break coming later in the week. For the most part the higher action against the GBP is a near-term head fake and not indicative of the overall market bias. Look for the EURO and GBP to recover higher by mid week.

Analysis by: Forexpros.com written by Jason Alan Jankovsky


Trading Futures and Options on Futures and Cash Forex transactions involves substantial risk of loss and may not be suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more of your initial investment. Opinions, market data, and recommendations are subject to change at any time.