The theme of the day is shifting from dollar strength to yen rally in early US session after disappointing data from US. Stocks open low and is feeling tremendous pressure with DOW down over 100 pts within first 5 mins of trading. The Japanese yen, on the other hand, surges sharply against Euro, and to a lesser extent dollar. NY State Manufacturing survey was disappointing, dropped more than expected from -4.6 to -9.4 in June, breaking recent up trend since April. Nevertheless, the reading was still far better than March's low of -38.2. The index generally suggests that manufacturing sector is having some stabilization but is not yet out of the woods. Net Long term TIC capital flow slowed sharply from $55.4b to $11.2b in April, showing that private foreign investors reduced their net holdings of corporate and government agency bonds.

Dollar was boosted as the week starts by comments from Russian Finance Minister Kudrin that there is no plan to change the structure of Russia's investments significantly in the near future, and it's too early to speak of an alternative for dollar as reserve currency and fundamentals of the greenback are still in good shape. Though the greenback loses some steam as the day goes. From a technical angle, we're holding to the view that whole fall from 89.62 has completed with three wave down to 78.33 already. Further rally is expected to 81.47 and break will target key resistance of 82.63 (38.2% retracement of 89.62 to 78.93 at 82.64). Though, below 79.96 minor support will turn intraday outlook neutral first. Further break of 79.19 support will delay the bullish case and bring one more fall in the dollar index before bottom. However, we'll still look for reversal ahead of 77.69 key long term support.

Other than commodity currencies, Euro is the weakest one, falling sharply against dollar, yen and Sterling. Q1 employment in Eurozone dropped at record level of -0.8%, much deeper than prior -0.3%. Swiss combined PPI dropped -0.3% mom, -5.0% yoy in May, biggest drop in over two decades. RBA will release minutes in the coming Asian session while BoJ is expected to keep rates on hold at 0.10%.