ASIA SUMMARY

Asia saw a continued bid tone in the dollar after Friday saw US non-farm payrolls come in strong at 180k vs. expectations of 135k. The continued strength in the US labor market despite weakness in the housing sector came as a surprise. EUR/USD ground lower below Friday’s lows but has not had much follow through so far. USD/JPY has also traded through Friday’s highs but is finding resistance into 119.50 area.

With many traders out on holiday in the US, Asia, and Europe, it seems that the market is unwilling to take the dollar much higher. However, illiquid conditions could push the market as we saw last Thanksgiving week.

The focus in Asia for the rest of the week is on the BOJ rate decision due on Tuesday evening in the US (Wednesday in Asia). With JPY crosses holding up after their recent rally, it looks like much of the fear of higher interest rates in Japan have subsided. However, next weekend’s G7 meeting could bring the focus back on the JPY. The relatively low JPY has increased Japanese exports at a time when many argue that the JPY should be stronger as the Japanese economy recovers.

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