ASIA SUMMARY

After the dollar rallied in New York off of the better than expected ISM which came in at 54.7 vs. expectations of 51, Asia took the dollar modestly higher. USD/JPY grinded higher but is still capped by the 120 level. GBP/USD broke through the NY lows and has not been able to bounce significantly. With the focus back on the dollar, EUR/JPY traded sideways around the 163 level as it consolidates just under all-time highs.

Commodity currencies were notably weak as well. Earlier in the session, the Reserve Bank of Australia released their interest rate decision which was unchanged as expected.AUD/USD initially traded higher but then broke through the .8240 area which has been short term support. USD/CAD was also strong as it trades firmly above the 1.1100 handle.

Looking forward, it looks after the higher than expected ISM number, dollar bears are being tested. While the dollar may push a bit higher in the near term, traders may look to wait for Friday’s US employment data before making a serious push higher. However, given the net reaction to the weaker US GDP data last week, weaker employment data still may not be enough to push the dollar to new lows.

Upcoming Data Release (UK Session):

Germany: (2am EDT) ILO Unemployment rate expected 6.8% vs. previous 6.9%. (3:55am EDT) Seasonally adjusted unemployment rate expected 9.1% vs. previous 9.2%. PMI Manufacturing survey expected 57.3 vs. previous 56.9.

UK: (4:30am EDT) PMI construction expected 59 vs. previouis 58.9.

EC: (5am EDT) Euro-Zone Unemployment Rate Expected 7.2% vs. previous 7.3%.