Dollar index holds firm

<p>The DXY is testing resistance at the 80.57-60 level, with the technical picture suggesting that a break here could establish a rally above 81.00 as […]</p>

The DXY is testing resistance at the 80.57-60 level, with the technical picture suggesting that a break here could establish a rally above 81.00 as we trade and close above the 200-day moving average at 80.38. The JPY has continued to trade with a bid tone, with some citing the 10-year US treasury yields that made a new yearly low overnight, as the culprit. The release of Japanese retail overnight has certainly not helped, following a drop to -13.7% from an already weak consensus of -11.7 after the retailer-front loading activity head of the sales tax increased in April.

AUD was a shining star in the Asian session following the release of capital expenditure data that is closely followed by the RBA for monetary policy adjustments. The headline number of -4.2% versus expectations of -1.5% initially sent the lifestyle currency down to the 0.9200 support level. However, as the market realised, the headline weakness was all down to the buildings and structures component that doesn’t contribute to GDP readings. The reality is that the forward looking investment showed solid growth in the machinery and equipment sector (mining) and the AUD did an about U-turn, trading back above 0.9280.

With most of Europe celebrating Ascension Day, the FX market will be driven by GDP and pending home sales data from the US this afternoon. The big question of what action the ECB will take next Thursday dominates research pieces from analysts. Will they dare to disappoint the markets again? Are rate cuts priced in now? Is outright QE a possibility?



Supports 1.3560-1.3520-1.3480 | Resistance 1.3640-1.3675-1.3700




Supports 101.50-101.20-100.75 | Resistance 101.90-102.15-102.35




Supports 1.6680-1.6655-1.6560 | Resistance 1.6745-1.6785-1.6830


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