Positioning to dominate

The Asian session has been reasonably quite as the dollar continues to hold onto gains with USD/JPY moving up to 109.15/20. Japanese welfare minister Yasuhisa Shiozaki said that he has absolutely no intension of delaying the GPIF reforms, as the Japanese CPI data was seemingly ignored by the market as the core reading came in at 3.1% versus the 3.2% expected.

It was another session of underperformance for the antipodean currencies as the AUD broke the 0.8850 level that had held since August 2013. The technical picture now points to a test of the 0.8660 level as the NZD slid through 0.7900. My contacts have suggested that lack of liquidity played a major part in the move as some sighted the market had been miss-hit by market makers, although no official confirmation has been given on that suggestion.

The dollar continues to outperform as the dollar index breaks above 85. China and Geopolitical tensions continue to weigh on equities but, with the Fed speak this week somewhat dovish, I wonder how long it will be before we get a comment from a Fed member with regards to the surging dollar and the effects it is having on the economy. I note positioning is starting to elevate to extreme levels which added together has all the hallmarks of a 2%-3% correctional cleansing.

The data calendar is dominated from across the pond with Q2 GDP and the University of Michigan consumer sentiment survey.

EUR/USD

Supports 1.2695-1.2660-1.2625  | Resistance 1.2765-1.2785-1.2820

USD/JPY

Supports 108.40-108.25-108.00  | Resistance 109.30-109.50-110.00

GBP/USD

Supports 1.6275-1.6240-1.6160  | Resistance 1.6340-1.6395-1.6420