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USDJPY and Crude Oil Remain Weak

Market Analysis

USDJPY, H4                 

The dollar has traded mixed, picking up some demand versus its G3 counterparts following the phase of weakness sparked by Friday’s sub-forecast U.S. jobs report, but lost some ground to other currencies. EURUSD fell back under 1.1240, putting in a little distance from the seven-month peak seen on Friday at 1.1285. USDJPY, after extending to a fresh 18-day low in Tokyo, at 110.31, recouped to levels about 110.60. I remain short USDJPY on the daily chart from May 31 with a target at 109.90.  The narrow USD index was showing a 0.3% gain, as of the early European PM session. Cable, after dipping to a low of 1.2861 following a below-expectations UK services PMI report, rallied back above 1.2900. A new UK poll, part of which was conducted after the terror attacks in London on Saturday night, put the Conservative Party’s lead over Labour at 11 points, well up on a different poll on Friday showing the party with only a 6 point lead. AUDUSD also rallied, to an 11-day peat at 0.7486, while USDCAD carved out a three-session low at 1.3461, despite a dip in oil prices.

USOil topped at $48.42 highs during Asian hours, following reports that Saudi Arabia and other gulf nations cut diplomatic ties with Qatar, accusing it of supporting terrorism. Since then however, prices have fallen more than $1/bbl, as the market ponders whether the effectiveness of the political rift could impact the OPEC/NOPEC production cut agreement. In addition, U.S. production continues to ramp higher, with drillers adding new rigs for a record 20 straight weeks, according to Baker-Hughes data. The front contract has fallen back to session lows of $47.20.

 

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Stuart Cowell

Senior Market Analyst

HotForex

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