The first Asia session of the week kicked off with a much stronger greenback. Following a Friday that saw choppy moves for the USD, in what seemed like a market searching for direction, Monday’s open looked like many traders had made up their minds. They sent the dollar higher almost across the board against the other majors on the first tick of the week.
AUDUSD opened 50+ pips lower from Friday’s close, attracting momentum traders who continued to sell the pair an additional 50+ pips to lows around .9000. NZDUSD saw similar moves, also dealing 100+ pips to the downside to the .7550 area, before some bids stepped in and helped the pair bounce. The dollar also enjoyed a much need rally against the GBP, with Cable continuing its slide off historic levels. The pair dealt to lows back around 2.0800, with large stops expected under the figure.
Many of the high yielding JPY crosses were under pressure for most of the session, as Asian equity indexes opened substantially lower. Also keeping currency traders on edge regarding the carry pairs is the ongoing credit crisis in the United States. Many market observers are expecting another week of news and events adding to the volatility in the financial markets, with most of the risk to the downside for the more riskier assets (such as carry trades). This fear was certainly evident in EURJPY during the session, with the pair dealing more than 100+ pips to the downside into the 161.20s in a steady move lower. USDJPY also dealt to areas of significance, sliding another 70+ pips to multi year lows around the 11.10s. The pair stopped just short of the 110.00 mark, with the 109.80-110.00 level likely to provide solid support.
Ahead in the upcoming London session, currency traders will continue to focus on the ongoing trend in the market. We may begin to see momentum building to the downside causing another round of carry trade unwind. On the economic front, United Kingdom PPI is expected out, which will likely add to even more volatility to a currency on the retreat. Indications from the first session show we will likely be in for another wild week in the currency markets.
