7 Jun 2013
Flash: Markets snap as Investors Par long USD - OCBC Bank
FXstreet.com (Barcelona) - Emmanuel Ng of OCBC Bank notes that markets snapped on Thursday as investors pared their long dollar positioning ahead of Friday’s labor market report and the greenback collapsed against the majors with the JPY leading the charge.
In addition to USD, he notes that the JPY also strengthened across G10 space as investors also unwound the crosses. Elsewhere, he sees that although the antipodeans managed to carve out minor gains on the greenback, they however continued to trail their G10 counterparts. On this front, note the EUR/AUD comfortably above 1.3800 on Thursday.
Further, Ng adds that the broad dollar’s substantial move higher may have been precipitated the EUR/USD’s rise, and after the ECB’s Draghi indicated that there was no reason to act now with regards to implementing negative overnight deposit interest rates. Overall, he sees that last night’s price action may have been a culmination of prior pent up pressures (i.e., possibly overbought dollar positioning and growing disappointment with the lack of progress in yen weakness) with the ECB providing a convenient catalyst. Elsewhere, the Fed’s Plosser also stated on Thursday that market expectations towards a tapering may have been overblown. He finishes by writing, “Needless to say, tonight’s US nonfarm numbers (mkts: +170k) are expected to be the highlight of the global day and investors may require a significant upside surprise to kick start the dollar higher again.”
In addition to USD, he notes that the JPY also strengthened across G10 space as investors also unwound the crosses. Elsewhere, he sees that although the antipodeans managed to carve out minor gains on the greenback, they however continued to trail their G10 counterparts. On this front, note the EUR/AUD comfortably above 1.3800 on Thursday.
Further, Ng adds that the broad dollar’s substantial move higher may have been precipitated the EUR/USD’s rise, and after the ECB’s Draghi indicated that there was no reason to act now with regards to implementing negative overnight deposit interest rates. Overall, he sees that last night’s price action may have been a culmination of prior pent up pressures (i.e., possibly overbought dollar positioning and growing disappointment with the lack of progress in yen weakness) with the ECB providing a convenient catalyst. Elsewhere, the Fed’s Plosser also stated on Thursday that market expectations towards a tapering may have been overblown. He finishes by writing, “Needless to say, tonight’s US nonfarm numbers (mkts: +170k) are expected to be the highlight of the global day and investors may require a significant upside surprise to kick start the dollar higher again.”