Dollar Strengthens Across The Board

The dollar has strengthened across the board following stronger data from the US yesterday in the form of ISM manufacturing and PMI figures that has seen US treasuries continue to outperform. For me the possibility of a December taper from the Fed is starting to increase, with many economists looking for 200k+ for NFPs on Friday with the consensus at 183k. I will add, however, that US budget negotiations that are due to be resolved by mid-December have the capacity to stop the taper debate as I doubt a bipartisan agreement will be reached on time.

The FX market is focusing on reports that the BoJ is working on a contingency economic stimulus plan to achieve their inflation target with the usual unnamed sources quoting that the package is likely to be between JPY 5.5 trillion to 5.6 trillion, which has taken JPY to a six-year low of 103.39 against the dollar.

The RBA as expected left rates unchanged overnight as they continue to monitor the effects of earlier rate cuts whilst still sighting the AUD as being ‘uncomfortably high’, adding that the currency needs to be lower to balance economic growth.

EUR/USD
Supports 1.3490-1.3425-1.3380 | Resistance 1.3630-1.3685-1.3710

USD/JPY
Supports 102.25-101.75-101.50 | Resistance 103.40-103.75-104.30

GBP/USD
Supports 1.6340-1.6250-1.6180 | Resistance 1.6450-1.6500-1.6620

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