USD

The dollar was off to a good start for the week, as risk aversion remained in the markets for most of the Asian session.

However, the U.S. ISM manufacturing PMI failed to impress market participants as it clocked in at 50.9. This was only slightly higher than expectations of a 50.6 reading, an improvement over the 49.0 figure last May. There are no major reports from the U.S. today, only the medium-tier factory orders data and speeches by a couple of Fed officials. Dudley has downplayed the Fed’s stimulus taper plan last week and could dish out similar remarks again today, which could lead to dollar selling.

EUR

The euro was able to gain strength against the dollar in yesterday’s trading, as it climbed from the 1.3000 area until the 1.3050 level. Data from the euro zone came in stronger than expected, as Italian manufacturing PMI came in better than expected and so did the euro zone jobless rate. For today, only the Spanish unemployment change is expected from the euro zone, and it could show another round of improvements in the labor sector. If that’s the case, the euro could continue to draw support.

GBP

 The pound was off to a good start but returned most of its gains, even though the U.K. manufacturing PMI came in better than expected. The figure improved from 51.5 to 52.5 instead of dipping to the expected 51.3 reading. Net lending to individuals fell short at 1.0B instead of climbing from 1.3B to 1.4B. For today, the construction sector will release its PMI figure and possibly print an improvement from 50.8 to 51.3. Aside from that, MPC member Tucker is set to give a speech and the 10-year bond auction will be conducted in the UK.

CHF

 The franc weakened in yesterday’s trading since the SVME PMI showed slower manufacturing activity in Switzerland. The reading slipped from 52.2 to 51.9 instead of improving to 52.5. There are no major reports due from Switzerland today which suggests that USD/CHF movement could be driven by US data.

JPY

 USD/JPY edged higher in yesterday’s trading, moving closer to the 100.00 handle. Average cash earnings in Japan remained flat and missed the expectations of a 0.6% uptick. There are no reports due from Japan today, which suggests that yen pairs could be dependent on risk sentiment and currency-specific events.

Commodity Currencies (AUD, CAD, NZD)

 Comdolls retreated in yesterday’s trading as risk aversion remained in the markets. The Australian dollar tested the .9250 level, but dropped right back below .9200 when the RBA decided to keep rates unchanged and mentioned that the Aussie is still relatively overvalued. There are no other releases due from the commodity-dependent economies today.

By Kate Curtis from Trader’s Way