Forex snapshot

The US dollar continues to weaken after last week’s good run, as geopolitical tensions ease somewhat. 

Dollar and yen notes
Source: Bloomberg

Dollar slips back versus yen

The dollar is struggling to hold the 200-daily moving average today, but the bounce from ¥102 remains intact.

Weaker retail sales yesterday from the US did little to hold back the dollar, but the risk in initial jobless claims today back above 300,000 has seen the yen gain strength during the afternoon. The final day of the week will bring with it PPI figures and the first Michigan confidence reading for the month, but the data is broadly expected to be supportive of the US dollar.

A rising daily relative strength index has faltered slightly today, but so long as the currency pair can hold above the 200-DMA there is reason for optimism and grounds for a possible retest of the ¥103 level.

On the downside ¥101 has yet to be seriously challenged, while the 50-DMA around ¥101.90 should also provide support.

C$1.10 halts rise in USD/CAD

The major line in the sand at present is C$1.10, halting the significant rise in USD/CAD that was a feature of July.

The falls began last week when the Canadian jobs report came through well below expectations, an event that initially boosted the loonie, but Canada’s statistics agency then admitted the report was in error (without providing further detail). Analysts now think that around 30,000 jobs were added last month, which will boost the Canadian dollar and likely see the pair weaken again.

With the daily RSI declining and the MACD turning negative, USD/CAD may be weakening, but the uptrend from July should provide support, and if this is lost the 200-DMA may still step in to prevent further losses.

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