Though the US markets were open after the holiday weekend Monday morning, there was little thrust behind a greenback move. With a clear economic schedule, dollar traders were left to contemplate last weeks NFPs and the scheduled events due later in the week.
Reflecting the lack of direction in the absence of a fundamental push to get the ball rolling, most of the majors were frozen in modest ranges before noon in the New York session. Against the euro, the dollar moved back and forth between 1.3385 and 1.3355 with the downside teasing a rising trendline going back three weeks. On the other hand, a bid was turning up the heat under USDCHF pushing the pair easily through 1.2240 resistance. According to USDJPY, carry trade-related volatility continues to wane. The pair was holding a 20 point congestion range above 119.20 by mid-day in the North American session. Finally, GPBUSD showed a distinct dollar bias since liquidity returned in the Asian session. The gradual declines since the official open lead the pound to a 60 point loss to 1.9605 12 hours later.
Though traders in the US returned from their extended holiday vacations Monday, those in Europe had another day off. The hole in liquidity was more than apparent as most of the majors were held in check through the usual hours of volatility. For fundamental impetus Monday, greenback traders were left to fully digest last weeks employment data and speculate on the few market-moving indicators set for release over the coming days. Nonfarm payrolls from last Friday had an extended effect on the currency market as market participants who closed their platforms for the holiday had their first crack at the numbers on Mondays open. Looking back over the data, the better than expected 180,000 print in NFPS and the unexpected drop in the jobless rate looked just as good today as they did when the data first hit the wires. However, the lack of momentum after the release allowed for some follow through this morning as many believed there was still some room to run the dollar.
When the market was done playing catch up, there was the ubiquitous change to speculation. For the rest of the week, there are few indicators that have a strong track record for moving the dollar. The first indicator that has any consistency in raising dollar action is Thursdays import price index. Kicking off the March round of government inflation reports, this pressure gauge will be monitored specifically for the affects of energy prices last month. With crude prices hitting new highs for the year over the month, the trickle down effect from imported inflation to the consumer will be crucial for Fed watchers who noted the warning on inflation at the last FOMC rate meeting. On Friday, the February trade balance and University of Michigan consumer sentiment survey for April will mark the most fundamentally potent day for the dollar. The former will be taken in context of the new tariffs enacted on Chinese paper imports and the latter against last months labor report. Also on the agenda are a number of Fed speeches and events. Addresses made by members of the policy board are peppered throughout the week, though Wednesdays FOMC minutes will mark the high point for Fed watchers. Until then, every FX trader will monitor tonights Bank of Japans interest rate decision. In the past few months, the appeal of the low yield currency has turned market-wide volatility on its head. Should rhetoric change, it could quickly disseminate through the market.
Though action was modest Monday morning, equities were trading higher in reaction to Fridays employment report. By 15:35 GMT, the S&P 500 was quoted 0.17 percent higher at 1,446.28. Not far behind, the Dow rose 0.15 percent to 12,579.45 while the NASDAQ Composite added 0.09 percent to 2,473.67. From the top movers list, tech giant Advanced Micro Devices stuck out with a 5.0 percent rally to $13.51. The firm generated interest when it lowered its first quarter revenue forecast and announced it would cut $500 million in capital spending for the fiscal year. Changing gears, Dow Chemicals shares jumped 4.4 percent or $1.97 to $46.44 after a UK newspaper suggested a buyout bid for the firm may be announced in the next few days.
Treasuries were little changed in light trading Monday morning. The ten-year note was quoted a mere 1/32nd higher at 99-02 while its yield went unchanged at 4.744 by 15:35 GMT. Bonds were unchanged at 97-11 with yields at 4.92.