U.S. Dollar Declines in Asian Trade on Risk Appetite

The dollar remained broadly pressured in Asia with risk appetite fueled by increased optimism on the global economic outlook. Asian stocks were broadly higher, with the MSCI Asia index ex-Japan hitting fresh 10-month highs. In particularly AUD and EUR were both bid, but remained under recent highs. Of note is the upcoming record $115 bln U.S. bond auction only because the dollar has shown a propensity to weaken just prior to the auctions until the results are known. EUR-USD fell to early lows of 1.4172 before bouncing back to 1.4237 highs. USD-JPY was contained in a surprisingly tight range around 94.67-93. Commodity prices were well bid with oil extending gains, copper bid and aluminum prices rising limit up in Shanghai as global economic optimism prevailed. Comments from Fed’s Bernanke, including support for Treasury’s strong dollar policy had little impact. U.S bond yields edged up ahead of this week’s supply and in reaction to the regional stock gains. The cumulative USD short positions in the IMM for the major currencies shows the highest shorts in a year as the dollar bearish sentiment continues.