From Marc Chandler at Bannockburn Global Forex:
Overview: The dollar has begun the new week under pressure, though many financial centers are closed today. The upside pressure on Asia Pacific currencies remains notable. The offshore yuan, the Taiwanese dollar, and Malaysian ringgit, the Japanese yen, and Australian dollar are among the strongest currencies today. The ostensible trigger is speculation of US semiconductor tariffs to be announced Wednesday and continued speculation of a "Mar-a-Lago" currency agreement modeled as it were on the 1985 Plaza Accord that drove the dollar lower. Less fanciful is the idea that the US will seek local currency revaluation in trade talks. Many local markets will re-open tomorrow. The Australian dollar is a new five-month highs following a sharp victory for the ruling Labor Party.
The equity markets that were open in the Asia Pacific region were mixed. Taiwan, Australia, and the Philippines markets fell. India and Singapore, New Zealand, and Indonesia advanced. European bourses are mixed, while the US index futures are off by 0.65%-0.90%. European benchmark yields are mostly around two basis points lower. With holidays in Tokyo and London, US cash Treasuries have not traded, but the futures show sharply lower yields. After falling 2.4% last week, gold is rebounding. It is up nearly 2% today to push back above $3300. OPEC+ agreement to boost output by another 411k barrels per day in a bid to punish the quota cheaters, sent the June WTI contract to almost $55 after having been turned back from $60 before the weekend. Still, after gapping lower, the contract has recovered to about $57.50 in the European morning.
USD: The Dollar Index appeared to have broken out of a bottoming pattern last Thursday but its pullback before the weekend was disappointing and leaves a mixed technical picture in its wake. Still on balance, given the 1) still resilient labor market, 2) a likely hawkish hold by the Fed on Wednesday, and 3) the favorable momentum indicators, we favor a continued upside dollar correction. However....
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