USD firmer overnight - Evening Session - GMT

Overnight Asia/Europe

•    USD firmer overnight
•    Stops seen in most pairs lifted USD
•    Liquidation of GBP crosses continues

Today’s Economic Reports
All times EASTERN (-5 GMT)

•    10:00am USD ISM Non-Manufacturing PMI
•    10:00am USD Pending Home Sales m/m
•    10:00am USD Factory Orders m/m
•    2:00pm USD FOMC Meeting Minutes

Looking Ahead to Wednesday
All times EASTERN (-5 GMT)

•    7:30am USD Challenger Job Cuts y/y
•    8:15am USD ADP Non-Farm Employment Change
•    10:30am USD Crude Oil Inventories

Summary

The USD is better against most major pairs this morning as traders unwound EURO-Sterling and Yen pairs giving the Greenback a boost by default some desks report. Stops were driving trade as the USD crossed several important S/R levels overnight; most notably in EURO as the rate fell through stops at 1.3500, 1.3440, and 1.3390 for a low print at 1.3330. Traders report that semi-official demand was seen under the 1.3400 handle but the rate is not responding higher at this point as liquidation from the non-USD pairs continues. Aggressive traders can look to buy EURO under the 1.3300 handle as key support starts coming in around the 1.3280 area in my view. GBP is holding the 1.4600 handle after low prints at 1.4548 continued another inside range low for the rate; highs at 1.4737 are just under yesterday’s highs suggesting that the rate is meeting some selling despite the buying to liquidate GBP crosses. Aggressive traders can buy GBP anytime on weakness in my view; most likely a test of the 1.4500 handle.   USD/JPY rallied as shorts continued to get squeezed; high prints at 94.24 in late European trade. Stops were seen above the 93.50 area as expected and Japanese exporters continue to offer strength traders say. In my view, the rate is due to resume falling off but there is still residual short-covering possible so I would be a cautious bear above the 94.00 area. USD/CHF rallied higher as gold weakened again overnight; although the metal is still firmer about the $800/OZ. level trader perception is that a continued fall in the metal will rally the USD against Swiss. In my view, the high print at 1.1257 in early New York trade is follow-on buying from aggressive European trade and likely to fade as intraday longs run out of momentum. In my view, today’s USD strength is technical follow-on from Monday’s firmer start combined with liquidation from non-USD pairs. I don’t think the Greenback has what it takes to continue a prolonged advance and see this action as simple range-trade after last month’s high volatility. I would look to sell USD strength near-term  and like the buy side of EURO under the 1.3300 area.