The US dollar recovered from a softer tone in early Asia and is higher against nearly all the major and emerging market currencies as North American market prepare to start the new week. The news stream is light and investors remain on edge geopolitical concerns remain elevated. Oil prices are extending gains, and WTI is above $70 a barrel for the first time since November 2014. Alongside an inverse yield curve, a jump in oil prices typically proceeds economic downturns.
The euro edged higher in Asia, but sellers reemerged in front of $1.1980 before the disappointing Germany factory orders report. Rather than increase by 0.5% as economists expected, March orders fell 0.9%. Adding insult to injury, the February gain of 0.3% was revised to -0.2%. Factory orders had fallen 3.5% in January. The March decline is the third in a row, the longest streak in three years. Factory orders fell by an average of 1.5% in Q1 18 after a 1.2% average rise in H2 17.
The past appreciation of the euro may have taken a toll. Export orders fell 2.6%. However, orders from within the eurozone fell 3% and less (2.5%) outside the area. Still, domestic orde5rs rose 1.5%.
The selling pressure on the euro has thus far been unable to extend the pre-weekend decline that saw the euro trade to almost $1.1910. Options struck at $1.1960-$1.1970 today (~421 mln euros) marks intraday resistance. On a break of $1.1900, there is little in the way of important chart points until closer to $1.18.
The dollar has pushed through the pre-weekend high against the yen after initially slipping toward JPY108.75 in Asia. Japan's markets re-opened for the first time since the middle of last week. Offers around JPY110 last week stymied the dollar rise, but the market does not appear to have given up. A move above JPY109.50 is the last hurdle before the ceiling can be challenged. There are three sets of option expires today that may shape the range. On the downside, there almost $400 mln struck at JPY109.00-JPY1090.10. Reinforcing the cap is a little more than $600 mln strikes at JPY109.95-JPY110.00. And on the top side, there is a $400 mln strike in JPY110.15-JPY110.20.
