The US Dollar began the week in Asia doing something a bit unique as of late, it moved higher. The start of the trade week saw both the greenback and yen start to claw out of last weeks hole as profit takers looked to capitalize on what they believed were overbought markets. Further moves higher in the dollar and yen were also attributed to deteriorating trade relations between China and the US. The issue began with US President Obama imposing a new 35% duty on imported Chinese tires, and China responded by accusing the US of 'a grave act of protectionism' and stating that it would reevaluate import taxes on US poultry and automobiles. Fears that the disagreement could escalate pushed traders toward perceived safety of yen and dollars. This spat could make for interesting conversations at the upcoming G-20 meeting due to be hosted by President Obama in Pittsburgh within a few weeks.
The EUR/USD opened higher to touch a high over 1.4605, but quickly melted to a low of 1.4520 before looking to close the Asian trade day close to 1.4530. EUR/JPY showed the action of most yen crosses as it dropped from Friday's close over 132.00 and eventually sank to 131.30 for the day. AUD/JPY dropped a full big figure from last weeks close near 78.35, and NZD/JPY fell over a big figure from the 64.20 close, hitting a low just shy of 63.00 amidst yen strengthening. USD/JPY however was stable between 90.20 and 90.65, with the psychological 90.00 level looming below. AUD/USD and NZD/USD both sagged along with withering oil and commodity prices while USD/CAD shot to over 1.0850 on the same news. With stocks in Asia lower and futures for Wall Street looking weak it will be interesting to see if this dollar strength has any legs in what could be a very interesting week in currencies.
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