The Dollar remains weak against Euro and Pound this morning with EURUSD still holding a firm base above 1.3240, and GBPUSD retracing mildly after an attempt on the 1.5 resistance yesterday.
However, the U.S dollar is showing some strength against the Japanese Yen following positive signs of recovery from China concerning manufacturing capacity. The USDJPY has climbed straight up form its weekly low 95.61, this morning already trading around 99.3. The pair will obviously aim to test 100 if sentiment will continue to favor risk over risk aversion next week.
Another currency which is preforming well against the Yen is the Australian dollar, the former carry-trade star has managed a 500 pip move in just a few days, getting closer and closer to its main resistance area 73 after bottoming around 66.8 this week.
On a longer term angle, being a bit optimistic and assuming things will genuinely start to look better in the global economic spectrum ( maybe in a few months or maybe in a year or two), AUDJPY should find itself way above 80, which is one step before it returns to its old status as a carry-trade pair.
Personally, I like to consider AUDJPY and AUDUSD as important indicators expressing most clearly cycles of risk aversion versus cycles of risk appetite.
Lastly, note that today is labor day in Euro-Zone countries, expect lower volatility during London trading session.
Z.Georgi
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