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    Asian Session – Dollar firms against yen on Japanese intervention warning

    The US dollar made some progress during Monday’s Asian trading, despite the weaker-than-expected nonfarm payrolls report released on Friday. The dollar might have been helped by the warning of the Japanese finance minister that the country was ready to intervene in foreign exchange markets if the yen’s moves were volatile enough to hurt the country’s trade, economy and fiscal policies.

    Apparently there was some disagreement between US and Japanese authorities, with the Americans describing the yen moves as “orderly”, while the Japanese sounded increasingly concerned by the strengthening yen. This disagreement probably made intervention less likely and, were unilateral intervention to even occur, less effective. Dollar / yen was trading around 107.50, at its highest of the past 10 days or so.

    Despite Friday’s weaker-than-expected employment report, which just about removed a June rate hike from the picture, the dollar also posted modest gains versus the euro and the pound. The US dollar was trying to push the euro below the 1.14 mark, while sterling dropped below 1.44 to 1.4380. Better-than-expected March German industrial orders at the beginning of the European session failed to lift the euro.

    Gold also dropped back to the $1280 an ounce mark after rising to around 1295 in the wake of Friday’s weak labor numbers. Some attributed the dollar’s rebound to the insistence by New York Fed President William Dudley that the Fed will probably hike rates twice this year. Dudley made those remarks after the release of the employment report.

    Chinese trade data released over the weekend showed that imports fell by around 5% year-on-year instead of coming in flat during April as analysts had expected, while exports were more or less in line with estimates. This shows that China’s domestic demand might be a little weaker than previously thought. The data had little effect overall, although the aussie was trading at new 2-month lows versus the greenback at 0.7340.

    In commodities, oil prices were supported by the wildfires in Canada which looked like affecting the country’s oil production. US oil was holding on to the $45 a barrel level.

    Looking ahead, the economic calendar is relatively light as it features just Eurozone Sentix sentiment figures, Canadian housing starts and US employment trends for April. Fed officials Evans and Kashkari are also expected to speak later in the day. Overall this is expected to be a relatively slow week prior to Thursday’s Bank of England meeting and Friday’s US retail sales.

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