After a week of rather poor performance for the USD dollar, losing 1.76% against a basket of major currencies and adding a fifth straight week of losses, the dollar index started this week off on a firmer note. Finding firm support from the open around 93.30 the dollar index made steady gains towards 93.80 as some ground was reclaimed against sterling as a well as a jittery euro as the region remains engaged with the Greek debt negotiations. Relative to the euro the outlook for the greenback remains positive and with the rolling four week moving average of US unemployment at its lowest level since April 2000 the prospects for further gains in USD could support the currency higher.
We continue to keep a close eye on JPY, which will seemingly remain locked in consolidation sideways throughout the remainder of the month. Support towards 118.50 and resistance around 120.50 have kept the majority of April’s trading activity confined to a narrow range. With the Bank of Japan committed to its current loose monetary stance the yen could remain within the month’s trading range for the near term which will prove attractive for exporters over the coming month. As a result we could see further upside potential in the Nikkei 225 with some market commentators anticipating the index could revisit 20,000 and above in the near future after reaching this level for the first time since mid-2000 late last month.
Shortly after Rio Tinto announced it would be looking for a buyer for its $1bn Pacific Aluminium business unit, an attempt to divest noncore assets, BHP Billiton’s South32 entity, where it spun off noncore assets, had a rather subdued debut on ASX. After opening at A$2.13 and rising to A$2.20 early on, prices slipped back towards A$2.00 as investors continued to adopt a cautious approach towards the mining sector and softer Chinese property prices impacted investor sentiment.