The dollar has been on a slow and measured recovery over the past few sessions in the wake of the four and a half month low in the dollar index seen at the end of last week. This has curtailed uptrends on several majors, most notably against the euro and sterling. Of course, the better than expected US employment data last week had something to do with this, but events in China continue to play a role in FX market developments. Overnight, we’ve seen Asian stocks weaker, with the Nikkei down more than 2.5% as China fears continue to pervade markets. Most notably, this has seen the price of copper collapse during March by more than 8% from the highs. Less so, gold has also benefitted, making another high for the year overnight above the 1355 level.
For FX, this has meant that the crosses have been a lot more interesting than the dollar majors. This can be seen on EURJPY (near highs for the year), EURGBP (again near highs for year) and AUDNZD (near the lows for the year. On the latter, note that the RBNZ decision comes overnight, with a rise in the cash rate expected to reach 2.75%. A hawkish statement accompanying this would allow for a push towards the low for the year at 1.0493 on AUDNZD, but a push significantly lower from here could be difficult given that Australian data has perked up recently and the RBA has ditched its bearish rhetoric towards the currency.