Monday, October 29, 2012

Doing the Rounds: USD Grinds Higher Amid General Risk Aversion

The US dollar has been grinding upward against its major peers today as markets are met with a general mood of risk aversion.  EUR/USD appears poised to make another run at the 1.28 handle, though only a sustained break below this key psychological point would reestablish a mid to longterm bearish trend.  Likewise, cable traded lower today in the 1.600-40 range.  Conflicting signals from Bank of England officials have also weighed on Sterling.  Again, watch a break below 1.60 for clues as to the midterm trend.  USD/MXN spiked up to 13.1087, missing my sell order by a measly 13 pips, before heading back down towards the top end of the 13-13.07 range where the pair has spent the majority of the last few trading session.  The Canadian Dollar continued its slide, with USD/CAD trading back above parity.  AUD/USD was also dinged this morning, trading down roughly 30 pips from Friday's 1.0360 highs.  Finally, it is interesting to note that the less liquid pair USD/PEN has also seen its biggest daily gain in nearly four months.  Peru's Nuevo Sol has been appreciating as the South American country has maintained some of the strongest growth in the region as the result of sound macro-economic policy.  This, despite the central bank's intervention to smooth out the appreciation of the nation's currency.  USD/PEN traded above 2.6 for the first time since September after closing at 2.5910 last Friday.

In general, market conditions have not changed.  Look for bargain hunters to come in to position themselves for Friday's jobs report.     

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