The dollar is exhibiting a stronger tendency, rebounding from the previous day’s declines during the North American afternoon session. A disappointing employment report coupled with a lacklustre PMI has positioned the Australian dollar as the weakest among the G10 currencies, a notable shift from its leading status just a day prior. The dollar continues to hover around the JPY159 mark, yet Japanese rhetoric has remained subdued. The PBOC established the dollar’s reference rate today at a level not seen in several years. The euro tested the lower end of the support range identified in the $1.1580-$1.1600 area before recovering to new session highs (~$1.1645) amid a surge of optimism following President Trump’s indication that negotiations with Iran were nearing completion. Oil prices experienced a significant decline, accompanied by a decrease in interest rates. Nonetheless, the sensation of a “Groundhog Day” scenario persisted as the euro remained largely consolidated within the range of $1.1620 to $1.1640 during the North American afternoon. The euro hit a session low today, approaching $1.1595 following the underwhelming French PMI, yet began to rebound prior to the release of the German data shortly after the French report. It stalled near 1.1635.

The Japanese yen exhibited a notable appreciation yesterday, marking its first increase in eight consecutive sessions. It is not, we believe, a coincidence that US 10-year yields experienced a decline of approximately 8.5 basis points yesterday, marking the most significant single-day drop since February 5. The greenback eased to a two-day low near JPY158.60 and subsequently recovered to nearly JPY159 during afternoon trading activity. The dollar remains firm, yet it is subdued within a range of JPY158.80 to JPY159.10. Sterling exhibited an outside up day on Monday, followed by a period of consolidation on Tuesday, and subsequently recorded another outside up day yesterday. It fluctuated within Tuesday’s range and ultimately closed above its peak. Sterling achieved a new four-day peak close to $1.3465. The session low, near $1.3415 today, was recovered prior to the release of the soft PMI. It reached the session high shortly thereafter, around $1.3455, before experiencing a stall, coinciding with the expiration of options valued at approximately GBP935 million today. The 50% retracement of the losses since the month’s high on May 1 is around $1.3480. A move above there could target the $1.3510-20 area next.

The Canadian dollar was the sole G10 currency that failed to appreciate against the US dollar yesterday. Even the Norwegian krone, which exhibits a higher correlation with oil, managed to secure a modest gain of approximately 0.10%. The greenback reached nearly CAD1.3780, marking a new high since April 15. For the past four consecutive sessions, the US dollar has maintained a trading position above CAD1.3760, which aligns closely with the 50% retracement of the decline that followed the peak for the year, recorded at the end of March near CAD1.3965. However, it has yet to establish a position above it. The US dollar is currently trading within the range established yesterday, exhibiting a stable performance today. The market may attempt another approach to chart resistance in the CAD1.3800-15 range.

The Australian dollar exhibited a notable recovery yesterday. The nearly 0.65% gain positioned it as the leading performer among G10 currencies. It recorded its lowest settlement in a month on Tuesday, just above $0.7105, and subsequently rallied to nearly $0.7175, a few hundredths of a cent shy of Tuesday’s peak. It is currently trading within this week’s established range, specifically confined to the $0.7100-$0.7160 bracket. A convincing move above $0.7200 would suggest the downside correction may be over.