The US dollar is exhibiting a weaker performance against the majority of currencies today.The primary characteristic is the yen’s recovery, which is not a result of significant intervention but rather a response to the finance minister’s appeal for Japanese pension funds to increase their investments in domestic assets. The Nikkei experienced a rally of 1.2%, while the 10-year JGB yield declined for the first time in a fortnight. The 13 basis point decline represents the most significant single-day drop observed this year. The dollar, previously hovering around JPY162.40, declined to JPY161.30 before attracting new bids. In a notable development, the PBOC established the dollar’s reference rate beneath CNY6.80, marking the first occurrence of this benchmark in three years.Federal Reserve Chair Warsh appointed essential personnel for the newly established task forces. They seem to possess a high level of respect and credibility, along with a variety of experiences and political viewpoints. It appears to be a prudent practice to periodically assess foundational principles. Meanwhile, technical discussions between the US and Iran are reportedly ongoing. August WTI, which reached a peak on Wednesday just above $76, has approached $71 today and is hovering near $72 as the North American session is set to begin.

The euro traded in a $1.1375-$1.1475 range on July 2 and has maintained this range throughout the week. The euro successfully surpassed the 20-day moving average (~$1.1440 today) and climbed to $1.1460 before reversing direction in Europe, subsequently declining to new session lows around $1.1425. It has not established a position above it since the announcement of the hawkish hold by the FOMC on the eve of June 17. Yesterday’s low was around 1.1415, and a close below it diminishes the technical outlook. That said, there are 2.6 billion euros in options that expire today in the range of $1.1400 to $1.1405.Despite the announcement of a record current account surplus earlier in the week and the Ministry of Finance’s weekly data indicating that Japanese investors persisted in divesting foreign stocks and bonds last week, the yen struggled to gain momentum. However, the yen has regained strength today, supported by a robust PPI and Finance Minister Katayama’s appeal for national pension funds to boost their investments in domestic assets. The dollar was sold to JPY161.30, marginally above the week’s low established on Monday, which was nearer to JPY161.20.

The greenback has recovered to approximately JPY161.85 in the European morning. The intraday momentum indicators indicate potential for further USD appreciation, with JPY162 representing the initial resistance level.Sterling continues to exhibit strong trading performance, having increased yesterday for the tenth time in the past eleven sessions. The daily momentum indicators are not exhibiting overextension. The next target is around the June 15 high, $1.3460, which also corresponds to the (61.8%) retracement of sterling’s losses since the May Day high (~$1.3660). It reached slightly above 1.3450 in the Asia Pacific session before stalling. It retraced to nearly $1.3410 in Europe. Support is observed in the 1.3380-1.3400 range. There are options for GBP1.37 billion in that band that expire today.The Canadian dollar experienced a modest increase yesterday; however, the movement lacked conviction. Perhaps some were deterred by anticipation of today’s labour market report, which will struggle to surpass last month’s figures (154k increase in full-time employment and a decline in the unemployment rate to 6.6% from 6.9% on a stable participation rate).

The greenback breached the 20-day moving average (~CAD1.4165 today) for the first time in nearly two months; however, it ultimately settled above this threshold and maintained its position above the CAD1.4150 support level. Follow through US dollar selling today saw it fall to almost CAD1.4135, marking its lowest level since June 19. However, the greenback recovered from its Asia Pacific low and returned to the CAD1.4170 area during the European morning. The intraday momentum indicators imply that this could represent the limit of the US dollar’s recovery. The Australian dollar remained confined within a quarter-cent range yesterday, trading above $0.6925. The week’s high had been near 0.6960, but it reached 0.6970 today. It stalled and retraced to nearly $0.6940, the level at which it was acquired in Europe. The intraday momentum indicators appear to be favourable.