The US dollar managed to reclaim some of the ground it lost during the Asian session, pushing euro / dollar back towards 1.2474 and gaining against the yen to reach 114.3. The US dollar was still relatively far from the highs it achieved before Friday’s US employment report, which proved to be an excuse for taking profits by dollar longs.
There is some concern that the dollar may have gained too much too fast and that the level of speculative long dollar positions is extremely high. On the other hand, the argument that the US economy will soon warrant a tighter monetary policy than that of the Eurozone or Japan is also valid and this should push the dollar even higher.
The yen also lost some ground against the euro and sterling, at 142.71 and 181.77 respectively.
The euro was under pressure against the Swiss Franc, with traders driving it to its lowest in 2 years at 1.2021, as there were rumors that a speculative attack against the 1.20 floor imposed by the Swiss National Bank could take place. A November 30 referendum in Switzerland that could force the SNB to raise its holdings of gold is also talked about, although the measure is unlikely to be approved. However, given the intense language that the SNB has used in favor of defending the floor and its ability to print an unlimited amount of francs which can then be sold to the market, it was difficult to see such an attack succeeding.
Looking ahead, Japanese Trade Balance and Current Account data, together with bank lending figures will be out early during Tuesday’s Asian session and the figures could move the yen. House Prices for New Zealand and Australia could also be newsworthy, as could the National Australia Bank business sentiment survey.