Chinese Yuan to Hit New High, Indonesian and Indian Currencies to Pare Losses as US Jobs Data Weakens Dollar
The US dollar fell across the board late Friday in New York as the July non-farm payroll data came weaker than expected, turning market attention to the dovish elements of the 30 July policy statement by the Federal Reserve.
The EUR/USD rose to 1.3401 on Friday from near 1.3380 after the data, before easing to 1.3390 by the day's close. The move distanced the pair further from the eight-month low of 1.3366 touched on 30 July.
The dollar index, the gauge that measures the greenback's strength against a basket of major currencies on a trade-weighted basis, dropped to 81.18 from 81.48. It had touched a multi-month high of 81.57 on 31 July.
Given that a strong dollar was a major reason for the recent drop in Asian currencies, the reversal in the greenback outlook should trigger a corresponding reaction favouring the region's units.
USD/CNY
Stronger than expected US GDP data on 30 July had helped the pair move off a 4-1/2-year low of 6.1712 to 6.1804 by Friday.
In case of a reversal of the past two sessions' gains, the pair should first find support at 6.1767-40 region before 1.6712.
A break below that will open the doors to 6.1660 and then 6.1533, the 50% Fibonacci retracement of the January-April rally.
However, if the drop in China non-manufacturing PMI to 54.2 for July from 55.0 in the previous month, according to the weekend data, weighs on the Chinese yuan, then the pair will seek its first resistance at 6.1858 ahead of 6.1904.
USD/INR
The pair had rallied to a more than four-month high of 61.25 on Friday before easing to 60.83 by close.
If the dollar weakness helps the Indian unit gain ground, the first level to watch on the downside of the pair is 60.50 and then 59.90.
Further south, 59.50 and 58.90 are likely to offer support ahead of a retest of the May low of 58.23.
On the higher side, a break above 61.65-75 will open the doors to 62.70, and then 63.50 ahead of 63.90.
USD/IDR
The sharp jump on Friday took the pair to a three-week high of 11,826. A reversal will likely aim 11,675 first and then 11,556 ahead of 11,475.
On the higher side, 11,935 and 12,045 are the two levels to watch ahead of a retest of the June high of 12,148 which had marked a more than four- month high.
USD/THB
The pair had found support near 31.725, a near eight-month low, on 22 July and the move upward since then got a boost after the US GDP data last.
It touched a one-week high of 32.295 on Friday before closing at 32.148.
On the downside, the pair will have its target at 32.075 and then 31.990 ahead of a retest of the 22 July low.
A break of that will expose 31.575 and 31.175 ahead of 30.875.
As per Friday's data, the US saw an addition of 209,000 non-farm jobs in July, less than the 298,000 addition registered in June, while analysts were expecting a more moderate drop to 233,000.
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