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Greenback gains after a down Asia session - BTMU

FXStreet (Guatemala) - Lee Hardman, FX Analyst at the Bank of Tokyo Mitsubishi UFJ noted the events taking place in Asia.

Key Quotes:

"The US dollar weakened modestly in the Asian trading session only partially reversing strong gains recorded over the last week. US dollar strength has been most marked against the yen since the BoJ accelerated monetary easing at the end of last week which lifted USD/JPY to an intra-day high of just over 115.50 overnight."

"However, a sharp reversal has since taken place later in the Asian trading session with USD/JPY falling back below 114.50. Commodity-related currencies also staged tentative rebounds in the Asian trading session after declining sharply against the US dollar yesterday. Despite more choppy price action overnight, the underlying trend still remains in favour of a stronger US dollar.
"The US dollar derived support yesterday from the release of the stronger than expected ADP survey which estimated that private employment likely increased by 230k in October. The employment sub-component of the ISM non-manufacturing survey also increased for the sixth consecutive month to 59.6 in October reaching its highest level since August 2005."

"The surveys have reinforced investor expectations that the release of the non-farm payrolls report on Friday will prove supportive for the US dollar. If as expected the non-farm payrolls report reveals strong employment growth, a further decline in the unemployment rate, and evidence of pick up in earnings growth in October it will likely trigger further US dollar gains in the near-term potentially lifting the dollar index above the high from June 2010 at 88.71."

"The ISM non-manufacturing survey also revealed that economic growth has likely slowed modestly in October with the headline index declining by 1.5 point to 57.1. However, it still remains elevated signalling that the US economy has likely continued to grow strongly early in Q4. The contrast with slowing economic growth overseas continues to support a stronger US dollar in the near-term."

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