Dead-Cat Dollar

The US dollar continued its modest rebound on Monday with China and North America on holiday. The Australian dollar was the top performer early in the week while the yen unwound some of last week's strength. CFTC positioning showed an ill-timed shift towards the dollar. A new Premium trade in a major index has been issued earlier, highlighting 5 technical factors, in addition to Thursday's index trade. The RBA minutes are due next, followed by the ZEW survey on Tuesday morning. The UK jobs report is on Wednesday and not Tuesday as reported earlier.

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The US dollar found some life on Friday and that continued Monday but we will have to wait until the day ahead to see if it was anything more than flows and position squaring ahead of a long weekend in yet-another dead cat bounce.

USD/JPY clawed its way up to 106.70 after falling to 105.50 at the lows on Friday. The bounce so far is well-within the standard range. One level to watch is the Sept 2017 low of 107.29 as that former support level will now act as resistance.

In economic news, the Eurogroup nominated Spanish economic minister De Guindos for the ECB vice presidency in a move that was generally expected. Spain was due for an executive position and there were few candidates to choose from so they were forced to take a politician at a time when central bankers are increasingly politicized. His motives are sure to be questioned during his 8-year term but for now he's saying all the right things.

Looking ahead, the RBA meeting minutes are due at 0030 GMT. Details about recent forecasts will be welcome as Lowe shifts to a more-upbeat outlook on growth but maintains the expectations for low inflation.

A bigger market mover will come at 100 GMT when the German ZEW sentiment survey is due. The consensus on the current situation is a dip to 94.0 from 95.2 last month. A strong reading could put the euro back on a path to a cycle high.

CFTC Commitments of Traders

EUR +128K vs +141K prior GBP +15K vs +28K prior JPY -115K vs -113K prior CAD +33K vs +40K prior CHF -20K vs -20K prior AUD +9K vs +14K prior NZD +2K vs +3K prior

The theme was US dollar buying in the latest changes but that turned out to be the wrong move as the dollar sank back into the doldrums until Friday's bounce. Yen shorts continue to get beaten up, will they capitulate?