Euro also Wins the Small Battles

The big battles in FX are the ones that matter--aggressive reversals and one directional +100 pip moves. But the small victories are often telling too. The euro was the top performer on Monday while the New Zealand dollar lagged. Expect a more lively market on Tuesday after holidays in Canada and Australia. The same can be said about USDJPY. China's trade balance rose to $46.8 bn in July, while imports advanced 11% instead of the expected 18%. A new Premium trade was issued yesterday 3 charts, added to the  6 existing trades (2 FX, 2 commodities and 3 indices).

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The Monday after July non-farm payrolls is usually one of the quieter days of the year as Wall Street heads on vacation. USD continued its post-NFP momentum higher on a few fronts, but one exception was EUR/USD, which retraced nearly half of of Friday's 140-pip drop. EUR/USD hit a high .3 bn of 1.1814 but couldn't regain the 61.8% retracement of the fall to 1.1735. That comes in at 1.1820 and is a level to watch in the days ahead.

In any case, the way the euro was bid up without any news reflects prevalent optimism from the bulls and a positive sign going forward. Cable meanwhile touched a slightly lower low and floundered along the bottom. USD/CAD also continued higher to touch above 1.27 as oil slipped.

On the news front, Fed doves Kashkari and Bullard didn't offer anything fresh. The President headed away on a 17-day holiday but any thoughts that he might remain low key were erased by a typical tweetstorm attacking the media and touting the record high in the stock market, among other things.

Germany's trade surplus edged up EUR 22 bn, reminding the FX world of the nation's external account situation, which is a vital component in exchange rate determination. The US JOLTS are also due next.