EUR/USD is back to Friday closing levels in morning trade in New York while USD/JPY is firmer as risk trades perform strongly.
Traditional expectations were useless in early Asian trade as EUR rallies strongly as did AUD.
The JPY reacted as one could have guessed by strengthening, but not for long, as risk aversion overwhelmed any impulse toward Asian currency strength.
I think we will see in coming days that China’s move over the weekend was much more of a political act than an act with significant near-term economic impact.
My one take-away from the early Monday price action as well as the commitments of traders report on Friday is that the market is much, much less short of EUR/USD than the were a week or two ago. Further explosive short-covering rallies are unlikely, as a result. If we rally, it will be because the market wants to, not because it has to…
EUR/USD trades quietly at 1.2378; USD/JPY changes hands at 91.28.
