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The US Dollar was back on the offensive Thursday after a brief corrective pause as all eyes turn to September’s labor-market data to inform Fed rate hike speculation. Tellingly, the currency rose alongside front-end Treasury bond yields while gold prices. Hawkish remarks from Patrick Harker and John Williams, presidents of the Philadelphia and San Francisco Fed branches, probably helped the greenback’s cause.

The rates-sensitive commodity bloc currencies were understandably among the biggest losers among the US unit’s G10 FX counterparts. The Australian Dollar led the way downward having been stung by disappointing local retail sales data. It was the British Pound that suffered most however as chaotic UK politics continued to stoke Brexit-related jitters.

DailyFX Economic Calendar: Asia Pacific (all times in GMT)

Asia AM Digest: US Dollar Back on the Offensive Before Jobs Data

A quiet offering on the economic data docket and the looming US jobs report seem likely to make for a quiet session in Asia Pacific hours. A bit of corrective price action reversing some of the trends seen in the past 24 hours might be in order but lasting follow-through seems like a tall order.

With that in mind, it ought to be mentioned that any lull in activity may owe as much to reduced liquidity ahead of critical event risk as general indecision. That makes for elevated sensitivity to stray headline risk and may increase the threat of seesaw volatility should something grab traders’ attention in the coming hours.

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Asia AM Digest: US Dollar Back on the Offensive Before Jobs Data

IG Client Sentiment Index Chart of the Day: USD/JPY

Asia AM Digest: US Dollar Back on the Offensive Before Jobs Data

CLICK HERE to learn more about the IG Client Sentiment Index

Retail trader data shows 52.3% of traders are net-long USD/JPY, with the ratio of traders long to short at 1.1 to 1. The number of traders net-long is 3.8% higher than yesterday and 2.6% higher from last week, while the number of traders net-short is 6.7% lower than yesterday and 2.3% higher from last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests USD/JPY prices may continue to fall. Traders are further net-long than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger USD/JPY-bearish contrarian trading bias.

Five Things Traders are Reading

  1. Pre-NFP Price Action Setups (Oct. 5, 2017) by James Stanley, Currency Strategist
  2. USD/CHF Rally Eyes Major Resistance Ahead of NFP by Michael Boutros, Currency Strategist
  3. Brexit Briefing: Politics, Data and Technicals Combine to Sink GBP by Martin Essex, Analyst and Editor
  4. How Much Further Will Dow Jones Industrial Average Trend Continue? by Jeremy Wagner, CEWA-M
  5. S&P 500 Bullish Bias Eases as New Highs Emerge by Christopher Vecchio, Sr. Currency Strategist

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