FX Update: The dollar and other currencies consolidated
FX Update: The dollar and other currencies consolidated. Trading has been thin with Japanese markets closed, and with northern hemisphere markets in summertime mode. USD-JPY, after posting its first down week since early June last week, settled in the mid 112.0s. EUR-USD edged out a three-session high at 1.1474 before ebbing to around 1.1450 in a market lacking directional ambition. While the pair logged 13-month highs last week, which was the culmination of a three-month rally phase, some momentum indicators are flagging, with the 14-day relative strength index, for instance, falling back despite the new highs. This is what the technically minded call bearish divergence, which can be a precursor of a trend shift. Elsewhere, the Australian dollar settled lower after rallying strongly last week on the back of data showing strong Chinese trade figures (particularly of iron ore imports, Australia's biggest export) and the slow-go rate hike guidance from the Fed. AUD-USD ebbed to the low 0.78s, below Friday's 15-month peak at 0.7834.