The USD is slightly higher this morning after losing ground in Asia overnight. Traders note that volumes are on the moderate-to-low side and economic data is scarce making for a lot of technical trade. Initially softening a bit the USD held firm after minor buying lifted the USD/JPY to challenge the 2008 highs. After several attempts the rate managed to trade above the 108.60 area for a high print at 108.71 before falling back under the previous high.

Traders note that a US investment house was on the bid for USD and that stops in the USD/JPY were about as expected but did not attract additional buying. Offers are said to be resting all the way to 108.80 area suggesting that although the USD is at a new 2008 high there is little interest to extend the gains just yet. Cable and EURO both rallied in early Asia for high prints ahead of European trade but were knocked back on poor UK data; both rates are trading near the lows to start New York. Cable had a high print at 1.9598 before dropping back to trade about unchanged from Tuesday; traders note “quiet” hedge-fund supply coming in at a steady pace during European trade.

EURO high prints at 1.5517 looking like a possible reversal off the lows but the rate has fallen back on technical selling having missed stops said to be building quietly above the 1.5530 area so far today. USD/CHF is firm to start after a solid two-way session as well; traders note that the rate is tracking Yen more than anything else and should the USD firm later today the Swissy is expected to go with it.

Across the board the majors have consolidated losses but the two-way nature of the overnight action suggests that the lows for the week may be in. In my view, the technical nature of trade is firming support a bit and stops being placed above the market suggest the majors have late sell interest. Look for the USD to continue sideways but to give up these early gains.

Overnight Asia/Europe

•           USD firms after weaker start

•           Traders note volumes only average

•           News remains light forcing technical trade

Today’s Economic Reports

All times EASTERN (-5 GMT)

•           10:35am USD Crude Oil Inventories

Another light day for data across the board

Looking Ahead to Thursday

All times EASTERN (-5 GMT)

•           8:30am USD Unemployment Claims

•           10:00am USD Pending Home Sales m/m

•           10:35am USD Natural Gas Storage

•           3:00pm USD Consumer Credit m/m

Rate announcements due from overseas also, could be a big day for the USD.