The dollar regained strength and bounced from session lows in late Asian trading, after being sold earlier in the session, on knee-jerk reaction after strong earthquake that hit Japan. The greenback maintains its strong bullish stance, boosted by expectations of increased fiscal spending and higher inflation under a Trump administration and is still holding near 13 ½ year high against the basket of major currencies.
Near-term action is seen as consolidation of recent strong gains, with investors seeing no stronger impact from the earthquake but pointing on risk of more aggressive profit taking that may push the greenback lower.
The dollar index traded near session high at 101.16 in the late Asia, after hitting low at 100.74 and up 0.13% from Tuesday’s opening. The index remains tall and is so far moving within narrow consolidation range, despite strongly overbought conditions. It hit fresh 13 ½ high at 101.53 last Friday and extended to 101.50 on Monday, in attempts to retest the top, signalling persisting bullish sentiment.

The dollar spiked above 111.00 barrier against yen, on recovery rally from session low at 110.25, after fears of stronger impact from the earthquake prompted investors to exit dollar longs for safe-haven yen. However, the pair is still positive for the session and was marginally higher at the end of the Asian session, but showed initial signs of indecision.

The Euro showed no significant changes during Asian hours on Thursday, remaining within near-term consolidation above fresh low at 1.0567 against the dollar, which remains capped at 1.0648 for now, on persisting dollar-bullish sentiment. The pair is holding within narrow range on Tuesday after being up 0.34% on Monday, marking the first bullish close after ten straight days in red.
Sterling held its gains from Monday, when it rallied sharply on strong buying after British PM Theresa MAY hinted the possible shape of scenario of Britain’s exit from the European Union.

Cable was last at session lows at 1.2465, off 1.2500 high, hit on Monday’s strong rally, when it ended day with 1.20% gains, maintaining near-term bullish sentiment.
Elsewhere, antipodean currencies extended near-term recovery from fresh lows for the second day, taking advantage of dollar bulls taking a breather.

Australian dollar peaked at 0.7400 in Asia, up 0.43% for the session, on extension of Monday’s rally of 0.52%.

New Zealand dollar was up 0.20% in Asia on Tuesday, extending Monday’s rally 1.02% from fresh low at 0.6982, levels last seen in July.
Crude oil prices rose to their highest level since October on Tuesday as the market priced in an expected output cut led by producer cartel OPEC, but analysts warned that a failure to agree on a cut could lead to a deepening supply glut by early 2017.

US crude oil price spiked at $48.96 per barrel on Tuesday and cracked strong technical resistance at $48.80, on extension of strong rally on Monday, when the price advanced nearly 4%.
Asian stocks rallied to one-week highs on Tuesday, supported by solid overnight gains on Wall Street, though investors were wary of chasing prices higher until President-elect Donald Trump picks his economic team.

MSCI’s broadest index of Asia-Pacific shares outside Japan was up 1.3% on Tuesday, pulled up by a 1.3 % rally in Australian shares. Korean shares and Hong Kong stocks rose 0.9 and 1.3% each, while Japan’s benchmark Nikkei 225 was up 0.75% on Tuesday.

European stocks followed the sentiment from Asia and opened higher on Tuesday. FTSE100 was up 0.55% in early trading, after opening 0.2% higher. DAX and CAC 40 pared initial gains and were in red in early Tuesday’s trading, after opening with gap higher of 0.66% and 0.62% respectively.

Highlights of the day

Europe
Public Sector Net Borrowing in UK is the highlight of European session. Forecast for October is optimistic at 5.9 billion pounds, compared to September’s release at 10.1 billion. Data is due at 09:30 GMT.

America
Focus is on release Canada’s retail sales numbers for September which is due at 13:30 GMT. Retail sales are expected to rise to 0.5% in September from 0.0% in August, while Core retail sales are expected at 0.6% in September, up from -0.1% in August.

Important levels
US CRUDE OIL
Oil extended Monday’s strong rally on Tuesday and peaked at $48.96, after cracking strong barriers at $48.67/80 (Fibonacci 61.8% retracement / daily cloud top). Bullish sentiment favors further advance, with close above those levels seen as confirmation of strong bullish stance for extension towards psychological $50.00 barrier. Initial support lies at $48.25, followed by strong $47.58 support

GBPUSD
The pair holds bullish bias after Monday’s strong rally, consolidating under fresh highs at 1.2510.
Daily close above pivotal barrier at 1.2486 that was cracked on Monday, is needed to confirm bulls for extension towards next strong barrier at 1.2530, break of which may extend towards 1.2585/1.2600 zone. Immediate support lies at 1.2462, followed by 1.2434 and 1.2400. Downside pivot lies at 1.2376., Market Analysis