The US dollar continues its mixed performance. The fragile stability of commodity prices today is not lending much support to the Australian and New Zealand dollars though the Canadian dollar is flat after yesterday’s slide. 

The euro has pushed above $1.09 for the first time this week. We had suggested a $1.08-$1.10 range would likely dominate this week.Technically, it appears poised to test the upper end of that range. Stops above the $1.1010 retracement objective could carry the euro toward $1.11. 

Sterling had a deeper retracement of last week’s gains but is also recovering today after finishing the North American session yesterday above $1.50. The recent high near $1.5155 is the next technical target, which corresponds to last week’s highs and the downtrend off the early-November highs. 

The dollar has been mostly confined to a JPY122.25 to JPY123.75 range since early November. Soft equities are taking a toll and pushing the dollar toward the lower end of the range. Japanese economic news also may have encouraged some buying of yen on fading ideas that the BOJ will expand its asset purchase program.  

Not only was Q3 GDP revised higher, to show a modest expansion rather than a modest contraction, but earlier today Japan reported a much stronger than expected core machinery orders report. It indicates thatcapex is off to a strong start in Q4. Core machinery orders, which excludes ships and electricity generators rose 10.7%. This is the largest increase in 18 months. A Reuters poll found a median forecast for a 1.5% decline, after a 7.5% rise in September. 

 Another talking point today is the Chinese yuan. The PBOC fixed the dollar higher against today. At CNY6.4140, it was the highest fixed since August 2011. The yuan had fallen about 0.5% since a week ago Monday when the IMF announced the inclusion of the yuan in the SDR basket. Many observers see the two as linked. With the SDR decision behind it, China feels more comfortable continuing the depreciation strategy begun over the summer.