The US dollar’s pre-weekend gains were extended against most the major currencies, but the euro, sterling, and Australian dollar have recovered in the European morning. Emerging markets currencies are mixed.  

The Indian rupee is the weakest (of the emerging market currencies (~-0.8%) following the widening of the Q2 current account deficit at the end of last week and ahead of the August trade deficit which is expected to show the impact of rising oil prices and the past currency depreciation. The Turkish lira is also weaker (-0.6%) after Q2 GDP was reported at 5.2% year-over-year (down from 7.4% in Q1). On the other hand, the South African range is about 0.75% stronger as it consolidates last week’s slide that saw the US dollar trade to almost ZAR1.570.  

The euro fell to almost $1.1525 in following through selling. Today and tomorrow there are large options expiring at $1.15, which seen as solid support for the single currency. There are also about 640 mln euros struck at $1.1550 and 550 mln euros at $1.1650 that will be cut today. The intraday technical indicators suggest that the $1.1600-$1.1610 may difficult to overcome. Before the weekend, the euro was sold against most of the crosses, including the Swiss franc, where the euro fell to its lowest level in a year. After holding last Friday’s low near CHF1.1185, the euro has risen above last Friday’s high, and a close above it (~CHF1.1245) would be a positive technical sign.  

Sweden’s election has not led to a clear outcome. The center-left and the Alliance bloc got 144 and 143 seats respectively in the 349-seat parliament.  The anti-immigration Democrats appear to have secured 62 seats, which is not as much as some polls projected, but better than 2014. The euro initially extended the pre-weekend sell-off and fell to SEK10.4255 (after closing ~ SEK10.4655), but has recovered in the European morning and appears set to test the SEK10.50SEK10.54 area. It marks retracement objectives of the pullback seen at the end of last week. The political uncertainty in Sweden encourages flows into Norway, and the krone is the strongest of the majors, up about 0.85% today.