USD: The Dollar has rebounded from early pressure and is posting a modest gain to start out the new trading week, as a quiet weekend has done little to change the overall tone of the market. The G20 meeting resulted in plenty of rhetoric but little substance, leaving the Dollar as the clear safe-haven destination of choice if and when risk concerns start to flare up again. Fresh talk of ECB rate cuts are also providing the Dollar with a moderate boost as well, but mixed results with recent US economic data continues to weigh on prices early this week. The Chicago Fed and Existing Home Sales numbers may help to underpin today’s recovery, but the Dollar is likely to remain subdued as long as overseas risk concerns remain quiet. The Dollar may be able to climb up to a new 21/2-week high above the 83.03 level later today, but is likely to remain well below the early April highs as long as flight-to-safety concerns remain a back-burner issue with global markets. The Commitments of Traders Futures and Options report as of April 16th for US Dollar showed Non-Commercial traders were net long 38,358 contracts, a decrease of 11,071 contracts. The Commercial traders were net short 44,564 contracts, a decrease of 10,612 contracts. The Non-reportable traders were net long 6,206 contracts, an increase of 457 contracts. Non- Commercial and Non-reportable combined traders held a net long position of 44,564 contracts. This represents a decrease of 10,614 contracts in the net long position held by these traders.
EUR: The June Euro could not sustain an early-week recovery and has slumped back towards unchanged levels this US morning as the market is having a difficult time generating any upside momentum. The re-election of 87-year-old Giorgio Napolitano for another 7-year term as Italian President may be stretching market credulity, but at the very least has dampened a potentially serious problem with that nation’s inability to form a government. Fresh talk from ECB officials continues to ramp up expectations of a rate cut during the near future, however, which has kept the Euro on the defensive this morning. Unless global markets can find a stronger across-theboard “risk on” attitude, the Euro will remain vulnerable to a sharp pullback if peripheral EU problems start to generate news headlines. The June Euro may slide down towards the 130.34 area later today, and should remain well inside of this recent trading range just as long as global risk sentiment does not deteriorate further. The Commitments of Traders Futures and Options report as of April 16th for Euro showed Non-Commercial traders were net short 30,256 contracts, a decrease of 22,046 contracts. The Commercial traders were net long 48,221 contracts, a decrease of 24,888 contracts. The Non-reportable traders were net short 17,966 contracts, a decrease of 2,840 contracts. Non-Commercial and Non-reportable combined traders held a net short position of 48,222 contracts. This represents a decrease of 24,886 contracts in the net short position held by these traders.
JPY: The June Yen has been under pressure throughout the overnight session but has been unable to break out below the key 100.00 level early this US morning. Much of the impact of the G20’s inaction with Japanese monetary policy was felt during Friday’s downdraft, so there may have been little additional weakness left after their meeting was concluded over the weekend. Support appears to have built up again after the market’s first excursion down to this price area earlier this month, as options traders are likely to strongly defend this level once again. Without the benefit of fresh safe-haven support, the Yen is unlikely to see any large-scale bounce away from these levels. The June Yen could retest the overnight low of 100.12 later in today’s session, with a strong set of US economic data possibility taking the market well into new low ground by the close of trading.
GBP: The June Pound has bounced back from an early 2-week low this US morning, and is holding up fairly well in the wake of last Friday’s downdraft. Fitch’s credit rating downgrade may not have come as a total surprise given the recent sluggishness in UK economic data, but its impact effectively derailed a potential retest of the mid- April highs. The Pound will likely be a major beneficiary if a “risk on” mood can take hold in global markets, but the market is likely to wait on the UK GDP numbers later this week before taking prices anywhere close to last week’s highs. The June Pound may grind out a rally to the 152.54 area later today, and will be looking towards outside markets for a large portion of near-term support early this week.
CHF: The June Swiss was unable to hold overnight gains and is finding mild pressure early in today’s session, although prices are finding more than enough support to remain firmly within their recent trading range. The chairman of the Swiss National Bank stated that their current 1.20 floor rate with the Euro was “indispensable”, and that the Swiss Franc’s valuation was “very high”, which is likely to keep their currency driven mainly by the ebb and flow of Euro zone sentiment going forward. The June Swiss may fall down towards the 106.94 level later today, but is unlikely to find additional pressure as long as risk appetites do not deteriorate any further during today’s session.
CAD: The June Canadian was able to consolidate near the middle of last Friday’s trading range, but is finding little in the way of carryover support from stronger energy and metals prices early this week. Outgoing Bank of Canada Governor Carney laid out three criteria for raising Canadian rates in comments over the weekend that included a 2% growth rate, which compares to the Bank of Canada cutting their 2013 growth forecast down to 1.5% at last week’s meeting. The June Canadian may rise up towards the 97.56 level during today’s trading, but will need to see stronger global risk sentiment in order to regain upside momentum.
EasyForexNews Research Team