USD: The Dollar was unable to sustain an early move up to 21/2-week highs and is finding moderate pressure coming into this US morning’s trading. While another set of weak German sentiment data has given the market additional pause for thought, overall risk sentiment continues to show steady improvement after yesterday’s volatile session. Recent US economic data have not seen any decisively strong readings that could create a contrast with the softer numbers coming out of China and Europe, so the likelihood of a negative result from today’s Durable Goods number could lead to more pressure on the Dollar. The Dollar has built up enough residual safe-haven support to stay in close proximity to the recent highs, but will continue to look towards overseas risk concerns in order to regain upside momentum and take this rally up into new high ground. The Dollar may slide down towards the 82.88 level after the US economic report window, but will continue to be relatively well supported through the balance of today’s trading session.
EUR: The June Euro came under initial pressure after the German IFO survey presented the second weak sentiment reading for that nation in as many sessions, but has shaken off that early weakness and was able to climb up into positive territory this US morning. An uptick with German government growth forecasts for 2013, as well as positive vibes from Italy, has helped the Euro to put some brakes on this current sell off. Improving global risk sentiment should help to underpin this morning’s rebound, but the Euro clearly needs to find some definitively positive news from the EU in order to quiet down fresh calls for an ECB rate cut. Until that happens, the Euro will remain vulnerable to a sharp downside moves if and when the next negative EU news headline rattles the market. The June Euro could extend today’s recovery rally up to the 130.27 area later this morning, and should hold onto early strength as long as risk sentiment remains on the upswing.
GBP: The June Pound remains fairly strong given the turbulence in outside markets, and looks to be heading towards a new weekly high during the next few hours. While recent UK economic data continues to show mixed results, this US morning’s move by the Bank of England to extend easier credit conditions through January 2015 is likely to provide underlying support for the Pound through stronger UK business sentiment. The June Pound may extend early gains up to the 153.04 area this morning, and will also benefit from today’s improvement in global risk sentiment.
JPY: The June Yen continues to “defy gravity”, and has bounced back from another run at the 100 per Dollar level early this US morning. While the sluggish German IFO survey provided a modest dose of safe-haven support, the lack of fresh news in front of Thursday night’s BOJ meeting has helped to ease downside momentum. OTC option traders are putting up a spirited defense of that price level, so the market may require a catalyst event from either the US or Japan in order to drive the Yen firmly into new low ground during the next few sessions. Given the reluctance of some traders to hold their positions going into the BOJ meeting, a short-covering rebound will continue to provide the strongest opportunity to enter the short side the Yen using long put option strategies. The June Yen may climb back towards the 100.80 level from a weak US Durable Goods report, but will remain firmly within its longer-term downtrend and headed for new low ground in the near future.
CHF: The June Swiss has shown little inclination for making a large-scale recovery from yesterday’s sharp downdraft, and continues to lose further ground to the Euro early in today’s session. Rumors that the Swiss National Bank would raise their current floor rate to the Euro up the 1.25 level may have carried more weight with the market given the overall negative tone of yesterday’s Euro zone PMI numbers. However, comparative strength with recent Swiss economic data makes it unlikely that the SNB will take that sort of action unless there is a substantial flare-up of Euro zone risk concerns. The June Swiss may climb up towards the 106.10 level later this US morning, and will gain further ground as overall global risk sentiment continues to improve.
CAD: The June Canadian has been consolidating within an increasingly tighter price range early this week, and may be setting up for a breakout move during the next few sessions. Yesterday’s strong Canadian Retail Sales number is a step in the right direction, but an improved tone from China and the US as well as stronger energy and metals prices will provide the main source of near-term support. The June Canadian may rise up towards the 97.62 level later today, and will continue to take a large portion of direction from outside markets through the rest of this week’s trading.
EasyForexNews Research Team