USD: The Dollar has been under pressure throughout the overnight session, and at this point has given back all of this week’s early gains. While global markets are still some ways away from being in a full-scale “risk on” mood, it has been the lukewarm tone of recent US economic data that has derailed the Dollar’s recent rally. This will put greater emphasis on this US morning’s Jobless Claims reading to at least match market expectations, as any further disappointment with US data will keep the Dollar squarely on the defensive during today’s session. Unless the market gets a fresh reminder of overseas risk concerns, the Dollar is unlikely to fully regain upside momentum until tonight’s BOJ meeting. The Dollar should find near-term support just below the 82.50 level during today’s trading, and will be looking for decent Jobless Claims numbers in order to relieve some of today’s early pressure.
EUR: The June Euro continues to build upon yesterday’s reversal from 21/2-week lows, and is now closing in on a new weekly high early in today’s trading session. Comments by a key ECB official downplaying the effectiveness of lower interest rates have dampened expectations for a rate cut at next week’s ECB meeting, and with a positive tone coming from Italy that has allowed the Euro to recover all of this week’s losses. Weak German sentiment numbers continue to cast a long shadow over the market, however, and this morning’s report of a 27% Spanish Unemployment rate is a fresh reminder of peripheral EU problems. While disappointing US Jobless Claims numbers may provide the Euro with a fresh boost later on this morning, the market will need to see definitive signs of stronger EU economic conditions before prices can rally back towards last week’s highs. The June Euro may rise back towards the 130.90 level during today’s session, and will be looking for improved global risk sentiment in order to consolidate this morning’s early gains.
GBP: The June Pound has rocketed to the upside this US morning, and has quickly reached the highest prices levels since mid-February. A 0.3% quarterly rise in UK GDP may be modest by global standards, but was well above market expectations and therefore the Pound has also climbed back into positive territory after a negative 4Q 2012 reading. This likely has closed the door on any near-term easing from the Bank of England, which has added further strength to today’s updraft. The June Pound may extend today’s rally up towards the 154.60 area later today, and should hold onto a large portion of this morning’s rally through the close of trading.
JPY: The June Yen is seeing moderate strength this morning, and for the moment is staying well above the key 100 per Dollar level. While this morning’s Dollar weakness has provided near-term support for the Yen, the market is likely to remain fairly subdued in front of tonight’s main event, the Bank of Japan meeting. While the magnitude of fresh easing measures at their early April meeting leaves room for disappointment, if there are no new measures tonight, the market is likely to focus more on the BOJ’s forecasts for upcoming inflation levels. Even if their 2% inflation target is pushed out to 2016, the prospect of aggressive easing measures going forward should turn the Yen back down towards a retest of the mid-April lows. The June Yen may bounce back above the 101.20 area if US Jobless Claims disappoint the market, but traders should hold out for a retest of Tuesday’s weekly high before approaching the short side of the Yen using long put option strategies before tonight’s BOJ meeting.
CHF: The June Swiss was able to put together a moderate recovery from this week’s severe losses, but continues to lag well behind the Euro this morning. The Swiss Franc has been unable to shake off rumors that the SNB will be raising their floor rate with the Euro up to the 1.25 level, which has lifted the Euro/Swiss spread up above the 1.23 area and to a new 21/2 week high. While officials have kept up a steady verbal defense of their floor rate, there have been few Swiss economic readings that are comparatively weak versus the Euro zone. The June Swiss may rise up towards the 106.15 level later today, and should remain fairly well supported, as long as global risk sentiment continues to improve.
CAD: The June Canadian was able to climb up towards a new weekly high, and is finding decent support from stronger energy and metals prices this morning. Although Canadian economic data has a better tone after this week’s decent Retail Sales number, lukewarm readings from China and the US are sources of carryover pressure for the Canadian Dollar this week. With outgoing BOC Governor Carney’s comments that there is little pressure to hike Canadian rates hanging over the market, the Canadian Dollar will need a full-scale “risk on” mood in global markets in order to lift decisively clear of this recent trading range. The June Canadian should climb up towards the 97.75 level this morning, and will look towards outside markets as a main source of strength.
EasyForexNews Research Team