USD: The Dollar is finding significant pressure to start out the new trading week, and is likely to remain squarely on the defensive throughout today’s trading session. Friday’s disappointing GDP data eroded any benefit from last week’s Jobless Claims data and put US economic slowing concerns as a front and center market issue this morning. Positive vibes out of Europe have dampened the Dollar’s safe-haven support as well, as there has been moderate improvement with risk sentiment coming out of the weekend. There will be several pieces of US economic data for the market to digest this morning but without any fresh risk concerns to provide meaningful support, the Dollar may be looking ahead towards Friday’s Employment date in order to fully shake off this current pressure. The Dollar may find near-term support around the 82.08 level later today, and will need to see a better tone from upcoming US economic data in order to put the brakes on this current downdraft. The Commitments of Traders Futures and Options report as of April 23rd for US Dollar showed Non-Commercial traders were net long 38,114 contracts, a decrease of 244 contracts. The Commercial traders were net short 46,311 contracts, an increase of 1,747 contracts. The Non-reportable traders were net long 8,197 contracts, an increase of 1,991 contracts. Non-Commercial and Non-reportable combined traders held a net long position of 46,311 contracts. This represents an increase of 1,747 contracts in the net long position held by these traders.
EUR: The June Euro is benefiting from a more optimistic tone from the region this US morning, and was able to briefly rise above the 1.31 level for the first time in over a week. Relief that Italy has finally been able to form a new government helped their 10-year debt yields fall to multi-year lows at their auction this morning, which has more than offset a fairly bleak set of Euro zone sentiment numbers earlier today. Recent weakness in Euro zone data has fueled a growing consensus that the ECB will go ahead and cut rates at Thursday’s meeting, which is helping to keep further gains in check. Unless there is some tangible improvement with Euro zone economic data, particularly from Germany, it will be difficult for the Euro to climb back towards the mid-April highs. The June Euro may retest the 131.05 overnight high later in the session, and will be looking for improving sentiment both from inside and outside Europe in order to consolidate these recent gains. The Commitments of Traders Futures and Options report as of April 23rd for Euro showed Non-Commercial traders were net short 34,342 contracts, an increase of 4,086 contracts. The Commercial traders were net long 51,397 contracts, an increase of 3,176 contracts. The Non-reportable traders were net short 17,055 contracts, a decrease of 911 contracts. Non- Commercial and Non-reportable combined traders held a net short position of 51,397 contracts. This represents an increase of 3,175 contracts in the net short position held by these traders.
GBP: The June Pound made a decisive move through the 155.00 level during overnight trading, and has now reached the highest price levels in over 2 months. While recent UK economic data has seen mixed results, last week’s positive reading on UK GDP will likely be a key factor with keeping the Bank of England away from starting up fresh easing measures until new BOE Governor Carney comes on board at mid-year. Improving global risk sentiment this morning will also help to underpin the Pound’s recent strength. The June Pound will have a nearterm upside target of 155.62, and looks to remain well supported throughout today’s session.
JPY: The June Yen continues to be well supported coming out of the weekend, but has already seen a sizable pullback from the overnight highs. Thin trading conditions in Asia due to the Golden Week holidays this week are helping the Yen to sustain last Friday’s updraft, which was due more to a lower than expected US GDP number than the Bank of Japan’s moderation with reaching their 2% inflation target. Unless there is some definitive improvement with Japan’s economy – particularly on the inflation front – the Bank of Japan is likely to keep their “bold and aggressive” easing measures running full steam for the foreseeable future. While the Yen is clearly outperforming the Dollar at the start of this week, there is little chance that the Yen will become a first- hoice safehaven destination until the Bank of Japan’s easing measures have run their course. The June Yen may slide back towards the 102.10 level as global risk appetites continue to improve, with a further break below this morning’s early lows likely to produce additional downside momentum.
CHF: The June Swiss was able to post moderate gains this morning, but still has some ways to go in order to fully recover from last week’s significant downdraft. While stronger global risk attitudes will help keep the Swiss Franc in an upward trajectory, recent comments from SNB officials on the “elevated” value of their currency are likely to keep the Swiss Franc losing ground to the Euro. The June Swiss should climb up towards the 106.67 area later today, but will need a strong tone from outside markets to see any large extension to this current rebound.
CAD: The June Canadian continues to drive to the upside this morning, and matched a 2-week high early in this morning’s trading. Stronger energy and metals prices will help to underpin recent gains, but the Canadian Dollar is going to need positive upcoming data from both sides of the US/Canada border in order to take this current rally back towards the mid-April highs. The June Canadian will claw its way up towards the 98.62 level later today, and will be a major beneficiary of improving risk appetites throughout global markets.
EasyForexNews Research Team