USD: The Dollar appears to have found some footing after six straight losing sessions, but still has a long way to go in order to fully recover from this current downdraft. While global risk appetites remain lukewarm at best, the Dollar has been unable to see much benefit as several pieces of weak US economic data have eroded recent strength. While the Fed’s inaction at yesterday’s FOMC meeting clearly helped the Dollar, the market will need to see some definitive improvement with US economic data throughout the rest of this week. Lower rates from the ECB will provide some support, but the Dollar’s near-term strength will likely hinge on whether this morning’s Jobless Claims and Trade Balance numbers can improve the tone of the US economy going into tomorrow’s Payroll numbers. The Dollar may climb up towards the 81.90 level later this morning, but may have to wait until Friday Employment data before undertaking any sizable recovery rally.
EUR: The June Euro continues to slide further back from yesterday’s 2-month highs, and is likely to remain on the defensive going into this morning’s European Central Bank meeting results. Today’s set of Euro zone PMI numbers were slightly better than expectations, particularly from Italy, but they were all solidly below the 50 level that signals a contracting economy. There is a consensus that the ECB will cut rates at their meeting today, although the slide in Italian and Spanish debt yields to 2013 lows may have limited pre-meeting pressure that was being put on the Euro this morning. This week’s sharp gains leave plenty of room for retracement, however, and combined with a positive reception for US data later in the session that could send the Euro further to the downside. The June Euro will find near-term support around the 131.45 area, and remains vulnerable to additional losses if the ECB surprises to the dovish side this morning.
GBP: The June Pound has lost upside momentum early today as its recent rally may be showing signs of running out of steam. A surprisingly good reading for the UK Construction PMI has provided little help to the Pound this morning, which has been weighed down by carryover pressure from the Euro in front of today’s ECB meeting. The June Pound may fall back towards the 155.30 area during today’s session, but has found enough support from the recent improvement in UK economic data to remain in close proximity to the recent highs.
JPY: The June Yen has consolidated just below the recent highs this morning, and has remained fairly subdued in front of this morning’s key events. Weak data from the US and China has helped the Yen regain some measure of safe-haven support, which is likely to be further strengthened in the wake of an ECB rate cut. Even so, firmly entrenched Japanese deflation will make it difficult for the Yen to retest the mid-April highs. If US economic data finds a better tone over today and tomorrow, near-term Yen strength is likely to erode fairly quickly. The June Yen may rise up above the 103.00 level after the ECB meeting results are out, but further upside will be limited unless today’s US economic data disappoints the market.
CHF: The June Swiss is finding moderate pressure this morning, although prices are remaining in close proximity to yesterday’s high for the move. While today’s Swiss PMI was well above expectations and rose above the 50 level, carryover pressure from the Euro is likely to keep the Swiss Franc under pressure this morning. The June Swiss could slide down towards the 107.50 level later today, but will remain fairly well supported after the recent recovery rally.
CAD: The June Canadian was able to consolidate above the 99.00 level during overnight trading, and is holding up fairly well given recent weakness in energy and metals markets. The Canadian Dollar has benefited from recent improvement with their nation’s economic data, and comments by outgoing BOC Governor Carney that their economy had “a bit more momentum” will help to underpin recent gains. The June Canadian will find early support at 99.00 this morning, and should regain upside momentum if and when this morning’s US data exceed market expectations.