USD: The Dollar is finding moderate pressure this morning, but is still holding onto a sizable portion of yesterday’s mid-day rally. While there was little in the way of fresh US data for the market to digest, it was left to “dovish” commentary out of ECB President Draghi to provide the Dollar with a strong boost of support. However, last night’s surprise rate cut in Australia has meant that safe-haven flows are heading back into Yen this morning and leaving the Dollar on the back foot this morning. The lone piece of US data over the next two sessions, Consumer Credit, will come very late in today’s action so the Dollar will continue looking towards overseas risk concerns for a source of strength this morning. The Dollar may fall back towards the 82.10 area later on during today’s session, as a lack of US data to reinforce last Friday’s strong Payroll numbers will leave prices at the mercy of overseas risk concerns for near-term direction.
EUR: The June Euro remained fairly subdued this morning, until a surprise positive reading for German Factory Orders lifted prices out of a tight overnight trading range. Yesterday’s comments from ECB President Draghi that the ECB was prepared to cut rates further may not have been substantively different from his post-ECB meeting remarks last Thursday. However, the market’s quick negative reaction indicates how vulnerable the Euro has become even after the ECB’s rate cut has been digested by the market. A positive German Factory Orders numbers may be a step in the right direction, but the market is still waiting for signs of recovery from outside the “core” EU. Record-low ECB rates are keeping peripheral EU debt yields subdued, which should keep the Euro well clear of yesterday’s weekly lows. The June Euro may bounce back towards the 131.35 area later this morning in the wake of this morning’s German data, but will continue to be one or two negative news headlines away from seeing another rapid sell off that takes prices down to a new monthly low.
GBP: The June Pound has consolidated near the middle of its recent trading range, and is showing little inclination to retest the 156.00 area after four straight sessions without an upside breakout. While the market may have reached a consensus that the Bank of England will hold off on fresh easing measures, at least until new BOE Governor Carney comes on board at mid-year, the Pound will be unable to reach new high ground without a better tone from outside markets. The June Pound may climb up towards the 155.64 level later this morning, but will likely to remain range-bound until the BOE is heard from later this week.
JPY: The June Yen has bounced back from overnight lows this morning, and for the moment has backed away from a retest of the early April lows. Last night’s rate cut by the Reserve Bank of Australia caught the market by surprise, and triggered a large-scale liquidation move in Aussie/Yen spreads. While the Dollar will remain the safe-haven destination of choice for the longer-term, the Yen’s overnight recovery has allowed it to benefit from this week’s flare-up of Euro zone anxiety as well. The Yen is unlikely to climb back towards last week’s high without a full-scale risk event rattling global markets, so today’s near-term strength may provide a fresh opportunity to approach the short side of the market using long put option strategies. The June Yen may climb back towards the 101.05 level later today, but is unlikely to sustain any recovery without global markets shifting back into a “risk off” mood.
CHF: The June Swiss came under heavy pressure early this morning, and a new monthly low before recovering in the wake of the German Factory Orders number. While Swiss Unemployment and Consumer Confidence were in-line with market forecasts, a report that the SNB’s foreign currency reserves fell more than expected is keeping the Swiss Franc on the defensive this morning. The June Swiss could retest the 106.00 overnight low once again this morning, and needs to see stronger global risk sentiment to regain upside momentum later on during today’s session.
CAD: The June Canadian was able to rebound from overnight pressure and is grinding out a moderate gain early in today’s session. With the Canadian economy still showing mixed results, the market may be hesitant to take prices sharply into new high ground until Friday’s Canadian jobs data is out of the way. The June Canadian may rise up to the 99.47 level and post a new high for the move, but will need help from stronger energy and metals markets to extend this rally in front of Friday’s always-volatile Canadian jobs data.