USD: The Dollar is finding minimal support at the start of the new trading week, and still has some way to go in order to move back up and beyond last Friday’s spike highs. An article by a well-regarded “Fed-watcher” indicating that the Fed already has an exit strategy for their current QE measures and that has underpinned the Dollar going into this morning’s trading. Mixed results with last night’s Chinese economic data has left global risk appetites subdued at best, while the Dollar may have dodged a bullet when the G7 gave Japan another pass on the global currency impact of their recent aggressive easing measures. US economic data will be much more of a market factor starting with today’s Retail Sales number, which could put further headwinds on the Dollar if it falls well short of market expectations. The Dollar may rebound back towards the 83.42 level this morning, and will likely need some additional help from stronger overseas risk concerns in order to retest last Friday’s monthly high as well as the early April high for 2013. The Commitments of Traders Futures and Options report as of May 7th for US Dollar showed Non-Commercial traders were net long 32,056 contracts, a decrease of 3,154 contracts. The Commercial traders were net short 39,475 contracts, a decrease of 2,787 contracts. The Non-reportable traders were net long 7,419 contracts, an increase of 367 contracts. Non-Commercial and Non-reportable combined traders held a net long position of 39,475 contracts. This represents a decrease of 2,787 contracts in the net long position held by these traders.
EUR: The June Euro continues to have trouble putting together any sort of recovery early this week, and remains firmly at the bottom end of last week’s downdraft. Comments over the weekend by an ECB official have given further credence to the potential for negative Euro zone deposit rates, which is likely to weigh heavily on the Euro over the next few sessions. A lack of fresh economic data from the region today and tomorrow may help to keep further losses in check, however, as further evidence of non-German weakness will make it even more difficult for the Euro to regain any sort of sustained upside momentum. A rebound in global risk sentiment would clearly help, but the Euro sorely needs to hear positive economic news out of the peripheral EU to shake off recent pressure. The June Euro should find near-term support around the 129.56 level, and should avoid another leg down for this current sell off just as long as the market’s focus stays on the US and Japan early this week. The Commitments of Traders Futures and Options report as of May 7th for Euro showed Non-Commercial traders were net short 33,201 contracts, an increase of 2,807 contracts. The Commercial traders were net long 47,315 contracts, an increase of 7,938 contracts. The Non-reportable traders were net short 14,114 contracts, an increase of 5,131 contracts. Non-Commercial and Non-reportable combined traders held a net short position of 47,315 contracts. This represents an increase of 7,938 contracts in the net short position held by these traders.
GBP: The June Pound found little lasting benefit from recent strength in UK economic data and the Bank of England’s decision to hold off on fresh easing measures, as negative outside markets knocked prices well below their recent highs late last week. The BOE’s upcoming Quarterly Inflation Report is casting a long shadow over the market, as the potential for negative economic guidance is clearly weighing on the Pound early this week. The Pound will clearly benefit from any rebound in global market risk sentiment this morning, but may need to wait until the Quarterly Inflation Report is out of the way in order to retest the early May highs. The June Pound may rise up towards the 153.76 level later in the session, but is likely to remain relatively subdued until critical events later on this week.
JPY: The June Yen was able to bounce back from a new low for the move during the overnight session, but is having trouble getting into positive territory coming into this morning’s trading. The G7 once again avoided criticizing Japan for their aggressive easing measures, which will keep longer-term pressure on the Yen going forward. The outright collapse of JGB prices over the last two sessions has led to an explosive rally in Japanese longer-term yields, however, which is giving some traders pause for thought early this week. The Yen will be vulnerable to a sizable short-covering rally if global risk appetites deteriorate any further, but the market will need to see some definitive signs of progress on the Japanese deflation front to fully put the brakes on this longer-term downtrend. The June Yen may climb up towards the 98.68 level later in today’s session, but any near-term strength is unlikely to be sustainable unless Japanese inflation readings start to show some vast improvement.
CHF: The June Swiss has shown little inclination for mounting a recovery from last week’s severe losses, as modest overnight gains have been mostly reversed this morning. A surprisingly large decline in Swiss Retail Sales is weighing on market sentiment, and is likely to keep the Swiss Franc on the defensive early this week. However, rising concerns with potential negative Euro zone deposits should help the Swiss Franc hold the upper hand on the Euro over the next few sessions. The June Swiss may slide down to the 104.25 level later on during today’s session, but should avoid a retest of last Friday’s 8-month low as long as global risk attitudes do not deteriorate any further from already lukewarm levels early this week.
CAD: The June Canadian has mostly shaken off early pressure, but has a long way to go in order to fully recover from last week’s significant chart damage. There was little margin for error given the headwinds from outside markets, so last Friday’s weaker than expected Canadian Employment data ended up adding even more pressure on the Canadian Dollar. With energy and metals markets on the defensive this morning, it will be difficult for the Canadian Dollar to sustain any upside momentum. The June Canadian may grind out a move towards the 99.00 level later today, but will need plenty of help from outside markets in order to climb back towards last week’s highs.