USD: The Dollar remains well supported and continues to drive further into new high ground going into this morning’s trading. Recent US economic data may not have seen dramatic levels of improvement but is clearly outperforming other major global economies, with today’s weak Euro zone data providing the Dollar with an additional boost of safe-haven support as well. This will raise the bar for upcoming US data, however, as there will be quite a few “top-tier” and “second tier” releases during the rest of this week’s trading. While potential tapering of Fed QE may still be well beyond the market’s horizon, the Dollar should continue to maintain upside momentum as long as today’s PPI and Industrial Production numbers do not produce any negative surprises. The Dollar may climb up through the 84.12 level after the US data window, and may be on-course for reaching a fresh 9-month high if overseas risk concerns provide another fresh dose of safe-haven support later today.
EUR: The June Euro came under severe pressure during overnight trading and has quickly fallen down to a fresh 1-month low this morning. Weak GDP data from the Euro zone, Germany and France has underscored the sluggish economic conditions that are developing in the “core” EU, even as problems in the peripheral EU fade into the background. Spanish and Italian longer-yields are starting to climb again, which is removing another supportive factor for the Euro this morning. Unless there is a substantial turnaround in global risk sentiment, the Euro is likely to remain on the defensive throughout the rest of today’s session. The June Euro may slide down towards the 128.68 level later this morning, and may be heading for a retest of the early April lows for 2013 if peripheral EU risk concerns start to flare up once again.
GBP: The June Pound was able to bounce back from longer-term support levels this morning and has overcome sluggish outside markets to post a modest gain early in today’s trading session. Already boosted by a stronger-than expected reading on UK Unemployment, the eagerly-awaited Bank of England Quarterly Inflation Report showed an upgraded UK growth outlook as well as UK inflation reaching their 2% target level and that is a change of pace. While fresh QE measures appear to be off the table until well into new BOE Governor Carney’s term, further upside for the Pound may be difficult unless global risk sentiment sees some vast improvement. The June Pound may rise back up towards the 152.60 level later this morning, and will need plenty of help from stronger outside markets to extend this current recovery rally.
JPY: The June Yen has been firmly under pressure this morning, but appeared to be put some near-term brakes on this current downdraft in reaction to the weak Euro zone GDP data. Diminishing global risk sentiment provided a modest but badly-needed dose of safe-haven support, which helped the Yen recover from taking out another “big-figure” on the cash forex charts at the 102.50 level. Yesterday’s reversal was a clear indication of how fragile any near-term Yen rallies are likely to be, unless there is substantial and sustained improvement with the tone of upcoming Japanese economic data. Today’s sluggish risk appetites will be of some benefit for the Yen, but not enough to keep the market from sliding further into new low ground later in the session. The June Yen could see a brief run back into positive territory and up towards the 97.90 level if this morning’s US data come in weaker than the market expects, but traders should still look for a further rally up towards the 98.50 area before approaching the short side of the market once again using long put option strategies.
CHF: The June Swiss fell below the 103.00 level for the first time in over 9 months, but was able to put together a modest and short-lived recovery from those early lows in the wake of today’s poor Euro zone GDP numbers. Several weak Swiss economic readings over the past week have kept the Swiss Franc in a tailspin, with the Swiss/Euro spread remaining in close proximity to the key 1.25 per Euro level. The June Swiss may drive back down towards the 102.68 level later on in today’s session, but may be able to regain a portion of recent losses versus the Euro as long as this morning’s weak Euro zone data continues to be a front-and-center issue with the market.
CAD: The June Canadian made a modest rebound from a new monthly low, but is still showing little inclination for recovering any larger portion of recent losses this morning. Today’s Canadian Manufacturing data could go some way towards strengthening upside momentum, but the Canadian Dollar may have to wait until energy and metals prices are able to shake off this week’s pressure. The June Canadian may climb up towards the 98.25 level if today’s data on both sides of the US/Canada border can exceed market forecasts, but the Canadian will continue to need stronger global risk sentiment to see a sharp extension to any recovery rally.