USD: The Dollar has started out this holiday-shortened trading week with modest gains, and has moved closer to the midway point of last week’s volatile trading range. A noted improvement with recent US economic data helped the Dollar to shake off last week’s severe whipsaw price action, although there is still concern that the market may need to see a strong set of Payroll numbers next week before the Dollar can retest of last week’s highs for the move. Calmer Japanese financial markets have fostered a mild improvement in global risk attitudes this morning, however, which is likely to keep further Dollar gains in check. Today’s set of US data should help to underpin the Dollar’s early gains, but a full-scale rally may be off the table as long as risk sentiment continues to be on the mend. The Dollar may climb back up towards the 84.07 level later today, and appears to regained “topdog” status for being a safe-haven destination of choice. The Commitments of Traders Futures and Options report as of May 21st for US Dollar showed Non-Commercial traders were net long 45,709 contracts, an increase of 10,689 contracts. The Commercial traders were net short 57,389 contracts, an increase of 12,840 contracts. The Non-reportable traders were net long 11,680 contracts, an increase of 2,151 contracts. Non-Commercial and Non-reportable combined traders held a net long position of 57,389 contracts. This represents an increase of 12,840 contracts in the net long position held by these traders. The Non-reportable Net Long position in the Dollar Index did hit a new record level at 11,680 contracts.
EUR: The June Euro continues to show lackluster price action early in this week’s trading, and is seeing little sustained benefit so far from improving risk appetites. While peripheral EU debt yields remain subdued early this week, there have been few positive data points outside of Germany to provide the Euro with underlying support. With the ECB leaning towards a more “dovish” monetary stance, the Euro may need to see a much more pronounced “risk on” mood in order to climb back up towards this week’s highs. It would not take much in the way of negative news out of Italy, Spain, or France to derail this morning’s gains fairly quickly. The June Euro may find near-term support around the 129.04 level, but should avoid any return to the mid-May lows as long as recent peripheral EU trouble-spots continue to stay out of market news headlines. The Commitments of Traders Futures and Options report as of May 21st for Euro showed Non-Commercial traders were net short 79,813 contracts, an increase of 33,578 contracts. The Commercial traders were net long 107,803 contracts, an increase of 41,081 contracts. The Non-reportable traders were net short 27,990 contracts, an increase of 7,504 contracts. Non-Commercial and Non-reportable combined traders held a net short position of 107,803 contracts. This represents an increase of 41,082 contracts in the net short position held by these traders.
GBP: The June Pound is showing little inclination for extending last week’s rebound from 2-month lows, and remains in close proximity to the low end of this month’s downtrend. With the Pound unable to shake off market ideas of upcoming BOE easing measures, global risk sentiment and the tone of outside market will need to see substantial improvement in order for the market to recover a sizable portion of recent losses. The June Pound may rise up towards the 151.24 level later today, and will be a major beneficiary of a full-scale “risk on” mood in global markets.
JPY: The June Yen is squarely back on the defensive this morning and is posting severe losses coming into this morning’s trading. Japanese equities appear to have put the brakes on their recent downdraft, which has stemmed the flow of flight-to-safety funds into the Yen. In addition, comments by a Bank of Japan official that their monetary easing measures will put downward pressure on longer-term and short-term Japanese rates, has also been a source of pressure on the Yen this morning. If Japanese equities and JGB’s can remain stable, the Yen’s safe-haven support will continue to erode. With the market failing to hold onto a move above the 99.00 level yet again, the Yen may be heading for a retest of last week’s low during the next few sessions. The June Yen will have a near-term downside target of 97.56, and may be setting up to resume its longer-term downtrend during the near future.
CHF: The June Swiss has been the other major “victim” of calmer Japanese markets and improving risk sentiment, as the near-term inflow of safe-haven support has evaporated fairly quickly. A lukewarm reception to this morning’s Swiss Trade numbers will put further pressure on the Swiss Franc, which will continue to lose further ground to the Euro as the SNB’s threats of negative interest rates and of raising their 1.20 floor rate versus the Euro continue to weigh on prices. The June Swiss should find support around the 102.96 level later in today’s session, and may have to wait until the Swiss GDP number comes out later this week to have any chance of regaining upside momentum.
CAD: The June Canadian has been able to lift clear of last week’s 101/2-month lows, but still has a long way to go in order to recover from recent substantial chart damage. Stronger energy prices will help, but the market may wait for this week’s Bank of Canada meeting before the Canadian Dollar can see any large upside move. The June Canadian may rise up towards the 96.85 level later this morning, and will also benefit from a stronger tone from outside markets during today’s session.