USD: The Dollar was unable to follow-through on overnight strength this morning, and has drifted back into negative territory and towards the middle of a fairly wide late-May trading range. While a generally positive tone from recent US data has underpinned this week’s recovery, somewhat calmer overseas markets after the Japanese close this morning are not providing the safe-haven support needed to sustain any Dollar rally up into new high ground. Higher US longer-term rates may be a virtue, but liquidation pressure from overseas Treasury holders may become a negative factor for the Dollar after this week’s downdraft. With little in the way of “top-tier” US data for the market to digest, the Dollar may be hoping for a fresh dose of overseas risk aversion in order to regain upside momentum. The Dollar may slide down towards the 83.92 level later today, and may have to wait until tomorrow’s set of US economic data in order to make another run at the recent highs.
EUR: The June Euro was able to bounce back from overnight pressure this morning, and is grinding out a modest gain early in today’s session. German Unemployment may have been marginally weaker than expectations, but at least avoided an uptick to the 7.0% level. With few pieces of positive economic data outside of Germany, however, the implied threat of additional ECB easing measures casts a long shadow over the Euro this week. A revival of global risk appetites would certainly be a benefit for the Euro, but any chance at rising up and beyond last week’s high would require some positive vibes out of France or Italy, much less the peripheral EU trouble spots that elude any lasting solutions. The June Euro may rise up towards the 129.10 level this morning, and will be hoping that global markets can shift back towards a “risk on” mood in order to build onto these early gains.
GBP: The June Pound continues to show lackluster price action this week, and may be heading for a retest of the new 2-month low posting during overnight trading. A private survey of UK retail sales produced a surprisingly negative reading that fell to a 13-month low, which is likely to keep the Pound under firm pressure going into this morning’s trading. The June Pound may find near-term support around the 150.10 level later this morning, but appears more than likely to finish out today’s session well into new low ground below the 150.00 level.
JPY: The June Yen has put together moderate gains this morning, but so far has lacked the strong upside momentum required to retest the recent highs above the 99.00 level. The recent extreme volatility in Japanese equity and interest rate markets are sending shockwaves far beyond Japan’s borders, but have also provided a steady diet of safe-haven and repatriation support for the Yen early this week. While last night’s Japanese Retail Sales may have mildly exceeded forecasts, its negative reading underscores the work ahead for the Bank of Japan and the Japanese government with reviving their economy. Calmer markets both inside and outside Japan will put the Yen squarely back on the defensive, so another run back above the 99.00 level should be viewed as a fresh opportunity to enter the short side of the market using long put option strategies. The June Yen may bounce back towards the 98.52 overnight highs later today, but is already showing signs this morning that a move back down towards a new weekly low may be on the near-term horizon.
CHF: The June Swiss has made a sizable recovery from overnight lows, but still has a long way to go in order to retest the recent highs. This morning’s private survey of Swiss Consumption provided a badly-needed piece of positive Swiss data, but recent comments by SNB officials threatening negative interest rates and raising their peg rate versus the Euro will continue to weigh on prices going forward. The June Swiss may climb up towards the 103.26 level this morning, but may need to see a decent Swiss GDP reading tomorrow morning to have any chance of moving up and beyond this sizable recent trading range.
CAD: The June Canadian rebounded from a new 111/2-month low early in today’s trading but remains under moderate pressure in front of today’s critical market event, the Bank of Canada’s monetary policy meeting. The prospect of the BOC moderating their tightening bias has been a key negative factor during this month’s extensive selloff, so any lack of change with their post-meeting statements could trigger a sharp shortcovering rally in the Canadian Dollar later this morning. The June Canadian could make another run at the 95.91 overnight low early in today’s session, but will clearly take direction from how the market receives the Bank of Canada meeting results.