USD: The Dollar followed through on yesterday’s severe turnaround with a downside breakout during overnight trading, and fell to the lowest price levels since mid-May before mounting a moderate recovery this morning. While the main source of pressure has come from the revival of Yen safe-haven support due to turbulence in Japanese financial markets, there has been little in the way of fresh risk anxiety from other regions of the globe to provide the Dollar with any lasting benefit. Strong US data was the catalyst for the Dollar’s sharp rally earlier this week, so a positive reception for today’s GDP and Jobless Claims numbers would clearly lift prices further away from their overnight lows. Unless Japanese equities can put the brakes on their recent downdraft, however, the Dollar will remain well below this week’s early highs. The Dollar should climb back towards the 83.72 level with a strong set of US data later today, but will need to see calmer Japanese markets to rise back towards the middle of the late May trading range.
EUR: The June Euro remains fairly well supported early in today’s trading, but once again has shown some reluctance with moving up and beyond the 130.00 level. Today’s set of Euro zone sentiment readings were mildly better than forecasts and have helped to underpin this morning’s gains, but the jump in peripheral EU yields may have fueled some caution in front of today’s Italian longer-term debt auction. While the Euro continues to be burdened by potential fresh ECB easing measures, being out of the market’s spotlight has helped the market with regaining lost ground late this week. Although global markets are still well away from a full-scale “risk on” mood, the Euro should stay in close proximity to this morning’s early highs as there have been few fresh negative news items from the Euro zone itself for the market to digest. The June Euro may slide back towards the 129.55 level if today’s US data beats expectations, but should hold onto a sizable portion of yesterday’s recovery rally through the close.
GBP: The June CBP has built upon early gains this morning and has posted a fresh weekly high early in today’s session. Mixed results with recent UK economic data have kept potential BOE easing measures hanging over the market, but the Pound should hold onto a large portion of this current recovery rally unless global risk sentiment turns decisively negative later today. The June Pound may fall back towards the 151.36 area later in today’s session, and should stay well clear of yesterday’s low for the move as risk appetites continue to mend.
JPY: The June Yen continues to find strength from the meltdown in Japanese equities, and reached a fresh 3-week high before losing upside momentum and falling back into negative territory this morning. A 5.15% drop in the Nikkei was the second massive downdraft in a week, which in turn created another fresh flight-to-safety wave into Yen during overnight trading. While the Bank of Japan will increase the number of their JGB purchases to ease the recent volatility with Japanese longer-term yields, the Yen’s main source of support will continue to come from slumping Japanese equity markets. While the Yen should find additional pressure from a strong set of US data later this morning, any chance for an extensive move back towards this week’s early lows will depend upon Japanese equities putting the brakes on their current pullback. The June Yen could fall back towards the 98.36 level later in today’s session, but will remain well above this week’s early lows until Japanese equity markets are heard from again this evening.
CHF: The June Swiss was able to build upon yesterday’s sizable reversal and has reached a new 2-week high early in today’s trading. This morning’s Swiss GDP number was stronger than expected and moved above the 1.0% year-on-year level, which is in sharp contrast to a large number of its Euro zone neighbors. The June Swiss may fall back towards the 103.92 level after this morning’s US data window, but comparatively strong Swiss economic data should help to keep prices in close proximity to their recent high through the rest of today’s trading session.
CAD: The June Canadian was able to consolidate yesterday’s reversal from a new 111/2-month low, and may be able to build upon this morning’s modest early gains. The Bank of Canada may have made a symbolic gesture by retaining their tightening bias at yesterday’s meeting, but the Canadian Dollar avoided a major hurdle when the tightening bias remained in their post-meeting statement. A strong showing from economic data on both sides of the US/Canada border should help the Canadian Dollar maintain upside momentum through today’s session. The June Canadian may rise up towards the 96.90 level later this morning, and may be poised to recover a large portion of this month’s sizable losses.