USD: The Dollar was able to shake off overnight pressure and return to unchanged levels this morning, but still is having trouble with putting together any extensive recovery from Monday’s sizable downdraft. Overnight pressure from the Yen has not shown any signs of abating, even with some flight-to-quality Dollar demand out of Europe early this morning. Yesterday’s US Trade numbers had a mildly positive tone, but were unable to fully offset Monday’s much weaker than expected ISM reading. Today’s US markets will start to take on a labor-centric tone in anticipation of Friday’s Employment numbers, so a positive reception for the ADP private jobs survey will help to boost early Dollar strength. Other US economic numbers today and recent Fed dialogue are likely to provide some benefit as well but with volatile Japanese equity markets still boosting the Yen at the Dollar’s expense, the market may wait to digest Friday’s Payroll figures before any strong recovery rally can take place. The Dollar could make a run at the 83.00 level with a positive sweep from US data this morning, but will still have some work to do to recover any large portion of recent losses.
EUR: The June Euro just missed on making a fresh high for the move during overnight trading, and has now fallen back on the defensive early this morning. While today’s set of Service and Composite PMI numbers lived up to the market’s lukewarm expectations, fairly weak Euro Zone GDP and Retail Sales data provided fresh evidence of sluggish economic conditions throughout the region. The chances for an ECB rate cut at tomorrow’s meeting are slim, but post-meeting comments from ECB President Draghi are unlikely to be any sort of positive factor for the Euro. There may be more pressure ahead after today’s US data, but subdued peripheral EU debt yields will help the Euro hold onto a large portion of recent gains. The June Euro may find support around the 130.45 level later this morning, and will remain close to this week’s highs as long as global risk sentiment does not erode further during today’s trading.
GBP: The June Pound bounced back from early pressure this morning with a strong upside move, and is now within striking distance of reaching a fresh new high for this recovery rally. A better than expected reading from the Services sector meant that all 3 PMI reading this week – manufacturing, construction, and services – were significantly better than market forecasts. While a fresh easing move was unlikely at this week’s Bank of England meeting, consistently positive UK economic data will help to keep potential QE measures off the table well into the future. The June Pound may head up towards the 153.80 level later this morning, and should retain a positive tone beyond the US economic data window later today.
JPY: The June Yen continues to see volatile price action, but is managing to hold onto sizable gains coming into this morning’s trading. The announcement of Prime Minister Abe’s new growth policies underwhelmed the market and was the main catalyst for a 3.8% selloff in the Nikkei, the fifth decline of 3% or more in the past 2 weeks, which provided the Yen with another large boost of flight-to-safety support. As long as Japanese equities continue to search for a near-term bottom, the Yen is likely to remain fairly well supported. Positive US data this morning will weigh on the Yen, but any decisive downside move may have to wait until Japanese equities can stabilize and the Non-Farm Payroll numbers are heard from later this week. The June Yen will find near-term support around the 100.10 level during today’s session, and will likely remain fairly strong until Japanese financial markets are heard from again this evening.
CHF: The June Swiss is posting moderate losses this morning, but continues to hold onto a large portion of Monday’s sharp rally. Carryover pressure from the Euro is likely to keep the Swiss Franc under pressure early in today’s session, but recent strength in Swiss economic data should keep any losses firmly in check. The June Swiss should find support around the 105.22 area later in today’s session, and will need to see stronger risk appetites in order to regain upside momentum.
CAD: The June Canadian continues to have a difficult time sustaining upside momentum, as yesterday’s disappointing Canadian Trade data cast further doubt on that nation’s comparative economic strength. As with their southern neighbors, the Canadian Dollar may require the help of strong jobs numbers at the end of this week in order to lift clear of this recent trading range. The June Canadian may retest the 96.80 overnight highs later this morning, but will need help from stronger energy and metals markets to build upon any early rebound.