USD: The Dollar has started out this week with moderate gains, and continues to extend last Friday’s rebound from 31/2-month lows early in this week’s trading. While the much-anticipated US Payroll numbers ended up being fractionally above expectations, they were more than good enough to keep Fed tapering concerns a front and center issue with the market. Sluggish Chinese trade data and a lukewarm Chinese CPI number may have provided a modest boost of safe-haven support to the Dollar as well. The main source of strength for the Dollar is likely to come from across the Pacific, as a rebound in Japanese equities has sent the Yen into a tailspin and have shifted flight to safety flows back into Dollars. With no major US data until later on in the week, the Dollar should remain moderately well supported from overseas risk concerns to build upon this current rebound. The Dollar may find near-term resistance around the 82.05 area, and may need to find further support from stronger US data later this week in order to recover a larger portion of recent losses. The Commitments of Traders Futures and Options report as of June 4th for US Dollar showed Non-Commercial traders were net long 43,781 contracts, a decrease of 1,641 contracts for the week.
EUR: The June Euro is holding up fairly well given the lukewarm tone of global risk sentiment at the start of this week, and has already recovered from an early slide below the key 132.00 level this morning. A positive reception for this morning’s French Industrial Output data is providing some near term benefit this morning, but the Euro continues to hold onto a large portion of last week’s post-ECB updraft. Recent strength in German economic data has helped to underpin the Euro’s sharp rally over the past few weeks, but it has been equally important that peripheral EU trouble-spots have generally been quiet over the same period. While it may take a full-scale “risk on” mood to send the Euro up into new high ground, calmer global market will help to underpin early gains. The June Euro may fall back towards the 132.00 support level. The Commitments of Traders Futures and Options report as of June 4th for Euro showed Non-Commercial traders were net short 52,872 contracts, a decrease of 29,858 contracts and the short-covering mode is seen as somewhat positive.
GBP: The June Pound is finding moderate pressure this morning, but has managed to consolidate within the lower portion of last Friday’s trading range. The general rebound in UK economic data over the past few weeks has dampen expectations for Bank of England easing measures during the near future, but the Pound may have to see stronger global risk sentiment in order to retest last Thursday’s high for the move. The June Pound should find near-term support around the 155.18 level later today, and will stay fairly well supported as long as the tone of UK economic data does not turn negative.
JPY: The June Yen continues to plunge sharply lower this morning, and is far below the initial post-Payrolls highs seen on Friday morning. A 4.9% recovery in the Nikkei last night has helped to soothe plenty of market nerves over Japanese equities, and has caused a further drain of the Yen’s recent flight-to-safety support. A positive revision with first quarter Japanese GDP up to a 4.1% annualized basis has provided little if any benefit to the Yen this morning, as that data helped to reinforce Japanese equities and in turn put further pressure on the Yen. Japanese stocks may still well away from any sense of stability, but today’s recovery will keep the Yen squarely on the defensive during today’s trading. The June Yen looks to be headed towards the 101.06 level.
CHF: The June Swiss was able to make a sizable recovery from a sharp early selloff this morning, but has not quite been able to find enough strength to climb back into positive territory. While this morning’s Swiss economic data avoided any negative surprises, the Swiss Franc is likely to lose further ground to the Euro as long as EU trouble spots stay out of market headlines. The June Swiss may fall back towards the 106.55 area.
CAD: The June Canadian was able to build on last week’s sharp recovery rally early this morning, and is now within striking distance of posting a new 31/2 week high. Last Friday’s huge Canadian jobs creation number continues to provide support for the Canadian Dollar early this week, and today’s Canadian Housing data is likely to help reinforce early gains. The June Canadian should head towards the 98.25 level, and is likely to maintain a positive tone.