USD: The Dollar was able to grind out a modest rebound from overnight pressure, but still has plenty of work to do in order to recover from sizable weekly and monthly losses. With little in the way of “top-tier” US economic data to reinforce last Friday’s in-line jobs data, the Dollar continues to take most of its direction from the ebb and flow of overseas risk sentiment. Therefore, this morning’s Yen pullback should help to underpin the Dollar well above yesterday’s low for the move this morning. A private survey of US mortgage applications may take on added importance due to the spike in US longer-term yields over the past few weeks, but calmer global markets and improving risk appetites are likely to keep the Dollar’s upside limited at best. The Dollar may climb up towards the 81.40 resistance level.
EUR: The June Euro has fallen back from a new 31/2-month high during overnight trading, and is finding moderate pressure early in this morning’s session. While a rebound in German CPI may have helped to lift the Euro up into new high ground, a negative year-on-year reading for Euro zone Industrial Production has underlined the work needed to improve economic conditions outside of the “core” EU. The market appears to have taken German Constitutional Court arguments over the OMT bond buying program in stride this week, and with calmer global risk conditions should help to keep the Euro in close proximity to the recent highs. As long as peripheral EU debt yields can remain subdued this morning, the Euro should remain fairly well supported. The June Euro may slide down towards the 132.54 support.
GBP: The June Pound continues to build on yesterday’s substantial recovery, and just missed posting a new 4-month high early in today’s session. Better than expected UK Employment data has helped to reinforce the Pound’s substantial rally this month, as potential Bank of England easing measures look to pushed further into the future. The June Pound looks to be heading towards the 157.00 resistance level.
JPY: The June Yen has seen some choppy and volatile trading during the past few hours, but remains well below yesterday’s weekly high and last Friday’s high for the move early in today’s trading. A late rebound in Japanese equities may not have gotten the Nikkei back into positive territory by the close, but has gone a long way towards soothing market anxiety and has eroded a portion of the Yen’s safe-haven support. The latest reading on Japanese Machinery Orders may have exceeded market forecasts but was negative on a year-on-year basis, providing clear evidence of the work ahead of the Bank of Japan with reviving the Japanese economy. A large portion of recent Yen strength has come from domestic flight-to-safety flows, so any sense that Japanese equities have found a near-term bottom should send the Yen down to much lower prices levels. The June Yen may fall back towards the 103.45 support level.
CHF: The June Swiss is finding pressure from the loss of near-term safe-haven support as well as from a sluggish Euro early in today’s session. While there are several key Swiss economic measures that continue to outperform their Euro zone neighbors, persistent Swiss deflation will keep the SNB’s floor rate with the Euro firmly in place over the near future. The June Swiss could fall back toward the 107.55 support level.
CAD: The June Canadian has benefited from the improving tone of outside markets and global risk sentiment, but lukewarm price action in the energy and metals markets may have kept prices from building on an overnight rally up to new high ground. While Canadian economy has certainly shown some recent strength, the lukewarm vibes from China and diminished tapering fears from the US may be holding further gains in check. The June Canadian could see another retest of the overnight highs around the 98.36 level, but may require stronger global risk appetites in order to take this current rally up into new high ground.