USD: The Dollar is posting moderate losses this morning, although the market has survived an overnight retest of yesterday’s new low for the move. Calmer Japanese financial markets are helping to shift safe-haven support out of the Yen, which has clearly been to the Dollar’s benefit. However, market uncertainty over the Fed’s tapering strategy in front of tomorrow’s FOMC meeting results has kept the Dollar rooted to the bottom of this month’s downdraft. Well-received US data yesterday provided little lasting support, but today’s CPI and Housing Starts readings will carry more weight with the market and may help the Dollar climb up into positive territory later this morning. Until the Fed is heard from tomorrow, however, the Dollar will have difficulty putting together any extensive recovery from these current price levels. The Dollar may rise up towards the 81.15 area and should stay well clear of the recent lows during today’s trading.
EUR: The September Euro shook off early pressure and has climbed up to a new 4-month high. A slightly better than expected reading for the German ZEW survey has helped to underpin this morning’s rebound, as it represents a more than 2 point jump from the previous month. However, this morning’s bleak European auto sales data indicates that there is plenty of work left to do in order to improve economic conditions throughout the region. The Euro continues to benefit from being out of the market’s spotlight, which should keep the market fairly well supported. While the Euro may lose some upward momentum if US data exceeds expectations, a large-scale downdraft is unlikely until the Fed is heard from tomorrow. The September Euro should find near-term support around the 133.55 area and will remain in close proximity to the recent highs just as long as peripheral EU trouble-spots stay out of market news headlines.
GBP: The September Pound has been through a choppy morning so far, and has now fallen well below yesterday’s high for the move early in today’s trading. While the UK CPI numbers were generally in-line with forecast, a surprising fall in UK PPI input data may help to revive Bank of England easing talk in some quarters of the market. The September Pound should find near-term support around the 156.10 level, but should remain in close proximity to the recent highs until the FOMC meeting results during tomorrow’s session.
JPY: The September Yen continues to slide further away from last week’s highs as it sheds additional safe-haven support. While the Nikkei may have finished the day in negative territory, a modest 0.20% daily loss could indicate that Japanese equities may be stabilizing after their recent extreme volatility. There is still almost two full weeks left in the second quarter, but the Yen’s short-covering rally may have peaked with last week’s high. With the FOMC meeting starting to cast a long shadow over the market along with the prospect of calmer Japanese financial markets over the near-term, the Yen could have much further downside left to go. The September Yen could fall down to the 104.62 area and is likely to remain on the defensive through the balance of today’s trading session.
CHF: The September Swiss made a strong upside move during overnight trading, but appears to be losing momentum heading into this morning’s activity. With no major Swiss data until later on this week, the Swiss Franc may have trouble holding onto these early gains through the US economic data window. The September Swiss may find near-term support around the 108.52 level this morning, and will need to see a negative market reaction to US data in order to have any chance of retesting the overnight highs.
CAD: The September Canadian is having trouble sustaining upside momentum, and continues to pull back from last Friday’s high for the move. Sluggish energy and metals prices are weighing on the market, so the Canadian Dollar may have to wait until risk appetites can be revived later on this week before turning back towards the upside. The September Canadian may find support around the 97.60 level and will be looking for help from outside markets in order to turn back towards the upside.