USD: The Dollar has seen some moderate follow-through to yesterday’s recovery rally, with upside momentum strong enough for prices to drive up into new high ground early this morning. While dampened by Fed dialogue earlier in the week, yesterday’s clean sweep of stronger-than-expected US data points provided a fresh boost to Fed tapering ideas, and in turn that has kept the Dollar fairly well supported close to 3-week highs. Chinese liquidity concerns may have been soothed by their central bank, but not enough to completely soften the Dollar’s current safe-haven appeal. A final GDP revision and Fed commentary could potentially erode early support but at this point, global risk sentiment will need to see some significant improvement for the Dollar to fall well below these current high price levels. The Dollar may climb above the 83.25 level after the US data window, and is likely to finish out today’s session well into new high ground for this current up move.
EUR: The September Euro remains on the defensive this morning, and has slid below the 130.50 level for the first time since early June. The Euro has found little benefit from a better than expected reading on German consumer sentiment reading that reached its highest levels in nearly 6 years, as the market has discounted German out performance to their EU neighbors. ECB President Draghi’s comments that the ECB is nowhere near exiting their accommodative policy continue to weigh on the Euro this morning, and the inability of EU Finance Ministers to come up with banking reform measures in front of tomorrow’s summit meeting has also been a key negative factor this week. Even if global risk appetites are revived later on in today’s trading, peripheral EU debt will need to see a sizable pullback in order for the Euro to put the brakes on this current pullback. The September Euro may find near-term support around the 130.10 area this morning, but appears to have much further downside ahead before this downdraft finally runs out of steam.
GBP: The September Pound is finding significant pressure this morning, and may be heading toward a retest of Monday’s 21/2-week low later in today’s session. Unless there is considerable improvement with the tone of outside markets, the Pound is likely to remain squarely on the defensive this week. The September Pound looks to heading towards the 153.00 level later this week, and will be unable to overcome recent signals from BOE officials of accommodative monetary policy until there is fresh UK economic data that can repair market sentiment.
JPY: The September Yen was able to bounce back into positive territory this morning after sizable overnight losses, but continues to play second-fiddle to the Dollar as a safe-haven destination this week. A 1% sell off in the Nikkei has provided underlying support, but lower concerns with Chinese bank liquidity have dampened the Yen’s upside strength early in today’s session. The prospects for upcoming aggressive easing measures from the Bank of Japan are unlikely to recede, even if comments from BOJ Deputy Governor Iwata have diminished the chances for any near-term action. Sluggish global risk sentiment may help to keep the Yen from retesting the overnight lows during today’s trading, but any chance of a strong upside move will depend on the Dollar losing its recent appeal. The September Yen may pull back towards the 102.32 level later in today’s session, and will retain enough flight-to-safety support to avoid a pullback towards Monday’s weekly lows.
CHF: The September Swiss has been able to gain ground on the Euro this morning, which has helped it to avoid posting even larger losses early in today’s session. A mild gain in a private survey of Swiss consumption may provide some measure of support, but recent comments by SNB officials on how “highly valued” their currency is will continue to weigh on the Swiss Franc going forward. The September Swiss may find support around the 106.10 level later today, and looks to have additional downside left to go before finding any sort of near-term bottom.
CAD: The September Canadian has been able to overcome lukewarm global risk sentiment to post moderate gains this morning, but has made little headway with recovering from last week’s severe downdraft. Uncertainty with the Keystone pipelines and Chinese bank liquidity are unlikely to be long-term negatives for the Canadian Dollar, but the market will need to see consistent strength with upcoming Canadian economic data for this current recovery rally to be sustained. The September Canadian Dollar should rise up towards the 95.50 area later today, and should stay fairly well supported unless global risk sentiment turns sharply negative once again.