USD: The Dollar is finding modest pressure this morning, and is holding onto a sizable portion of yesterday’s late rally after a choppy overnight session. While a lukewarm GDP reading may have caught the market by surprise, recent US economic data has been generally strong enough to provide the Dollar with a large measure of underlying support. However, comments by Fed Regional President Lacker that the Fed is not close to trimming their balance sheet are likely to weigh on the Dollar this morning. In addition, the Dollar’s safe-haven appeal may be easing as China’s central bank has diminished that nation’s bank liquidity concerns this week. Today’s set of US data should provide the Dollar with fresh support, particularly if the Jobless Claims number reach new lows, but another strong upside move from these levels will likely require a new source of risk anxiety for global markets. The Dollar may climb up towards the 83.37 level after the US data window, and is likely to remain fairly well supported through the balance of today’s trading.
EUR: The September Euro is having trouble putting together an extensive rebound, but has held onto enough overnight support to hold onto modest gains this morning. A late-night deal by Euro zone Finance Ministers on bank failure rules helped to relieve pressure on the Euro, while positive readings on German Unemployment and Euro zone Business Sentiment is helping to keep prices well away from yesterday’s spike lows. However, dovish comments from ECB President Draghi and other key ECB officials are likely to weigh heavily on the Euro this morning – particularly if strong US data later in the session underscores the difference in each region’s monetary policy outlook. With potential problems in Greece also casting a long shadow over the market, the Euro remains vulnerable to a swift pullback that takes prices well into new low ground. The September Euro will have a nearterm upside target of 130.44, but will remain firmly within the late June downdraft and will need to see definitively positive news from inside the EU in order to make any sizable rally from these current low price levels.
GBP: The September Pound came under sharp pressure after today’s UK data window and has slumped to a new 31/2-week low this morning. While the UK GDP reading was in-line with estimates, a large jump in their current account deficit will likely keep BOE officials in a more accommodative stance going into next week’s monetary policy meeting. The September Pound should find near-term support around the 152.40 area, but will need plenty of help from stronger outside markets and improving global risk sentiment to put the brakes on this current downdraft.
JPY: The September Yen held onto modest strength during Asian trading, but then found significant pressure and has fallen well into negative territory early in today’s session. A nearly 3% rally in the Nikkei last night helped to erode a good portion of the Yen’s flight to safety support, which has already been dampened by lower Chinese bank liquidity concerns. Sluggish Euro zone sentiment and still-volatile Asian emerging markets may provide a fresh source of strength for the Yen and put some brakes on this morning’s pullback. However, any chance for a sizable Yen recovery will once again depend on this morning’s US economic data falling short of expectations. The September Yen could see a retest of 101.68 overnight lows later in today’s session, but will hold onto enough
safe-haven support to avoid a sharp plunge towards the early June lows.
CHF: The September Swiss remains on the defensive this morning and has fallen to a new 3-week low early in today’s session. Although Swiss economic data has generally outperformed their EU neighbors, ongoing deflation will keep SNB officials throwing out hints of negative deposit rates and defending their current floor rate with the Euro. The September Swiss may find support around the 105.60 level, and looks to have much further downside left to go before this sell off runs out of steam.
CAD: The September Canadian made a strong upside breakout above the weekly highs during the overnight session, but then gave back a sizable chuck of those gains coming into this morning’s trading. With energy prices losing upward momentum and no major Canadian data until tomorrow, the Canadian Dollar may need to see a positive reception for this morning’s US numbers in order to hold in positive territory through the rest of today’s session. The September Canadian may climb back towards the 95.60 level later today, but still has a long way to go in order to fully recover from recent chart damage.