USD: The Dollar has posted relatively mild gains coming into this morning’s trading, but is holding onto more than enough residual strength to consolidate in fairly close proximity to yesterday’s high for the move. There has been little downside follow-through after Thursday’s reversal in the Dollar, even with several Fed officials attempting to dampen market expectations for upcoming tapering prospects. Recent US economic data has generally been supportive, even with the occasional negative surprise such as this week’s GDP revision, and has more than made up for a loss of safe-haven support as Chinese banking liquidity concerns have eased. There are private surveys on Consumer Sentiment and Chicago-area manufacturing to get past, as well as the usual end- quarter volatility, but the Dollar is likely to hold onto a positive tone through the balance of today’s trading. The Dollar may be able to retest yesterday’s high of 83.43 with decent US data later this morning, but will need a fresh dose of safe-haven support to see any large-scale upside extension to this current uptrend.
EUR: The September Euro is once again having trouble sustaining a rebound for more than one session, and has given back a large portion of overnight gains this morning. The positive vibes coming out of this week’s Euro zone Finance ministers meeting have provided some measure of support to the Euro, and with today’s decent German Retail Sales reading are helping to keep peripheral EU debt yields subdued. However, comments by ECB President Draghi and other key ECB officials, concerning ongoing accommodative monetary policy, continues to hang over the market. Given the inability to lift clear of these recent lows, the Euro is showing signs that another downside leg may be on the near-term horizon. The September Euro will find support around the 130.30 area and should avoid a retest of this week’s lows, and will need to see solidly positive economic data from outside of Germany in order to climb well above this week’s lows.
CBP: The September Pound remains subdued at the end of the trading week, and has shown few signs of rebounding from chart damage sustained over the past two weeks. Given the recent signs of accommodative monetary policy from BOE officials, the market will need to get past next week’s Bank of England meeting before the Pound can put together any extensive recovery. The September Pound may drop down towards the 152.10 level later this morning, but should avoid posting a new monthly low as long as outside markets do not turn decisively negative going into the weekend.
JPY: The September Yen has been under pressure throughout the overnight session, and looks to heading for a new 3-week low later this morning. Last night’s unusually large amount of Japanese economic numbers has some positive highlights, particularly with Housing Starts and Retail Sales data, which clearly helped the Nikkei post a 3.5% gain. The key economic number once again came from Japanese CPI readings, which showed minimal improvement, but remains woefully low. With a 2% inflation target hanging over both the Japanese economy and Japanese financial markets, the BOJ’s aggressive easing measures are unlikely to conclude anytime in the near future. If Chinese bank liquidity problems remain subdued, the Yen is likely to lose further flight to safety support early next week as well. The September Yen could slide down to the 100.78 level later today, but a break below the key 100.00 level may have to wait until end-of-quarter volatility is out of the way.
CHF: The September Swiss has been fairly weak over the past few sessions, although prices are staying well clear of yesterday’s 3-week low for now. While a private survey of Swiss Leading Indicators rose to a new 6-month high this morning, the reading fell short of some market forecasts. This may give SNB officials further incentive to “talk down” the value of their currency over the near future by reaffirming their current floor rate with the Euro, and by throwing out fresh hints of negative deposit rates. The September Swiss will find support at the 105.60 area this morning, and remains vulnerable to a sharp downside move if the SNB follows through on their recent rhetoric with decisive action.
CAD: The September Canadian continues to have problems breaking out of this current trading range, and has fallen back towards unchanged levels this morning. With energy and metals markets providing little in the way of carryover support, the Canadian Dollar will need to see a positive reception for today’s Canadian GDP numbers in order to climb back towards yesterday’s weekly highs. The September Canadian should climb up towards the 95.45 level later this morning, and stands a good chance of posting a mild weekly gain after last week’s meltdown.