USD: The Dollar is finding moderate pressure at the start of the new trading week, although prices have kept within a fairly tight trading range near last Friday’s high for the move. While lukewarm Chinese PMI readings may have provided a modest source of strength last night, this morning’s positive spin of Euro zone data has more than offset that initial support and helped to push the Dollar back into negative territory. Today’s ISM number may prove be a critical factor, with the Dollar regaining upside momentum, as the market will need to see a large portion of last month’s sharp drop being recovered in this morning’s reading. With safe-haven support being muted at best early this week, the Dollar will need a steady diet of positive US data results in order to hold its ground near the recent highs. The Dollar may bounce back towards the 83.50 level, with a strong ISM reading this morning, but a large upside extension may be difficult without overseas risk anxiety providing an additional source of strength. The Commitments of Traders Futures and Options report as of June 25th for US Dollar showed Non- Commercial traders were net long 12,233 contracts, a decrease of 2,329 contracts. The Commercial traders were net short 17,492 contracts, a decrease of 1,971 contracts. The Non-reportable traders were net long 5,259 contracts, an increase of 359 contracts. Non-Commercial and Non-reportable combined traders held a net long position of 17,492 contracts. This represents a decrease of 1,970 contracts in the net long position held by these traders.
EUR: The September Euro has put together decent gains this morning, but has a long way to go to recover from recent chart damage. This morning’s Euro zone, German and French PMI numbers were all roughly in-line with forecasts, but sharp jumps with the Spanish and Italian PMI readings have dampened peripheral EU debt yields and provided the Euro with underlying support. However, the lack of upside follow-through after Euro zone Unemployment rose, less than expected may indicate that the Euro has further downside left to go, before this sell off runs out of steam. ECB officials are likely to stick with their accommodative policy going forward, which will make it difficult for the Euro to put together any sort of sustained recovery from these levels. The September Euro may find support around the 130.15 level later this morning, and remains vulnerable to a strong move below the 130.00 level in front of the ECB meeting later on this week. The Commitments of Traders Futures and Options report as of June 25th for Euro showed Non-Commercial traders were net long 19,048 contracts, an increase of 375 contracts. The Commercial traders were net short 17,270 contracts, an increase of 6,696 contracts. The Nonreportable traders were net short 1,778 contracts, a decrease of 6,320 contracts. Non-Commercial and Nonreportable combined traders held a net long position of 17,270 contracts. This represents an increase of 6,695 contracts in the net long position held by these traders.
GBP: The September Pound has been through a volatile overnight session, and is holding onto moderate gains coming into this morning’s trading. A much stronger than expected UK PMI reading triggered a sizable turnaround from early losses, although recent “dovish” comments from BOE officials continue to weigh on the Pound and are keeping further gains in check. New Bank of England Governor will be taking charge this week, so it is likely that Thursday’s BOE meeting results may need to be digested by the market before the Pound can make any sizable rebound from recent losses. The September Pound may climb up towards the 152.50 level later this morning, but will need a stronger tone from outside markets in order to lift clear of these recent lows.
JPY: The September Yen remains squarely on the defensive early this week, and looks to be heading back below the 100.00 level for the first time in nearly a month. Last night’s Tankan survey showed that Japanese business sentiment had registered its first positive reading for nearly two years, due in large part to the BOJ’s aggressive easing measures and the more than 12% loss in Yen valuation during the first half of 2013. While not totally out of the woods yet, calmer risk conditions in China are also eroding a sizable portion of the Yen’s flight to safety support. Unless Japanese inflation readings start to show the same level of improvement, as other Japanese economic measures, the Yen will extend this current downdraft well below current levels. The September Yen will find near-term support around the 100.20 area, and could see a sharp move through the 100.00 level in reaction to a stronger than expected reading for the US ISM number later this morning.
CHF: The September Swiss has been fairly subdued early this week, but is showing little inclination for lifting clear of last week’s low for the move. While remaining well above the 50.0 level, a decline in this morning’s Swiss PMI numbers will give SNB officials further incentive to hold with their current floor rate with the Euro and to keep up their rhetorical pressure on their currency. The September Swiss may slide down to the 105.64 level later this morning, but should find enough carryover support from the Euro to avoid falling to a new low for this downdraft.
CAD: The September Canadian is finding little benefit from stronger energy and metals prices this morning, and remains firmly rooted to the bottom end of last month’s downdraft. The Canadian Dollar will need to see consistently stronger Canadian economic data in order to break out above this recent trading range, as improving global risk sentiment is unlikely to be enough on its own to turn the market around. The September Canadian may rise up towards the 95.10 level later today, but any large recovery may have to wait until the Canadian jobs numbers are released later this week.