USD: The Dollar is showing mild weakness at the start of this new trading week, but has held onto a large portion of the sharp gains posted since Wednesday’s pre-holiday close. Friday’s much stronger than expected Payroll numbers had a much greater impact on the Dollar due to the dovish shifts of the ECB and BOE over the holiday, and that helped to drive prices up to nearly 3-year highs as Fed tapering ideas were given plenty of additional fuel. Calmer risk concerns out of the Euro zone this morning have taken some of the steam out of the Dollar’s up move, but an unsettled situation in Egypt and potential turbulence from Chinese economic data early this week should help to keep prices in close proximity to new high ground. With no major US economic data until Consumer Credit this afternoon, the Dollar is unlikely to lose any large amount of upside momentum during today’s session. The Dollar may slide down towards the 84.52 level later this morning, and may need a fresh dose of overseas safe-haven support to make another large upside extension to this current rally.
EUR: The September Euro appears to have found some near-term support this morning, but still has a long way to go in order to recover from the chart damage sustained over the past three weeks. News that the Troika and Greece are likely to reach a deal for that nation to receive further bailout funds has helped to relieve some measure of risk anxiety in the market. However, surprising weak readings for German Exports and German Industrial Output this morning have provided fresh evidence of sluggish economic conditions at the core of the EU. Last week’s explicitly dovish dialogue from the ECB meeting will mean that the Euro has to see a definitive rebound in upcoming data, not just with Germany but throughout the region as well. The September Euro may bounce back to the 128.76 area during today’s trading, but at this point remains on-course for a retest of the 2013 low at 127.70 and a further slide down towards the 125.00 level over the next few weeks.
GBP: The September Pound was able to survive a retest of last Friday’s low for the move, and has been able to post a modest gain early this morning. With more than 3.5 cents in losses since the July 4th holiday, there may be some further short-covering if the Pound is able to hold its ground in positive territory. With last week’s BOE meeting dropping some fairly strong hints of upcoming dovish forward guidance at their August meeting, it will be very difficult for the Pound to climb far above these current low price levels. The September Pound may extend today’s rebound to the 149.22 level this morning, but will need some hawkish dialogue from one or more BOE officials to make any extensive recovery from Friday’s severe downdraft.
JPY: The September Yen remains on the defensive this morning, and continues to post fresh new lows for the move. Extensive weakness in Japanese and Asian equity markets provided some measure of early support, but calmer risk conditions from Europe have eroded the Yen’s overnight strength. There may be enough anxiety over this week’s Chinese economic data to trigger a moderate short-covering rally later in the session, but any recovery later today is likely to be limited in nature. Unless the Yen is able to find a fresh vein of flight to safety support, the market looks to be heading towards a retest of the mid-May lows. The September Yen will head down towards the 99.64 level later this morning, but will likely have to wait until tonight’s Chinese inflation data for an opportunity to lift decisively clear of these recent lows.
CHF: The September Swiss was able to bounce back from a new low for the move this morning, but is having trouble holding in positive territory early in today’s trading. An in-line reading for Swiss Unemployment and a positive Swiss Industrial Order number are providing little if any benefit for the Swiss Franc this morning, as much stronger readings from Swiss economic data will be needed for the SNB to back away from their threats of negative deposit rates and a higher floor rate with the Euro. The September Swiss may climb up towards the 104.00 level later in today’s session, but is likely to post a fresh low for this move over the next few sessions.
CAD: The September Canadian is staying well clear of last Friday’s spike low, and has been able to post moderate gains this morning. Last Friday’s Canadian jobs may have been slightly better than
expectations, but did not compare well at all with US Payroll numbers or the previous month’s Canadian data and will create further headwinds for the Canadian Dollar early this week. The September Canadian could rise up towards the 94.72 level during today’s trading, but still has plenty of work to do in order to climb above this current trading range.