USD: The Dollar is finding fresh pressure early this morning and remains well below yesterday’s early high coming into today’s trading. Given the current division of opinion at the Fed, yesterday’s sluggish Retail Sales number ended up causing a severe turnaround in the Dollar as tapering expectations were dealt a blow. With little in the way of fresh overseas risk concerns, and with Fed Chairman Bernanke’s congressional testimony casting a long shadow over this week’s trading, the Dollar is likely to have problems regaining Monday’s early upside momentum. The Dollar will likely need to see definitively positive results from the CPI and Industrial Production numbers to make a large upside extension to this week’s recovery, as the recent dovish tone of Fed Chairman Bernanke’s comments is likely to keep further gains in check in front of tomorrow’s testimony. The Dollar may find enough support from today’s US data to climb back towards the 83.31 level later this morning, with further clarity from the Fed likely needed to see prices move above and beyond this week’s early highs.
EUR: The September Euro has followed through on yesterday’s late rebound, and is holding up relatively well given this morning’s events. The German ZEW Investor survey came in well below expectations, while a general strike in Greece today provided another fresh reminder of economic problems throughout the peripheral EU. In addition, reports that European car sales during the first half of this year fell to their lowest levels since 1993 that could have a corrosive effect on sentiment. Unless there is some definitive improvement with the tone of upcoming Euro zone economic data, today’s early strength is unlikely to hold and the Euro’s upside will remain limited at best. The September Euro will find near-term support around the 130.55 level later today, and could find additional pressure if US data can revive Fed tapering expectations.
GBP: The September Pound has seen some choppy and two-sided price action during the past few hours, and is back in positive territory early in today’s session. This morning’s UK CPI numbers came in lower than expectations, which may provide added fuel to Bank of England officials looking to ease UK monetary policy in the near future. Tomorrow’s release of Bank of England meeting minutes will provide much more clarity on the new BOE policy environment with new Governor Mark Carney in charge but until then, the Pound is likely to remain under some pressure during today’s session. The September Pound may find support around the 150.58 level later this morning, but should avoid any attempt to fill in the chart gap down at 150.09 until the BOE is heard from tomorrow morning.
JPY: The September Yen has recovered back above the key 100.00 level this morning, and is holding onto moderate early gains in spite of last night’s strength in Japanese equity markets. The Yen’s revival was triggered by yesterday’s weak US Retail Sales reading, which shifted flight to safety flow out of Dollars and into Yen. With Chinese economic concerns dampened by this week’s in-line GDP reading, the Yen may have to rely on US data remaining lukewarm in front of Fed Chairman Bernanke’s testimony tomorrow in order to maintain a positive tone. The September Yen is likely to lose upside momentum and make another run at the 100.00 level after the US data window, but a decisive downside move below yesterday’s lows may have to wait until Fed Chairman Bernanke’s testimony is fully digested by the market later this week.
CHF: The September Swiss is finding moderate support this morning as prices have risen up to a fresh weekly high. Unless upcoming Swiss economic data starts to show consistent strength, particularly from Swiss Trade numbers later this week, the Swiss Franc will have difficulty sustaining any recovery beyond last Thursday’s monthly high. The September Swiss is likely to slide back down towards the 105.35 level this morning, and will need a stronger tone from outside markets in order to sustain upside momentum.
CAD: The September Canadian continues to slide lower this morning, and is finding little in the way of support from stronger energy and metals markets early in today’s session. There is clearly some apprehension in the market in front of tomorrow’s Bank of Canada meeting, as many traders feel that new Governor Steven Poloz will be more dovish than his predecessor Mark Carney. The September Canadian may find support around the 95.55 level, and will need to see stronger global risk sentiment in order to find a near-term floor.