USD: The Dollar has been able to grind out a modest gain this morning, but is having trouble maintaining strong upside momentum. Fed Chairman Bernanke’s House testimony and Q&A gave plenty for the market to digest, although much of the Dollar’s ultimate benefit was offset by a surprising weak set of US Housing numbers earlier in the session Wednesday. While there may be some attempts to “move the goalposts” with the Fed inflation and unemployment gauges, one takeaway from yesterday’s testimony is that US data will need to show consistent improvement if Fed tapering is indeed set to begin later on this year. This will put additional emphasis on upcoming measures from the US labor front, particularly if the Dollar’s safe-haven support remains a backburner issue. The Dollar will have a near-term upside target of 83.15, and will need to see positive Jobless Claims and Philly Fed readings – and no surprises from Fed Chairman Bernanke’s 2nd day of Senate testimony later today – in order to lift well clear of yesterday’s monthly low.
EUR: The September Euro was able to find its footing after yesterday’s pullback, but is still showing signs of being “top-heavy” at or above this week’s highs. News that Greece has passed a fresh set of austerity measures has helped to soothe anxiety in the market, if not with the Greek public. Peripheral EU debt yields have been subdued, which helped the market to take down 3 billion Euros worth of Spanish debt at today’s auction. With little tangible improvement seen with recent Euro zone economic data outside of Germany, unresolved issues from several peripheral EU trouble-spots will continue to shadow the Euro. Sluggish US data later this morning may give the Euro a fresh boost, but it will be difficult to climb past this month’s highs unless there are clear signs of progress from their side of the Atlantic. The September Euro may find support around the 130.88 area later today, and remains vulnerable to further downside if fresh news headlines from the EU start to rattle market sentiment.
GBP: The September Pound was able to make a strong positive turnaround once again during overnight trading, and is holding up fairly well given the headwinds from outside markets early this morning. A decent Retail Sales reading this morning has been the second well-received UK economic number in as many days, and along with yesterday’s Bank of England meeting minutes that should help to keep the Pound firmly above the overnight lows during today’s trading. The September Pound may extend this rebound up towards the 152.34 level this morning, and will get a further boost if the tone of outside markets can improve later in the session.
JPY: The September Yen remains under significant pressure this morning, although a moderate rebound has taken prices well away from the overnight lows and back towards the key 100.00 level. While the Yen avoided any serious damage from Fed Chairman Bernanke’s testimony, the prospect for a strong LDP/New Komeito coalition after this week’s Japanese upper house elections is helping to keep the Yen on the defensive this morning. Japanese equities have extended their winning streak to five sessions, which will also keep pressure on the Yen during today’s session. Unless there is a fresh inflow of flight to safety support, the Yen looks to be heading for a retest of Monday’s weekly low before the end of this week’s trading. The September Yen may slide back towards the overnight low of 99.68 later today, and needs to see weak US data results to have any chance of climbing back into positive territory later on in the session.
CHF: The September Swiss is finding moderate pressure, and continues to slide further away from yesterday’s weekly highs this morning. While there was a jump in the Swiss Trade surplus, a 5.5% drop in exports will weigh heavily on the Swiss Franc this morning as it provides further evidence to the SNB to keep their 1.20 floor rate with the Euro firmly in place. The September Swiss may find support around the 105.80 area later this morning, and is likely to remain sluggish through the balance of today’s trading session.
CAD: The September Canadian has calmed down from yesterday’s turbulent price action, and has been consolidating near the middle of this week’s trading range this morning. The Bank of Canada made few changes in policy at yesterday’s meeting, the first with new Governor Poloz in charge, and they simply maintained their current tightening bias. Canadian rates look to be steady over the near-term, however, so the Canadian Dollar may need to find further help from stronger energy and metals markets to make any near-term recovery from these levels. The September Canadian may climb up towards the 96.05 level later today, and should maintain a positive tone throughout the session.