USD: The Dollar has come through a rather bumpy overnight session under moderate pressure, but is staying well clear of any retest of this week’s lows this morning. An upgraded outlook for the US from a major credit rating agency may have provided a boost to the Dollar last night, but weak Japanese and Chinese equities have helped to shift safe-haven support out of Dollars and into the Yen. A comment from Fed Chairman Bernanke that financial tightening from the recent rise in US rates is “unwelcome” clearly took some of the steam out of the Dollar yesterday, and may that be difficult to fully overcome today, as the US economic report schedule will be quiet. This weekend’s G20 meeting will likely focus on other regions of the globe, however, so the Dollar may be able to find some upside momentum to finish out a volatile trading week. The Dollar may climb up towards the 83.15 level later in today’s session, but would likely need a fresh inflow of safe-haven support to lift clear of this week’s trading range.
EUR: The September Euro failed to hold onto overnight strength this morning, and continues to have trouble staying at or above the 131.50 level. This morning’s German PPI was in-line with forecasts, but the Euro will need to see positive results from data throughout the EU in order to revive last week’s strong upside momentum. While there was some progress with Greece this week, problems with that nation as well as other peripheral EU trouble spots continues to cast a long shadow over the Euro. As long as news headlines remains quiet and peripheral EU debt yields remains subdued, the Euro is likely to avoid any severe chart damage going into the weekend. The September Euro may find support around the 130.88 area later in today’s trading session, and still remains fairly vulnerable to a sharp downside move if fresh news headlines from the EU erode market sentiment late this week.
GBP: The September Pound was able to build upon this week’s rally, but failed to initially climb above Wednesday’s weekly high early in this morning’s trading. While UK Public Sector Borrowing last month came in slightly above expectations, it fell more than 2.5 billion Pounds from May’s total and may provide some measure of underlying support to the market during today’s session. The September Pound is likely to retest the 152.62 weekly high later this morning, but will need to see stronger outside markets to make any large-scale extension to this current rally to finish out this week’s trading.
JPY: The September Yen went through a choppy and volatile overnight session, but has returned back towards unchanged levels this morning. While the Yen benefited from last night’s sell off in Japanese equities, gains were fleeting as traders have started heading to the sidelines in front of this weekend’s events. The G20 meeting is likely to touch base with recent Japanese easing measures, but the key factor for the Yen will come from Sunday’s Japanese upper house elections. With global markets having priced in some decisively positive results for the ruling LDP/New Komeito coalition, there is clearly plenty of room for disappointment if Sunday’s vote does not follow forecasts. The September Yen may bounce back towards the 99.78 level later today, but is likely to resume full-speed with this recent down move once Japanese upper house election results are fully digested by the market early next week.
CHF: The September Swiss has fallen back from overnight highs, but is managing to hold its ground in positive territory early during today’s trading. Yesterday’s weak Swiss Export number is likely to keep any late-week rally in check, as recent Swiss economic data has been unable to maintain its comparative strength versus their Euro zone neighbors. The September Swiss may find support around the 105.82 area later in today’s trading, and is likely to consolidate near the middle of this week’s choppy trading range heading into the weekend.
CAD: The September Canadian is holding up fairly well in the wake of this week’s Bank of Canada meeting, with surging energy markets providing a key source of support. A strong reading for today’s Canadian CPI will help to sustain upside momentum, but a positive shift in global risk sentiment may be needed before the Canadian Dollar can re-challenge last week’s monthly high. The September Canadian may rise up towards the 96.34 level later this morning, and will continue to benefit from the improving tone of Canadian economic data over the past few weeks.