USD: The Dollar is finding significant pressure early in today’s trading session, and has now reached the lowest price levels since late June. Comments from the G20 this weekend advising caution when adjusting stimulus measures were clearly directed at potential Fed tapering measures, and along with calmer risk concerns from the Euro zone and China are creating sizable early headwinds for the Dollar this morning. With a wellregarded West Coast bond trader calling for actual Fed rate tightening not to occur until 2016 at the earliest, the recent shift back from Fed tapering expectations will make it difficult for the Dollar to regain upside momentum. A positive reception for today’s Existing Home Sales figure will help, but the Dollar’s best near-term hope of lifting clear of these recent lows will remain with a fresh infusion of safe-haven support. The Dollar may climb up towards the 82.63 level after today’s US data, but needs to overcome diminished Fed tapering expectations in order to regain strong upside momentum. The Commitments of Traders Futures and Options report as of July 16th for US Dollar showed Non-Commercial traders were net long 29,625 contracts, an increase of 501 contracts. The Commercial traders were net short 35,811 contracts, a decrease of 718 contracts. The Non-reportable traders were net long 6,186 contracts, a decrease of 1,219 contracts. Non-Commercial and Non-reportable combined traders held a net long position of 35,811 contracts. This represents a decrease of 718 contracts in the net long position held by these traders.
EUR: The September Euro has found early strength this morning, and has been able to rise above last week’s highs. News that Portugal has held their coalition government together has helped to soothe risk anxiety throughout the region, although that nation’s difficulties are far from being resolved. Improving global risk is also helping to keep the Euro fairly well supported early this week, although the lack of definitively positive economic readings from outside of Germany has made this rally vulnerable to a swift turnaround if and when the next EU risk flare-up generates fresh news headlines. Until potential trouble from Portugal, Greece and other EU troublespots are shifted to back-burner issues, the Euro will find it difficult to make a large-scale upside move. The September Euro may pull back towards the 130.64 area later in today’s session, but should hold on a sizable portion of early gains as long as market news headlines from the EU remain quiet early this week. The Commitments of Traders Futures and Options report as of July 16th for Euro showed Non-Commercial traders were net short 38,356 contracts, a decrease of 1,694 contracts. The Commercial traders were net long 65,527 contracts, an increase of 3,385 contracts. The Non-reportable traders were net short 27,172 contracts, an increase of 5,080 contracts. Non-Commercial and Non-reportable combined traders held a net short position of 65,528 contracts. This represents an increase of 3,386 contracts in the net short position held by these traders.
GBP: The September Pound has made a sharp upside move this morning, and has reached a new 31/2-week high, and has now recovered more than half of the late June/early July downtrend. A rebound in the tone of recent UK economic data has helped the Pound sustain upside momentum, as potential fresh Bank of England easing measures appear to be off the table for now. The September Pound may slide back towards the 153.10 level after the US data window, but is likely to finish out today’s trading session with prices well into new high ground.
JPY: The September Yen has come through a bumpy overnight session with moderate gains, and has been able to bounce back above the key 100.00 level. Yesterday’s Japanese upper house elections provided the expected victory for the LDP/New Komeito coalition, although the results may not have produced the decisive mandate that the market was hoping for, that helped to fuel a “sell the rumor, buy the fact” short-covering rally. Japanese equities did not have a robust reaction to the election results, which has also provided a note of caution to the market as well. As long as aggressive easing measures remain on the table, the Yen likely to take out the early July lows during the near future. The September Yen may rise up towards the 100.28 level again this morning, but will need to see fresh flight to safety flows in order to move beyond the overnight highs.
CHF: The September Swiss was able to start out the week with moderate gains, although calmer EU risk concerns have caused it to lose ground to the Euro. Recent Swiss economic data has lost its comparative strength to the Euro zone, so the Swiss Franc may have to rely on stronger outside markets in order to maintain upside momentum. The September Swiss may pull back towards the 106.40 level later this morning, and should avoid any severe pullback as long as global risk sentiment continues to be on the mend early this week.
CAD: The September Canadian is grinding out a moderate gain this morning, but in spite of stronger energy and metals prices it has been unable to challenge the monthly highs just yet. Last Friday’s lukewarm reading on Canadian CPI has dampened upside momentum for the Canadian Dollar, so a stronger tone from outside markets may be needed in order to extend this rally. The September Canadian may climb up towards the 96.58 area later today, but may have to wait until stronger Canadian economic data is seen before making any sort of large upside extension.