USD: The Dollar has held its ground within a fairly tight overnight trading range and climbed back into positive territory, but is showing little inclination for recovering any large portion of yesterday’s slide to new 41/2- week lows. A weak reading for Existing Home Sales did particular damage to Dollar sentiment, as US data will need to post some strong results for Fed tapering hopes to be revived again. There has been little fresh news from overseas as well, which also means that the Dollar is finding little in the way of fresh safe-haven support. The Dollar may benefit from second-tier and third-tier US data later this morning but with key readings from China and Europe tonight and tomorrow casting a shadow over the market, today’s data may have limited upside influence during today’s session. The Dollar may climb up towards the 82.55 level later this morning, but still has plenty of work left to do in order to regain the upside momentum seen earlier this month.
EUR: The September Euro is finding moderate pressure this morning, but continues to “defy gravity” by holding above the 131.50 level early this week. Spanish and Italian debt yields have reached their lowest levels since mid-June, which has helped to underpin the Euro near the recent highs, in spite of any definitive resolution to any of the several peripheral EU debt problems that are continuing to smolder. A 15-month high in French Business Sentiment provided little in the way of support for the Euro this morning, as the market is clearly waiting for tomorrow’s “flash” PMI readings, as a gauge of Euro zone strength. While the Euro remains vulnerable to a sharp downdraft if and when the next EU risk event rattles global markets, today’s subdued conditions may help to keep further losses in check. The September Euro may find near-term support around the 131.62 area, and should hold onto a large portion of recent gains in front of tomorrow’s Euro zone PMI data.
GBP: The September Pound is finding mild pressure this morning, and is holding up fairly well after yesterday’s sizable upside breakout. While this week’s Pound strength is due in some part to the “Royal Birth” that is expected to give a modest boost to the UK economy, recent improvement with key UK economic readings is likely to provide more of a longer-term foundation for any further moves to the upside. The September Pound may slide back towards the 153.24 level later this morning, but should remain relatively well supported through today’s trading session.
JPY: The September Yen gave up sizable overnight gains and is back on the defensive this morning, and looks to be heading well below the key 100.00 level over the near future. The Yen’s post- election strength proved to be fleeting, as the likely proposal of a sales tax hike will make it difficult for the BOJ to reach their 2% inflation target without maintaining some fairly aggressive easing measures. Comments by Chinese Premier Li that his nation will not tolerate growth below 7% have eroded the Yen’s flight to safety support, which has already been dampened by ongoing strength in Japanese equity markets. While the Yen may have trouble making a decisive move through the 100.00 level today without a major catalyst event, the market looks to be heading well below these current levels over the next few weeks. The September Yen may find near-term support around the 99.82 level later today, and will need a fresh dose of safe-haven support to put the brakes on this current sell off.
CHF: The September Swiss continues to slide further away from yesterday’s monthly highs, although prices have been able to hold so far within yesterday’s trading range. The September Swiss is finding fresh headwinds from recent financial turbulence in Hungary, where a large portion of mortgages are denominated in Swiss Francs. Unless global risk sentiment shows some definitive improvement later today, the Swiss Franc will continue to grind its way lower. The September Swiss may find support around the 106.30 level later today, and is likely to lose further ground to the Euro as well this morning.
CAD: The September Canadian made an early move towards a new monthly high this morning, but sluggish energy and metals prices have caused it to lose upside momentum and fall back towards unchanged levels. This morning’s Canadian Retail Sales data will need to exceed market forecasts for the Canadian Dollar to take this month’s recovery rally up into new high ground. The September Canadian should climb up towards the 96.88 level later today with decent Canadian data, and may be heading further to the upside over the rest of this week’s trading.