USD: The Dollar was able to make a modest rebound from a 5-week low this morning, but remains squarely on the defensive heading into this weekend. An article from a well-read Fed-watcher indicating that the FOMC could adjust their guidance in order to emphasize keeping rates low for an extended period has throttled the Dollar again, which had finally been seeing some benefit from the positive tone of recent US data this week. US longer-term yields have also been sliding, which is also adding to the Dollar’s woes this morning. While today’s key private survey of Consumer Sentiment may provide the Dollar with some near-term support, the market may be waiting on clearer guidance directly from Fed officials before any extensive recovery rally can take place. The Dollar could bounce back towards the 81.95 level with a positive read on Consumer Sentiment later today, but is in need of some hawkish Fed rhetoric or a fresh dose of safe-haven support in order to put the brakes on this current sell off.
EUR: The September Euro has been able to regain upside momentum after yesterday’s early turbulence, and has driven up towards the highest prices levels since mid-June. Rising sentiment numbers in France over the past few sessions indicate that a positive tone is starting to be found outside of Germany, but it has also helped that peripheral EU trouble spots have kept fairly quiet since Portuguese government difficulties early this week. Recent strength in the Euro is unlikely to be playing well at the ECB, who will have their say on the matter less than 24 hours after the FOMC meeting results next week. Calmer risk conditions will keep the Euro fairly well supported going into the weekend, but it may difficult to sustain this current strength without the benefit of consistent improvement in Euro zone economic data. The September Euro could pull back towards the 132.72 area later in the day, but still looks to finish out the week with a fairly healthy gain.
GBP: The September Pound is finding moderate strength this morning, but is staying well clear of yesterday’s monthly highs. While there have been clear signs of improvement with recent UK economic data, it also appears that the market may not be that convinced that this will translate into a more “hawkish” monetary policy from the Bank of England – particularly with new BOE Governor Carney at the helm. The September Pound may slide back down towards the 153.50 area later today, and may be vulnerable to a sizable downdraft to finish out this week’s trading.
JPY: The September Yen continues to be the major beneficiary of Dollar weakness this morning, as flight-tosafety funds have flowed back across the Pacific and into the Yen. Last night’s Japanese CPI data provided the first nationwide positive reading since the middle of last year, although still well short of the BOJ’s 2% target rate. Japanese equity markets have not taken too kindly to the CPI news, however, as a nearly 3% sell off in the Nikkei and TOPIX indices is providing added fuel to the Yen’s rally this morning. With the Chinese economy as a major source of global market anxiety, the Yen is likely to hold onto a large portion of recent gains heading into next week. The September Yen may climb up towards the 101.65 level if today’s US Sentiment data disappoints the market, but will clearly it will need to see additional evidence of an improving Japanese economy to sustain any rally back towards the mid-June highs.
CHF: The September Swiss was able to follow-through on yesterday’s positive turnaround, and has reached a fresh monthly high early this morning. Improving sentiment levels in the Euro zone will help to keep the Swiss Franc well supported going into the weekend, although it may take a negative reception for US data later today to take prices far into new high ground. The September Swiss should find decent support around the 107.45 level this morning, and remains on-course for finishing out this week near the top end of this month’s recovery rally.
CAD: The September Canadian has been able to maintain a positive tone late this week, and is within striking distance of reaching a new 5-week high later today. While the strength shown in recent Canadian economic data will continue to provide support for the Canadian Dollar late this week, sluggish energy and metals markets may keep further gains in check. The September Canadian may climb up towards the 97.40 level later today, and will continue to recover lost ground from June’s sharp downdraft.