USD: The Dollar has recovered from mild pressure early in today’s trading, although prices have stayed fairly subdued in front of critical market events over the next 24 hours. While there will be no post-meeting press conference for the market to digest, this afternoon’s FOMC meeting results are likely to shape Fed tapering prospects for the near future. The Dollar could find early headwinds this morning if the second quarter GDP number fails to reach 1.0%, and will also need to see a healthy-sized reading from the ADP survey of privatesector job creation. There is a good chance that the Dollar will get a fresh dose of safe-haven support from the Chinese PMI number tonight, but will clearly need to get past today’s news headlines without receiving too much chart damage. The Dollar will find near-term support around the 81.69 level and needs a positive reception for today’s US data as well as fresh fuel for Fed tapering prospects in order to fully regain upside momentum and lift clear of these recent low price levels.
EUR: The September Euro was able to bounce back from early pressure to post moderate gains this morning, but once again has been unable to sustain a move above the 133.00 area that has now seen highs for four straight sessions. Euro zone Unemployment came in slightly lower than forecasts and avoided posting a new record high (although with revisions has now managed to stay at a record-high 12.1% for five straight months!), which has provided underlying support for the Euro this morning. Today’s German Retail Sales data was lower than forecasts but for the most part, recent economic data from the region have mostly avoided any negative shocks. Tomorrow’s ECB meeting may reinforce their shift towards an accommodative monetary policy, so any near-term strength in the wake of today’s US data and the FOMC may be fleeting at best. The September Euro could see a retest of the 133.05 high for the move but is starting to look top-heavy in front of tomorrow’s ECB meeting and may be vulnerable to a swift pullback later in the session.
GBP: The September Pound remains firmly under pressure this morning, and has given back a sizable portion of its July recovery rally over the course of this week’s trading. There are rising expectations that tomorrow’s Bank of England meeting and next week’s Quarterly Inflation Report will reflect a dovish shift in UK monetary policy, which is likely to keep the Pound on the defensive even if today’s US data and the FOMC end up diminishing Fed tapering prospects. The September Pound may find support around the 151.70 area, but will have to wait until the Bank of England results tomorrow morning to have any chance of putting some solid brakes on this current downdraft.
JPY: The September Yen remains well supported this week, and was able to climb to a new 5-week high early this morning. The Yen continues to find fresh flight-to-safety support, not only from diminishing Chinese growth prospects but from sluggish Japanese equities as well. While Japanese economic data have posted mixed revival of Fed tapering prospects this afternoon may weaken the Yen later in the session, the chances for a sluggish Chinese PMI number tonight is likely to prevent any sharp downdraft from taking prices well below their recent highs. The September Yen may be able to rise up towards the 102.62 level if US data and the Fed disappoint the market, but will need to see weak Chinese PMI numbers tonight to make any large scale upside extension to this current rally.
CHF: The September Swiss recovered from overnight losses and reached a new 51/2-week high earlier today, and is holding onto moderate gains coming into this morning’s trading session. While private surveys of Swiss Leading Indicators and Swiss Consumption showed mixed results, both remain near their highest levels for 2013 and should provide some measure of support for the Swiss Franc in front of today’s key market events. The September Swiss may bounce back above the 108.00 area after the US data window, but will need the FOMC to dampen Fed tapering prospects in order to maintain this current upside momentum.
CAD: The September Canadian recovered from a new weekly low this morning, and is showing modest strength early in today’s session. As long as Canadian economic data continues to show signs of
improvement, the Canadian Dollar will continue to hold in close proximity to the recent highs. The September Canadian may find resistance around the 97.10 level today, but may need to see stronger energy and metals prices in order to climb up into new high ground.