USD: The Dollar is finding moderate pressure at the start of the new trading week, although it survived an early retest of last Thursday’s downside breakout lows. While mixed results with Chinese manufacturing readings were a source of global concern during overnight trading, generally positive PMI data from Europe has eroded a sizable portion of the Dollar’s safe-haven support. In addition, another sharp pullback in Japanese equities continues to fuel flight-to-safety support for the Yen, which has been generally been at the Dollar’s expense. Although a strong US Consumer Sentiment number provided a considerable boost to the Dollar during Friday’s session, lukewarm readings for Personal Income and Spending have certainly cast doubt on a potential near-term start to Fed tapering measures. Decent US economic numbers this morning, particularly with the ISM index, should help the Dollar avoid a fresh new low for the move. Until Japanese financial markets can stabilize and dampen safe-haven flows into the Yen, the Dollar will have a difficult time fully recovering from last week’s downside breakout. The Dollar may bounce back towards the 83.30 area after the US economic report window, but it has plenty of work left to do in order to fully regain upside momentum. The Commitments of Traders Futures and Options report as of May 28th for US Dollar showed Non-Commercial traders were net long 45,422 contracts, a decrease of 287 contracts. The Commercial traders were net short 56,963 contracts, a decrease of 426 contracts. The Non-reportable traders were net long 11,541 contracts, a decrease of 139 contracts. Non- Commercial and Non-reportable combined traders held a net long position of 56,963 contracts. This represents a decrease of 426 contracts in the net long position held by these traders.
EUR: The June Euro has been able to climb back above the key 130.00 level early this morning, but for the moment has been unable to sustain any rally back towards last week’s highs for the move. Today’s set of Euro zone PMI numbers had a generally positive tone and showed improvement from their “flash” readings late last month, but they remained below the 50.0 level that would signify output growth. With this week’s ECB meeting starting to loom large on the market’s horizon, the Euro may need to see further improvement with sentiment – and relative quiet from the usual EU trouble spots – in order to build on this morning’s early gains. Positive US data may apply some near-term pressure later this morning, but it is unlikely that the Euro will fall back into the late May trading range without fresh risk concerns developing from inside the EU later today. The June Euro may slide back towards the 130.08 level this morning, but will remain moderately well supported as long as the market’s focus remains on other areas of the globe. The Commitments of Traders Futures and Options report as of May 28th for Euro showed Non-Commercial traders were net short 82,730 contracts, an increase of 2,917 contracts. The Commercial traders were net long 109,257 contracts, an increase of 1,454 contracts. The Nonreportable traders were net short 26,528 contracts, a decrease of 1,462 contracts. Non-Commercial and Nonreportable combined traders held a net short position of 109,258 contracts. This represents an increase of 1,455 contracts in the net short position held by these traders.
GBP: The June Pound could not sustain a sharp upside move during overnight trading, but is holding onto fairly sizable gains coming into this morning’s trading session. A large jump in the UK PMI index may have been the most surprising result from this morning’s set of data given the recent mixed results with recent UK economic data, and has clearly helped to dampen speculation that the Bank of England will be starting up fresh easing measures during the next few months. The June Pound may give back an additional portion of this morning’s early rally after US data is released later today, but it appears to be holding the upper hand on most major currencies at the start of the new trading week.
JPY: The June Yen climbed to a new high for the move during overnight trading, and just missed rising above the 100.00 level before losing upside momentum during the past few hours. A 3.7% sell off in the Nikkei was the fourth largest decline in the past eight sessions, putting the index over 14% lower since May 22nd and keeping a considerable flow of flight-to-safety funds heading into Yen early this week. While there have been some recent positive readings with Japanese economic data, deflation appears to remain well-entrenched even after the start of the Bank of Japan’s aggressive easing measures. The Yen may fall further back from the overnight highs this morning, but may need to see stable Japanese equity markets before making any decisive move back to the downside. The June Yen may find near-term support around the 99.45 level later today, but will retain enough flight-to-safety strength to hold within positive territory through the rest of today’s trading session.
CHF: The June Swiss has been able to hold onto moderate strength during a bumpy overnight session, but is showing some reluctance for moving up above the 105.00 level and into new high ground. This morning’s Swiss was both well above market expectations and well above the key 50.0 level, but recent comments from SNB officials, concerning negative interest rates and raising their floor rate with the Euro will keep the Swiss Franc tracking the ebb and flow of Euro zone sentiment. The June Swiss may fall back towards the 104.42 area in the wake of this morning’s US data, but is likely to remain in fairly close proximity to the recent highs, as long as global risk sentiment continues to be on the mend.
CAD: The June Canadian was able to shake off overnight pressure and is grinding out a modest gain early in today’s trading. The mixed results from Chinese manufacturing reading over the weekend have created some near-term headwinds for the Canadian Dollar at the start of this week, but a large slate of Canadian economic data over the next few sessions should help to underpin this morning’s rebound. The June Canadian may find near-term resistance around the 96.75 area during today’s session, but will continue to lift further away from last week’s lows for the move as sentiment continues to show improvement.