USD: The Dollar went through some bumpy trading during the overnight session, but survived a retest of yesterday’s monthly low and is holding onto modest gains early this morning. Last night’s sluggish Chinese PMI numbers produced a badly-needed source of safe-haven support, which has offset the positive vibes coming out of the Euro zone this morning. The Dollar’s main problem continues to come from home, as some lukewarm readings from this week’s second-tier economic numbers have eroded the case for Fed tapering this autumn. Given the disappointment with recent US housing measures, today’s New Home Sales reading may prove to be a critical step in providing the Dollar with stronger upside momentum. The Dollar will have a near-term upside target of 82.32 after today’s US data is digested by the market, but may have to see several positive numbers over the course of this week in order to lift decisively clear of these recent lows.
EUR: The September Euro found its “second wind” after sizable overnight losses, and was able to rise to a new high for the move before losing upside momentum this morning. Today’s PMI data from across the Euro zone was well above market forecasts, although the data continued the trend of Germany outperforming the rest of the EU. While a “50 plus” reading for the overall Euro zone gives hope that the region will come out of recession this quarter, upcoming economic readings will need to match today’s optimistic tone in order for the Euro to overcome the ECB’s shift towards accommodative monetary policy. In addition, peripheral EU trouble-spots need to stay quiet news-wise in order for the Euro to build onto this current uptrend. The September Euro may pull back towards the 132.15 level later this morning, but after today’s PMI would need to hear negative news from inside the EU to slide well below these recent highs.
GBP: The September Pound has found moderate pressure this morning as the positive reception for Euro zone PMI numbers has led to sizable unwinding of Pound/Euro spreads. While the “Royal Birth” rally may be fading as well, the recent improvement with UK economic data should help the Pound find support later in today’s session. The September Pound may end up retesting the 153.00 level this morning, but should avoid any sizable downdrafts as long as UK data can maintain a positive tone.
JPY: The September Yen found little sustained benefit from last night’s sluggish Chinese data, and has once again made an early slide through the 100.00 level this morning. Japanese exports fell short of expectations, even with the benefit of this year’s Yen pullback, which will give the BOJ fresh evidence to stay the course with their aggressive easing measures. While the Dollar’s recent difficulties have helped to shift flight-to-safety flow over into the Yen, it will difficult to sustain that momentum unless Japanese economic readings – particularly on inflation – show some sizable improvement. The September Yen may find support near the 99.82 level later this morning, and is likely to remain on the defensive through the balance of today’s trading session.
CHF: The September Swiss was unable to sustain yesterday’s late rebound, and is finding mild pressure early in today’s session. While positive vibes from the Euro zone may provide some measure of carryover support, the Swiss Franc may need to see stronger global risk sentiment in order to fully revive yesterday’s upside momentum. The September Swiss may find support around the 106.72 level, but should hold its ground near the recent highs as long as risk appetites do not deteriorate any further during today’s trading session.
CAD: The September Canadian was pressured by last night’s Chinese data, but has regained upside momentum and looks to be on-course for posting a new high for the move later this morning. Yesterday’s very strong Canadian Retail Sales number continues to be a source of support this morning, although energy prices may need to shake off early weakness for the Canadian Dollar to make any large upside extension to this current rally. The September Canadian may climb up towards the 97.28 area later today, and should extend this current uptrend further into new high ground during this week’s trading.