USD: The Dollar has been able to make a substantial recovery from yesterday’s post-Fed downdraft, and is now within striking distance of reaching a new weekly high. While the lack of fresh tapering dialogue in yesterday’s FOMC meeting results put significant pressure on the Dollar fairly quickly, a shift in market focus towards overseas risk events has clearly been to the Dollar’s benefit. Although the Chinese PMI data came in better than expected, the loss of safe-haven support has hurt the Yen much more than the Dollar. This morning’s central bank meeting in Europe has provided the Dollar with a strong amount of support, as many in the market feel that both the ECB and BOE could further emphasize their shift towards accommodative monetary policy. If today’s Jobless Claims and ISM data can avoid any negative surprises, the Dollar should remain fairly well supported in front of tomorrow’s Payroll numbers. The Dollar will have an upside target of 82.33, and is likely to build onto this current recovery.
EUR: The September Euro was finally able to break out above the 133.00 resistance level in the wake of the FOMC meeting results, only to turn back to the downside and slide back towards yesterday’s weekly low. Today’s Euro zone and German PMI data showed some modest improvement, but not enough to offset the ongoing concerns with France and the peripheral EU. The ECB will have a fresh opportunity to underscore their shift towards accommodative monetary policy at today’s meeting, which will be a major factor that will keep the Euro on the defensive during today’s early trading. With government problems in Italy and Spain also shadowing the market, the Euro remains vulnerable to a sizable downside move by week’s end. The September Euro may find support around the 132.15 level but is likely to find additional pressure after the market digest this morning’s ECB meeting results.
GBP: The September Pound was able to bounce back from an overnight retest of yesterday’s weekly lows, and is doing comparatively well to other major European currencies coming into this morning’s trading. A much stronger than expected UK PMI reading was the trigger for today’s rebound, but has likely come too late to impact this morning’s Bank of England meeting results. There has been widespread concern that the BOE will signal a shift towards easing monetary policy, which the Pound will need to overcome in order to regain further ground. The September Pound may find support around the 151.68 level but is likely to reach a new low for the move if the BOE makes any indication that there are shifting towards a more accommodative monetary policy going
forward.
JPY: The September Yen could not sustain yesterday’s post-Fed rally to new weekly highs, and is now finding significant pressure coming into this morning’s session. The Chinese PMI numbers were not strong by any measure, but by avoiding any further decline have eroded a large portion of the Yen’s safe-haven support. Chinese and Japanese equities posted solid gains last night, which is adding to the Yen’s negative tone this morning. There may be some near-term support if the ECB and BOE shift further into a dovish stance this morning, but the likelihood of strong US data through the rest of this week is likely to shift flight-to-safety funds across the Pacific and into Dollars. The September Yen may find near-term support just above the 101.00 area, and at this point will need to see weak US data this morning to put the brakes on this downdraft.
CHF: The September Swiss continues to slide further away from yesterday’s monthly high this morning, and may be facing additional headwinds over the course of today’s trading. While the Swiss Franc has been able to gain some ground on the Euro this morning, the prospects for dovish commentary out of today’s ECB meeting is likely to weigh heavily on prices during today’s session. The September Swiss may find support around the 107.28 level, and is vulnerable to a sharp downside move over the balance of this week’s trading.
CAD: The September Canadian is finding little benefit from stronger energy and metals prices this morning, and while finding some benefit from last night’s Chinese PMI data remains under pressure this morning. With yesterday’s lukewarm Canadian GDP number casting a shadow over the market, the Canadian Dollar needs to see a revival of global risk sentiment in order to climb back towards the upper portion of its recent trading range. The September Canadian may rise up towards the 97.30 area but needs plenty of help from outside market to fully regain upside momentum.