Forex News

– G10 in narrow ranges, Asian FX slightly weaker – US jobless claims unlikely to prove supportive of risk assets – We have cut our 3 and 12m EURCHF forecasts to 1.26 and 1.30, respectively

PMI data show decent growth but loss of momentum. Data spell GBP trouble and AUD support.

S&P GSCI TR Index: Recovering from Fibo support at 5015 NYMEX Light Crude Oil: Based short term favour recovery to the 55 day ma at 104.92 ICE Brent Crude Oil: Short term upside bias

The ADP employment report for May showed a gain of 38,000. This was the smallest increase since last September and considerably weaker than anticipated (consensus +175,000). Manufacturing employment fell by 9,000.

Positive EUR sentiment on Greece optimism providing broad boost to risk. Heavy data calendar today; while USD will trade on ISM, ADP, headlines will be more important for EUR.

– AUD leads broad rally vs the USD – UK manufacturing PMI is likely supportive of GBP – US ADP and ISM manufacturing likely to affirm trend of growth slowing – We recommended re-entering long EURUSD

Today’s highlights: EUR/USD: Reinforcing the base through key 1.4341/46 resistance with probe of 1.4424/43. Early June target 1.4572 GBP/USD: Bearish “outside” Tuesday reflects upside hesitancy.  Whilst above 1.6379 through, early June risk is to retest the 1.6741/48 peaks with interim challenges to 1.6600

EUR USD (1.4425) A vote to hike the US debt ceiling failed in Congress yesterday, 318-97, prompting discussion in the markets over the possibility of a ‘technical default’.

News BY: Positive – IMF mission in Minsk 1-13 June (p2) CZ: Neutral – CNB Singer said the CNB may raise interest rates sooner than previously forecast (p2) HU: Neutral – April banking data show little improvement in lending & foreign exposure, 1Q11 investment improves vs. 4Q10 (p2)

G10 Currencies EUR-USD: The recovery in EUR-USD continues. In the process the 1.44 mark was breached on a sustainable basis once again. The FX market continues in the same mode: difficulties in the Eurozone are taking a back seat while the focus is on the US economic data.

The euro retains an upper hand and EUR/USD is testing resistance just above. A break would leave few handles to hold onto nearby…