Currency Updates:
AUD/USD Europe spiked the pair up and added to June 18 gains as US yields were slipping. AUD/USD ran up to 0.9432 before pulling back to 0.9415 into NY’s open. Asian offers into 0.9440 aided to cap the rally. Early action in NY saw a tight range but the pair began to slide as US yields reversed some early losses and US stock markets swooned. A low of 0.9390 was hit but the pair sat just above 0.9400 late in the day as stock recovered a bit and yields pulled back from their highs. Bullish enthusiasm post-FOMC has been tempered today. The June 18 bullish engulfing candle saw only limited upside follow through today. Narrower yield spreads and ongoing concerns about Iraq seem to have dulled some of the shine post-FOMC. Some stops sit above 0.9440 but larger are touted above April’s high. If bears can’t assert themselves soon those stops are sure to attract.
EUR/USD Short covering for EUR bears (particularly vs. GBP) drove EUR/USD above 1.3600 in Europe and tripped stops. Follow through saw a 1.3644 high before the pair pulled dipped near 1.3615 into NY’s open. US bond yields were soft early on and the USD was generally offered. NY initiated their own rally but could only manage 1.3640. Spec & macro offers in the 1.3640/50 zone were too much to overcome. US yields recovered early losses & turned positive for the day while US equity mkts swooned. EUR/USD slid from NY’s high but stalled at 1.3603 as that old 1.3600 resistance now turns to s-t support. Further support sits 1.3560/70 where s-t spec t/p bids and the 200-hour MA sit. The pair is still consolidating in the post-ECB 1.3500-1.3680 range. This should resolve itself to the downside eventually but the break may have to wait. The market remains short EUR and day/week RSIs are in the process of unwinding recent o/s conditions. No major data is due into the weekend so it’s likely the pair will stick within current ranges.
USD/JPY As the NorAm trading day wears down, USD/JPY’s only managed a 25 pt range, the bulk of it guided by the lingering, post FOMC Tsy yield drop o/n followed by a big rebound ahead of today’s 30-yr TIPS auction and after better-than-expected US Claims, Philly Fed and LEI results. Wed’s reaction to the Fed dots was to some extent a squaring up of positions premised on a more hawkish total result. USD/JPY found support in NY ahead of this week’s lows and the 200-DMA, while the day’s 102.00 high is right at the daily Cloud base, that after Wed’s long wick rejection inside of the Cloud. Today’s rebound in Tsy yields may have helped USD/JPY recover, but it trimmed gain in some of the higher beta crosses, though a post-FOMC surge in the Nikkei plays into the risk-on/yen-off carry-trade pattern. Rising commodity prices also helping some of those trades, though a surge in oil on ME or Russian supply fears could cut against risk if it were to become too pronounced. Obama confirmed the US would lend some military support to Iraq, potentially upping ante there. EUR/JPY’s rise ran into 200-DMA, Tenkan, Kijun & 50% Fibo resistance by 138.90 as expected.
Looking Ahead – Economic Data (GMT)
• No Significant Data
Looking Ahead – Events, Other Releases (GMT)
• 06:36 JP BOJ Governor Kuroda Speaks at Nat’l Assoc of Shinkin Banks in Tokyo.
