Currency Updates:
AUD/USD Further frustration with the pair’s ability to clear June’s high and rising US bond yields led to further profit taking in the overnight session. The pair sat near 0.9400 as NY got going. Pressure remained in early NY as the bond yield rise persisted and the USD was broadly bid with the exception being against CAD. Bids into 0.9385/90, where the 200-HMA sat) were filled and a low of 0.9378 was made. A give back of yield gains alleviated some pressure into the afternoon & the pair sat just below 0.9390 late in the day. Bulls may be close to throwing in the towel in the s-t. The pair’s inability to hold above 0.9400, RSIs rolling over from near o/b territory and narrower yield spreads are concenrs for AUD longs. There is little in the way of Oz data next week so traders will look to China’s June HSBC Mfg PMI, EZ MFg PMIs and the US Q1 GDP for AUD direction.
EUR/USD Offers from ACBs and spec into 1.3650 were once again too much to overcome. Europe pushed EUR/USD from its 1.3634 high(aided by EUR/GBP’s slide to 0.7969) and it sat near 1.3695 into NY’s open. Pressure remained on the pair in early NY as US yields and the USD were rising. Further pressure was added after Canada’s CPI & retail sales data were above f/c. EUR/CAD had been heavy o/n but after the data it plunged from near 1.4710 towards 1.4585/90. This dragged EUR/USD down and it hit a low of 1.3565. A pause in the USD’s ascent and some give back for US bond yield gains allowed for a bounce. The pair lifted through NY’s afternoon and sat just above 1.3590 late in the day. Consolidation remains the dominant theme for EUR/USD. The phase is taking place near recent lows and should eventually resolve in favor of bears. A break of 1.3500 and the Feb low should open the door a 1.3300 test. Bulls need to retake ground above 1.3675/80 to alleviate the immediate downward pressure.
USD/JPY There was some catching up with recent Nikkei gains at week’s end, putting pressure on the yen. Rumors, then confirmation, Abe would make a speech about the new third arrow plan next Tuesday, after the Diet session’s end, raised some hopes the govt would not disappoint yet again. USD/JPY found buyers early by the daily Kijun at 101.80 and then rode a higher Nikkei, Tsy yields and oil prices into the daily Cloud and to the 100-DMA by 102.20. The Cloud top dips to 102.62 on Monday. US’s data calendar is light next week. Japan kicks the week off with the June Mfg PMI. CPI, Jobs & Household Spending are on tap later in the week. EUR/JPY initially fell away from its test of 200-DMA, Kijun & 50% Fibo resistance by 138.90, but a handsome EZ C/A surplus may have eventually won over hearts and minds for a firm finish. Despite doings in Ukraine and the ME, the default mkt position is one of risk-taking, which favors yen sellers. EUR/JPY’s weekly Cloud top held at 137.63 this week and it will begin to climb again in July. Some buy stops are above 139, with an eye toward the 140.09 June highs.
Looking Ahead – Economic Data (GMT)
• 22:45 NZ Ext Migration & Visitors May 11.8%-prev
• 22:45 NZ Perm/Long-Term Migration May 4080-prev
• 01:35 JP Manufacturing PMI Flash Jun 49.9-prev
• 01:45 CN HSBC Mfg PMI Flash Jun f/c 49.7, 49.4-prev
Looking Ahead – Events, Other Releases (GMT)
• 06:00 JP BOJ Governor Kuroda Speaks in Tokyo.
