Currency Updates:
AUD/USD Europe added to Asia’s gains and pushed AUD/USD to a 0.9455 high ahead of NY’s open. Asian offers into the July 10 high aided to stem the rise. The pair sat just below that high as NY got going. Early action saw a dip towards 0.9435 but buyers were waiting and the pair returned to the day’s highs later in the afternoon. Buys of AUD vs. GBP, EUR and NZD aided to keep AUD/USD elevated for the NY session. Some stops are noted above 0.9465 and may be targeted in Asia if the pair doesn’t see a meaningful pullback soon. If the stops are run the July high is then in play. There is not much in the way of major OZ data due until the end of July so cues for trading will come from geopolitical an foreign sources mostly. For now the bulls have the edge as yield spreads widen and day/week RSIs provide positive momentum. They have work to do though as the 0.9460/00 zone sees some decent resistance. Old and new T-Ls, the July high and the 76.4 Fib of 0.9758-0.8660 sit in that zone. If broken, longer-term bulls will be looking at the October high.
EUR/USD The pair held near its new trend low for most of NY and Europe. Bids ahead of the 1.3450 barrier and a solid bounce in EUR/GBP prevented bears from pushing further. EUR sales vs. the commodity currencies kept what meager EUR/USD rallies there were to a high of 1.3474. Late in the day the pair sat just above the day’s low as the market’s focus turns to EZ July PMIs tomorrow. Particular attention is likely to be put on Germany as the market looks to see the sanctions imposed on Russia have negatively affected one of the EZ’s core economies. Should the PMIs disappoint, the 1.3450 barrier is likely to be cleared and stop below it run. Bears then will push towards more barriers reported at 1.3400. Longer-term bears are targeting sub-1.3300 levels for now.
USD/JPY shorts who were looking for a bit more downside after Tues’s lows were broken o/n were disappointed by the 1.5pips of follow-through and covered. The lack of major economic news in the US allowed the mean reversion toward the falling 21-DMA (101.59) to persist, despite a slight drop in USD-JPY yield spreads. More supply is noted by 101.80. The daily Cloud span is 101.91-96 on Thur, with the 200-DMA at 102.03, and exporters and range traders are touted sellers into there. Japan’s June Trade report and July Markit PMI will be eyed for whether they jibe with the BOJ’s view that QQE is doing fine for now. Record low 1-mo vols have yet indicate concern about either a clear 101 breakdown or resumption of the Abenomics uptrend; the latter being something Japan Inc is far less keen on due to high import costs, and the latter the BOJ wants to avoid in their reflation quest. EUR/JPY malingers close to the ’14 low at 136.25, oversold, but unloved. GBP/JPY’s correction is holding above 50% Fibo sppt at 172.42, with the rising daily Cloud & 100-DMA soon to bolster that. AUD/JPY spies the ’14 high at 96.50 after a 61.8% Fibo last week & AUD CPI o/n.
Looking Ahead – Economic Data (GMT)
• 22:45 NZ Trade – Imports* Jun f/c 4.10b, 4.32b-prev
• 22:45 NZ Trade Balance MM* Jun f/c 150.0m, 285.0m
• 22:45 NZ Trade Balance YY* Jun f/c 1.15b, 1.37b-prev
• 22:45 NZ Trade – Exports* Jun f/c 4.28b, 4.60b-prev
• 23:50 JP Exports YY* Jun f/c 1%, -2.7%-prev
• 23:50 JP Imports YY* Jun f/c 8.4%, -3.6%-prev
• 23:50 JP Trade Bal Total Yen* Jun f/c -642.9b, -909.0b-prev
• 01:35 JP Mfg PMI Flash Jul 51.1-prev
• 01:45 CN HSBC Mfg PMI Flash Jul f/c 51, 50.7-prev
Looking Ahead – Events, Other Releases (GMT)
• 21:00 NZ Cen Bank Interest Rate* N/A f/c 3.5%, 3.25%-prev
