Currency Updates:
AUD/USD Numerous rallies in Europe & NY off the 0.9400 support area stalled near 0.9420/25 resistance. The pair’s inability to crack 0.9480/00 and TL resistance off the Oct high earlier in the week had recent bulls frustrated and looking for the exits. NY initially pushed the pair up from the 0.9400 area as June durable goods data beat but May’s data saw a big downward revision. The 0.9420 level was breached but the lift faltered again. Risk sentiment was sour as the Ukraine/Russia situation shows no signs of abating. Bonds, USD & JPY were firm while equities were soft for the entire NY session. AUD/USD made a steady descent from the NY high and eventually made a new session low of 0.9393. Bids near the 200-HMA and ahead of the July 23 low slowed bears. Little bounce was seen though as geopolitical risks remains and next week sees a slew of risk that may propel the USD higher. Should next week’s event/data risks be USD positive, AUD/USD is likely to retest the key 0.9320/30 zone. If broken the 200-DMA and May’s low come into play.
EUR/USD The below f/c German IFO data ignited EUR/USD’s latest leg lower in Europe’s session. The pair collapsed from 1.3475 to 1.3440 before bouncing towards 1.3455 into NY’s open. NY immediately applied pressure even after May’s durable goods orders saw a big downward revision. Sour risk sentiment due to seemingly increased Ukraine/Rusia tensions saw bond yields and stocks soft while the USD and JPY were firm. EUR/USD slipped from the NY open, pierced the 200 week MA and hit a low of 1.3421 while EUR/JPY slid from near 137.10 to a 136.65 low. Both saw only minor bounces as they held slightly above the day’s low late in the session. EUR may come under greater pressure next week with the catalyst liekly coming from the USD. Big data/event risk lies ahead. Wednesday gives us July ADP, Q2 GDP and the Fed. Friday brings the July jobs report. Should the results of this risk be USD bullish EUR/USD’s recent slide is likely to accelerate. We’re likely to then see the 200-WMA break cleanly and bears immediately target 1.3295/17 (Nov low, weekly cloud base). A break there puts the Sep low (1.3105) in play.
USD/JPY The daily Cloud top at 101.95 couldn’t be removed with the London open spike, or after the mixed US Durable Goods report, leaving intra-week longs and latent bears to push prices back toward the o/n lows into midday NY. That those 101.70 lows couldn’t quite be retested speaks to the recent dip-buying mindset and broader preference for dollars. The Nikkei finished the week close to July recovery highs, while the US yield curve flattened further on falling L-T rates. The converging 100- & 200-DMAs at 102.07 have exporter and supposed 101-102 DNT offers ahead of them, with stops beyond 102.10. EUR weakness, reinforced by this week’s EUR/USD close below the up TL from ’12 lows, kept EUR/JPY heavy and below recent highs by 137.35, but not yet below the ’14 low at 136.25. IFO and no good news from Ukraine weighed on the cross. NZD/JPY, which has been 0.9+ correlated to the S&P 500 on monthlies since ’07, is closing the week below its up TL from ’12 lows. Next week’s trading will focus on the FOMC and the NFPs. Japan’s June Household Spending will be an early-week focus as the after-effects of the Apr tax hike continue to be measured.
Looking Ahead – Economic Data (GMT)
• No Significant data
Looking Ahead – Events, Other Releases (GMT)
• No Significant Events
