Currency Updates:
AUD/USD The USD was generally soft in Europe but AUD/USD seemed to only grudgingly climb higher. The pair lifted from near 0.9300 to just above 0.9320 before pulling back near 0.9315 into NY’s open. The pace of the ascent may have been influenced by another soft day for commodity prices. NY made their own try at taking out structural resistance in the 0.9330/40 area after the softer than expected jobless claims. Bulls could only manage a 0.9328 high though as Asian sellers near 0.9330 prevented further gains. A rebound for the USD then saw the pair slip from the highs and it sat near 0.9315 late in the day. While the long-term trend remains down, bulls have the edge short term. Daily & weekly RSIs provide positive momentum for now and yield spreads are neutral. The 0.9330/40 resistance may get tested again. If it break the next hurdle for bulls is 0.9354/76 where the daily cloud base, 55-DMA and August 6 high sit.
EUR/USD Europe bought EUR/USD right out of the gate as the pair sat just below 1.3350. The lift had the pair near 1.3380 into NY’s open. The higher than forecast jobless claims data sent US yields lower and narrow yield spreads. The USD went offered across the board and EUR/USD hit a 1.3407 high. Offers ahead of the 21-DMA and Asian sellers near 1.3410 prevented further gains. US bond yields remained heavy but the USD managed to bounce back from its NY lows. EUR/USD slid and gave up all the gains made in early NY. The slide persisted into the afternoon and the pair sat just above 1.3665 late in the day. The pair continues is recent consolidation above 1.3295/1.3325 support. This should encourage bears as consolidation typically resolves in the direction from which the phase was entered. Most of Europe is on holiday tomorrow so traders look to UK GDP and US data for directional cues. A break of 1.3295 opens the door to the September 2013 low near 1.3100.
USD/JPY An unexpected rise in US Jobless Claims provided a short-lived USD/JPY discount to the 200-HMA for latent bulls to scoop up in NY. The mkt focus initially was on the drop in Tsy yields, but the lower yields soon enough tempted fresh equities buying, including N225 futures, which still have a 0.65 60-day correlation to USD/JPY, down from 0.90 in Feb. Japanese data o/n remained apiece with others of late suggesting more need or room for the yen to slide, either on its own merits or as a result of QQE2 by the BOJ. The latter still looks a tad implausible or superfluous given how low JGB yields are and how little impact they’ve had on domestic loan growth. The the Qual part of QQE still holds some appeal. Regardless, Obon is upon us and the markets are focused more on the US and Europe now. A string of higher USD/JPY daily lows and highs since Fri has some specs chasing prices with rising bids. A daily close above 103 is needed to convince M-T bears & some exporters that they needn’t rush their offers. EUR/JPY breached, but may not close above, its Kijun at 137.20 today. Cloud looms in mid 138.00s. AUDJPY’s 200-DMA rebound has run into the 50-DMA.
Looking Ahead – Economic Data (GMT)
• No Significant Data
Looking Ahead – Events, Other Releases (GMT)
• No Significant Events.
