July 22nd, 2014
The dollar maintained a strong tone against the Euro on Tuesday as it hit 2014 highs while the performance elsewhere was less convincing.
Unusually, Reserve Bank of Australia Governor Stevens did not trigger a major Australian dollar reaction in his latest speech as he avoided direct references to monetary policy and the Australian dollar’s value. There was stiff AUD/USD resistance on approach to the 0.9400 level despite some modest improvement in global risk appetite. USD/JPY held firm and looked to move above the 101.50 resistance area. Read the rest of this entry »
July 21st, 2014
Short covering was initially the dominant influence on Monday as EUR/USD rallied to highs near 1.3550 with the Euro gaining support from the ability to regain the 1.3500 level on Friday after briefly hitting five-month lows.
The latest CFTC positioning data recorded a marginal decline in net speculative dollar longs while net Euro shorts increased slightly. Although this maintains the possibility of a short squeeze if markets can’t sustain downside moves, there was no major change in market dynamics within the data. Read the rest of this entry »
July 18th, 2014
Risk aversion surged in US trading Thursday on reports that a Malaysia aircraft had been shot down over the Ukraine. USD/JPY spiked below 101.25 and dipped to lows under 101.10 after geo-political concerns were stoked further by an announced land offensive in Gaza by Israeli forces. US bond yields fell to 7-week lows below 2.45%, lessening the potential for US buying on yield ground while EUR/JPY retreated to fresh five-month lows below 137.0. Read the rest of this entry »
July 17th, 2014
The dollar held a firm tone on Thursday, especially after the Philadelphia Fed release, without being able to make a decisive break high. The latest Japanese capital account data recorded outflows into overseas bonds of JPY672bn in the latest week, maintaining expectations of sustained longer-term flows away from Japan which would weaken the Japanese currency, but USD/JPY was unable to make any impression.
Risk appetite tended to drift weaker during the European session with mist major bourses in the red. The imposition of fresh sanctions on Russia contributed to the relatively downbeat mood in European bourses which pushed EUR/JPY to fresh five-month lows below 137.20. USD/JPY also dipped lower once again to the 101.40 area before finding some tentative support.
Headline inflation for the Euro-zone was confirmed at 0.5% with a core reading of 0.8% and there was some slight relief that the rate had not fallen further. EUR/USD found support on approach to the 1.3520 level and attempted a weak rally with underlying sentiment still negative on yield grounds as the Banco Espirito Santo stresses also continued as a background factor.
The latest US jobless claims data was stronger than expected with a decline to 302,000 from a revised 305,000 previously while continuing claims fell to the lowest level for over seven years. In contrast, there was a much weaker than expected housing-starts release with a decline to 0.89mn from 0.99mn while permits fell to 0.96mn. The housing data was important in curbing any dollar momentum ahead of the Wall Street open.
In contrast, the Philadelphia Fed index was much stronger than expected at 23.9 for July from 17.8, the strongest reading since March 2011. With all the components strong, there was further confidence in the US economic outlook. EUR/USD came under fresh pressure, but still managed to hold above the 1.3500 level with USD/JPY unable to make much impression above 101.50.
Sterling had a generally more sedate tone during the day with no major data releases or central bank comments. There were still reverberations from the weak earnings data released on Wednesday which dampened speculation over an immediate Bank of England tightening. GBP/USD was also subjected to profit taking after failing to break above key technical levels and dipped lower to test support below 1.7100.
July 16th, 2014
The dollar maintained a firm tone on Wednesday as markets assessed global monetary-policy trends with Sterling also broadly resilient. Chinese GDP and industrial production data was marginally above market expectations at 7.5% and 9.2% respectively which helped underpin risk appetite. The Australian dollar struggled to derive any benefit despite a solid tone for risk appetite as AUD/USD dipped to lows near 0.9330. Read the rest of this entry »