The dollar has been unable to generate any momentum despite another encouraging jobs-market release. There was a stronger than expected reading for the Japanese current account with a seasonally-adjusted surplus of JPY0.38trn for May from JPY0.13trn previously which eased fundamental concerns to some extent and USD/JPY was unable to make any headway, blocked well below the 102.00 level.
The Australian dollar drew support from a small improvement in the latest NAB business confidence index and was also underpinned by the ability to hold support. From recent lows near 0.9320, there was a rally to test AUD/USD resistance around 0.9400.
Sterling was ambushed during the European session by much weaker than expected data. Consensus forecasts were for a further industrial production gain of around 0.4% for May and there was some element of complacency after a robust run of data. In the event, there was a sharp 1.3% manufacturing decline, the weakest reading for close to 18 months while production fell 0.7%. GBP/USD dipped sharply to below 1.7100 while EUR/GBP rallied to above 0.7950. There was solid buying support at lower levels which propelled GBP/USD back above 1.7100.
Risk appetite was generally cautious early in New York as equities remained on the defensive and US bond yields edged lower. In this environment, the yen continued to attract support as USD/JPY dipped to lows around 101.50.
Underlying Euro sentiment remained generally weak amid expectations that the ECB would maintain a very expansionary monetary policy and consider some form of bond-buying programme. There was also speculation that reserve managers would scale-back Euro purchases.
The latest CFTC positioning data, delayed until Monday due to the US holiday, recorded a further small increase in speculative Euro shorts which will maintain the potential for a short squeeze and these conflicting pressures continued to play-out during the day. EUR/USD was again unable to break below the 1.3580 support region which helped trigger a recovery back above 1.36 with the dollar generally drifting lower.
The US job-openings data was significantly stronger than expected for the second month in succession with a figure of 4.64mn from 4.46mn previously and this was the highest figure for at least 10 years and compares with a recession trough of around 2.40mn in 2010. The data again fuelled expectations of a more hawkish Fed, but with dollar buyers still struggling to gain any meaningful traction. EUR/USD held around 1.3610 as USD/JPY was trapped around 101.50.