Euro stronger, Dollar lower waiting improvement of Data!
The Euro rallied to finish just under 1.1200, leading most currencies higher against the US Dollar. The Dollar Index (USD/DXY) slipped to close 0.24% lower at 97.30 (97.53 Friday). The Ten Year US Treasury yield ended down at 2.14% from 2.15%. Canadian CPI printed at 0.1% against forecasts of 0.2%. US New Home Sales rose to 610,000 units from the previous 593,000 units. Oil prices steadied. Brent Crude closed at US$45.65 (US$45.25 Friday), up 0.86%. Global stocks closed mixed. The DOW was down 0.09% while the S&P 500 edged up 0.13%.
EUR/USD – closed at 1.1195 (1.1152 Friday). Eurozone Flash Manufacturing PMI rose to 57.3 (from previous 57.0).
GBP/USD – rallied mainly on the back of a weaker US Dollar to 1.2719 (from 1.2685).
USD/JPY – little-changed, ending at 111.28 (111.32).
AUD/USD – climbs to 0.7570 from 0.7540 Friday. Most metal prices were higher.
The Dollar will find it difficult to gain further without interest rate support. The US Ten Year bond yield slipped to close at 2.14% on Friday. It fell to 2.13% after the Fed hiked rates last week. Support from Federal Reserve officials Dudley and Rosengren saw a rally to 2.19% earlier this week. On Friday, St Louis Fed President James Bullard said that the US central bank should wait on further rate hikes. Loretta Mester (Cleveland President) remarked that inflation weakness should not defer another rate hike this year.
Recent US data while mixed have mostly fallen short of forecast. Traders are doubtful that the Fed will raise rates again in 2017. Improvement on the data ahead would be needed to erase those doubts.
US Core and Headline Durable Goods Orders are due out today (GMT 12.30 pm, June 26/Local Time 10.30 pm, June 26). Core Durable Goods (excludes aircraft orders – so it’s considered more accurate) are forecast to climb to 0.4% in May from April’s fall of -0.5%. That’s quite a big turnaround expected.
EUR/USD – The support at 1.1140 held well (the overnight low was 1.1145). The Euro closed just under 1.1200 after trading to a high of 1.1209. Immediate resistance lies at 1.1210 with close support on the day at 1.1180.
GBP/USD – The support at 1.2670 is strong and that should hold today. Sterling managed to rally on the back of a weaker US Dollar. Short term resistance is found at 1.27450 (the overnight high was 1.2744). Remarks from BOE MPC member Kristin Forbes were supportive of the Pound. The UK Ten year gilt yield climbed to 1.03% (1.01% Friday). US Ten year slipped to 2.14% (2.15%). We could see a topside test in GBP/USD to 1.2780 which is the next resistance level.
USD/JPY – little-changed but slightly lower. Without the yield support, USD/JPY will edge lower. There is immediate support at 111.10 and then 110.90. Resistance lies at 111.40. There are no major Japanese economic data until Friday this week (Japanese CPI, Unemployment and Preliminary Industrial Production). BOJ Governor Kuroda speaks on Wednesday at the ECB Bank Forum on Central Banking in Portugal. Another world Central Bank Heads will be speaking as well.
Meantime, likely range today 110.90-111.40.
AUD/USD – support at 0.7530 held (overnight low of 0.7538). Immediate resistance lies at 0.7590 today. Metals rose led by Copper. This should keep the Aussie supported. Likely range today 0.7555-0.7595
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