U.S. Dollar Trading (USD) US stocks eked out another day of gains albeit only small closing at fresh all time highs and helping to stabilize the rest of the market caught in risk off trade during the Asian and European sessions. Oil and commodities such as Iron Ore are under selling pressure and this is helping the USD gain against most pairs.
The Euro (EUR) the EUR/USD struggled in the strong USD environment and fell slowly to test the 1.1000 level which has held since the Brexit sell off. The ECB tomorrow may provide support but a break below the key 1.1000 support may lead to technical selling and catch traders wrong footed waiting for the ECB meeting. The Sterling (GBP) Came under heavy selling pressure once again and disappointed bulls must be getting nervous as the recovery falters and we edge back towards 1.3000. EUR/GBP buying and a quiet GBP/JPY has evaporated some of the support seen since Brexit and even stronger than forecast CPI could do little to inspire the beleaguered Pound. More Economic data is seen tonight in the form of Jobs data and perhaps this will show some of the initial impact of the Brexit vote.
The Japanese Yen (JPY) Some Risk off mood in Asia and Europe yesterday did little to dampen appetite to but the USD/JPY which remained buoyant and tracked the US stocks to fresh highs. USD Strength has helped continue the USD/JPY rally but substantial gains here will require more concrete news from the BOJ otherwise it will wax and wane with the global risk appetite. The Australian Dollar (AUD) the heavy NZD selling has caught the AUD up in the negativity as expectations of a RBNZ cut spread to speculation the RBA will also be lowering rates in August. Key Australian CPI next Thursday will make or break the RBA's decision but the market is betting now it will be weak. AUD/USD was quite sharp from 0.9600 down to 0.9480 and the first real AUD weakness in the last few weeks as the commodity currency rebounded with global stocks. Adding to the AUD troubles was continued sell off in iron ore down 3% yesterday and giving traders more conviction to break 0.9500 support.
Stocks Indices(DAX) was weak at the open breaking below 10000 but with no follow through from the US session we have stabilized and managed a small rebound closing at 9980.US Stocks (DOW) with 8 days in a row topside we are nearing overbought levels and caution is advised here with earning season delivering a potential reason for a pullback with every release. Sentiment is broadly positive though so pullback may be shallow.
Pairs to watch
AUD/USD Dragged in Kiwi sell off, Selling rallies preferred
EUR/USD tested 1.1000 can the support hold till thursday?
Economic Data Ahead
GBP June Claimant Count at 4.1k vs. -0.4k.
GBP June Average Earning forecast at 2.3% vs. 2.0% previously.
By Anthony Darvall (TonyD)