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Currencies: Dollar Needs Positive US Numbers; Canadian Likely To New Highs

by Dave Hightower on July 26, 2011

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DOLLAR: The Dollar continues to fall sharply this morning, reaching the lowest price levels since early May. Last night’s speeches by President Obama and Speaker Boehner were not well received by the markets, and have reinforced this week’s negative Dollar tone. This morning’s US data could provide some limited support to the Dollar if the numbers exceed market expectations. Unless there are some signs of progress towards a debt ceiling agreement, the Dollar is likely to remain on the defensive during today’s session. The Dollar may retest support near the 73.70 level later this morning, and could easily make a new low for 2011 if the situation in Washington continues to deteriorate.

EURO: The Sept Euro was able to make a strong move to the upside, easily reaching 3-week highs during overnight trading. Lukewarm private surveys of German and French consumer sentiment have taken some steam out of this rally but the market’s focus on US problems is likely to keep the Sept Euro well supported at these levels. A fresh flare-up of Euro zone debt concerns may cause some problems for the Sept Euro, however, as there are concerns that last week’s aid package for Greece may not be the last time help is needed for an EU nation that subject is far from completed. The Sept Euro may find resistance around the 144.80 level, and is likely to hold onto these gains as long as US debt problems dominate the news headlines.

YEN: The September Yen has gone through an extremely volatile overnight session but has held onto moderate gains this morning. Statements expressing “official” concern with recent Yen strength may be an early sign that the Japanese are getting ready for intervention, whether on their own or with concerted action involving other central banks. The September Yen may find resistance again near the 128.50 level but recent safe-haven support may not be enough to support prices if central banks start selling.

SWISS: The Sept Swiss continues to post new record highs, with market concern over the US debt situation providing plenty of flight to quality support. If there are some positive signs of progress towards a US debt ceiling agreement, the Sept Swiss could lose a significant portion of these recent gains. The Sept Swiss may find resistance again near the 125.00 level this morning, and may find new high ground once again, if there are few signs of progress from Washington.

POUND: The Sept Pound was able to overcome a sluggish UK GDP number this morning to post a new high for the current up move. While recent data may have pushed a Bank of England rate hike into 2012, UK austerity measures over the past year may be paying off now when contrasted with the gridlock on this side of the Atlantic. The Sept Pound may find resistance near the 164.00 level, and may gain further ground if US markets remain under pressure.

CANADIAN DOLLAR: The Sept Canadian posted a new high for the move during the overnight session, and remains fairly strong going into this morning. A rebound in commodity markets today is likely to provide some support, especially if crude oil makes a strong move above the $100 level. The Sept Canadian may find resistance near the 106.00 level, and may rise to another new high for this move if negative sentiment from the US does not weigh down the market.

TODAY’S MARKET IDEAS: The Dollar is likely to remain on the defensive this morning as long as US debt problems dominate the news headlines. Positively received US data later this morning could help the Dollar to recover some overnight losses. The Sept Canadian is likely to reach new high ground again as long as commodity prices maintain today’s rebound.

Currencies: Needs Good US Numbers to Hold Recent Gains

by Dave Hightower on July 5, 2011

DOLLAR: While the Dollar has shown some strength this morning, prices have only recovered a small portion of last week’s losses. There has been some safe-haven support from news that Chinese banks have understated loans to local governments, but inconsistent US data over the past few weeks may be keeping Dollar gains in check. There will be few US economic numbers in front of Friday’s Payroll data, so the Dollar is likely to take some direction from overseas risk concerns. The most recent Commitment of Traders report indicated that non-Commercial traders had more than doubled their net-long Dollar position as of last Tuesday, which was during a sharp pullback from the recent highs. The Dollar may find resistance around the 74.95 level this morning but should hold enough support to remain well above the recent lows. The Commitments of Traders Futures and Options report as of June 28th for US Dollar showed Non-Commercial traders were net long 12,971 contracts, an increase of 7,852 contracts. The Commercial traders were net short 17,827 contracts, an increase of 8,130 contracts. The Non-reportable traders were net long 4,857 contracts, an increase of 279 contracts. Non-Commercial and Non-reportable combined traders held a net long position of 17,828 contracts. This represents an increase of 8,131 contracts in the net long position held by these traders.

EURO: The Sept Euro fell back from overnight highs, coming under pressure from a weak Euro zone Retail Sales number this morning. With the Greek debt situation becoming less of a market factor, the Sept Euro may take more direction from economic conditions in the “core” Euro zone nations. Last week’s sluggish sentiment numbers may be an early warning sign that upcoming Euro zone data may fall short of expectations. The Sept Euro may find support near the 144.25 level during today’s session, and could fall further to the downside if there is a sudden risk flare-up out of the Greek debt situation. The Commitments of Traders Futures and Options report as of June 28th for Euro showed Non-Commercial traders were net long 34,756 contracts, an increase of 2,911 contracts. The Commercial traders were net short 43,435 contracts, an increase of 2,551 contracts. The Non-reportable traders were net long 8,679 contracts, a decrease of 361 contracts. Non-Commercial and Non-reportable combined traders held a net long position of 43,435 contracts. This represents an increase of 2,550 contracts in the net long position held by these traders.

YEN: The September Yen extended Friday’s sell off into this week, and is now closing in on a one month low this morning. The resignation of a key minister in the Japanese government has added pressure on the September Yen, which may find little benefit from an economy still recovering from the effects of the Sendai earthquake this spring. The September Yen may find support near the 123.10 level, with the potential for a downside breakout seen if that price area does not hold.

SWISS: The Sept Swiss was able to post a strong recovery from last week’s sell off but prices remain far below record high levels. There has been some safe-haven support from today’s poor Euro zone data, but the Sept Swiss may need further EU debt problems in order to reach new high ground again. The Sept Swiss may find resistance just above the 119.00 level today, and could see further gains if there are fresh headlines from the Greek debt situation.

POUND: The Sept Pound has been strengthened by a surprise jump in a private UK services survey this morning and it has climbed to the highest price levels since June 22nd. While today’s number may be in contrast to recent sluggish UK data, further strong economic numbers may be needed to persuade the Bank of England to hike rates during the near future. The Sept Pound may find resistance near the 161.25 level again this morning, but gains may be capped until there is further evidence of UK economic recovery.

CANADIAN DOLLAR: The Sept Canadian has been unable to take advantage of strong crude oil and gold prices this morning, and has drifted away from Friday’s highs. Even so, the Sept Canadian’s huge recovery from 3-month lows should help to keep prices well supported at these levels. The Sept Canadian may find support near the 103.50 area but could see a retest of last week’s highs if there is further broad-based strength for commodities during today’s session.

TODAY’S MARKET IDEAS: The Dollar should start out this week with moderate strength, and will need today’s US data to avoid a negative surprise in order to maintain these gains. The Sept Canadian could retest last week’s highs for the move if there is a strong rally in energy markets later today.

Currencies: Dollar on Defensive but Waiting On Numbers

by Dave Hightower on June 17, 2011

DOLLAR: The Dollar has seen a sizable pullback this morning, but remains close to the upper end of this recent recovery rally. Unless there is a larger change with sentiment over the next few hours, the Dollar could finish with a reasonably strong gain for the second consecutive week. Sluggish US data remains a concern, but there have been several economic numbers during the past few days that have provided some cause for optimism. The focus of the market remains on overseas risk concerns, so any positive news out of the Euro zone could put additional heavy pressure on the Dollar relatively quickly. Today’s US numbers could add further volatility into the mix if they surprise the market. The Dollar may find support near the 75.70 level, but may finish out the week holding relatively close to the highs for this recent rally.

EURO: The Sept Euro was able to lift well clear of the recent lows, although prices have a long way to go in order to recover losses sustained over the past few sessions. A cabinet reshuffle by the Greek government, including the idea of having an opposition leader as Finance Minister, has been positively received by the market but may only last until the passage of austerity measures needed to receive aid from the IMF and EU. Elevated risk concerns are still going to be a major problem for the Sept Euro to contend with during the next few weeks, and any further debt problems for the Euro zone could send prices back down towards the lows for the move. The Sept Euro may test resistance around the 142.40 level later on this morning, but needs to receive some positive news on Euro zone debt in order to make any substantial recovery from these levels.

YEN: The September Yen continues to make a late-week recovery, but prices have only risen back towards the middle of this week’s trading range. While today’s Dollar pullback is likely to give the September Yen some additional strength this morning, the upside may be limited as prices approach the critical 125.00 level where possible central bank intervention starts to become an issue. The September Yen may find resistance around the 124.75 level, and may not have enough upward momentum to retest last week’s highs.

SWISS: The Sept Swiss has recovered from this week’s lows, but remains well below record high levels posted earlier in the month. Recent safe-haven support may have been eroded by today’s events in the Euro zone, but the Sept Swiss is likely to stay fairly well supported until the crisis has reached some sort of conclusion. The Sept Swiss may find resistance near the 118.50 level but will likely need fresh risk concerns in order to trade up towards the recent highs.

POUND: The Sept Pound was able to put together a modest recovery this morning, but will likely finish a choppy and volatile trading week close to the recent lows. Weak UK economic data has taken a near-term Bank of England rate hike off the table for now, but an end-of-week Dollar sell off could help the Sept Pound to recover a portion of recent losses. The Sept Pound may find resistance near the 161.80 level, but needs a vast change in sentiment in order to climb back towards this week’s highs.

CANADIAN DOLLAR: The Sept Canadian has climbed back towards the middle of a huge weekly trading range, but gains have been limited by sluggish market action in crude oil and gold this morning. Comparatively strong Canadian economic data has taken a back seat to generally weak energy and precious metals prices which in turn have been providing the Sept Canadian with it recent direction. The Sept Canadian may find resistance around the 102.00 area later on this morning, but it needs a broad-based commodity rally in order to move well beyond these levels.

TODAY’S MARKET IDEAS: The Dollar appears to be concluding this week’s trading on the defensive, but may find some support if today’s US data comes in better than the market expects. The Sept Euro has been able to post a strong recovery this morning, but today’s rebound could quickly turn around if there is further negative sovereign debt news out of the Euro zone.

Currencies: Dollar’s Direction Determined By Reaction to US Jobs Data

by Dave Hightower on June 3, 2011

DOLLAR: The Dollar has been able to stabilize near unchanged levels, but remains down near the bottom end of the recent sell off. This week’s choppy and two-sided trading has calmed down in anticipation of today’s US jobs data, but the Dollar has been unable to totally shake off the impact of a credit rating agency warning for a potential downgrade if the debt level increase is not approved. A continued series of weak US economic numbers has put even more focus than normal on today’s US employment numbers, particularly with payroll numbers being adjusted down after private job surveys came in much lower that expected this week. Strong US data may provide enough strength for the Dollar to make a quick return towards this week’s highs, but other issues may need some resolution before prices can reach back towards the late May trading range. On the other hand, weak Payroll figures could reinforce the market’s general lack of confidence in the US economy and that could send the Dollar sharply lower very quickly. The Dollar may find support near the 74.25 level before the US jobs data, but the magnitude of today’s gains in Non-Farm and Private Payrolls will determine whether the market sees either a new low for the move or an extended recovery.

EURO: The June Euro was able to post another new high for the move, but has given back most of those early gains, as market focus shifts back to this side of the Atlantic. Reports that Greece will accept deeper austerity measures and accelerated privatization measures in order to receive aid from the IMF and the EU provided much of this week’s support, but details of any plan remain elusive and may disappoint the market if reality does not match earlier ideas. The June Euro could see a fresh new high for this move, however, if today’s US jobs data fails to match the market’s already diminished expectations. The June Euro may find resistance near the 145.30 level this morning, but any extended move from these levels will likely be triggered by the market’s general reception towards US Employment data.

YEN: The June Yen recovered from overnight pressure and has climbed back close to 3-week highs. Japanese Prime Minister Kan’s “mea culpa” may have provided some stability for the June Yen over the past few days, but a strong move above the recent highs may be difficult as prices are beginning to reach levels where the Bank of Japan has intervened during the past year. The June Yen may find resistance near the 124.60 level, but could see a sharp pullback if today’s US payroll numbers exceed market expectations.

SWISS: The June Swiss continues to climb towards new record highs, even as risk concerns from the Euro zone appear to be subsiding. While the June Swiss may have had the strongest recent performance of any major currency, there is clearly some vulnerability to end-of-week long liquidation – particularly if there are some surprisingly good US data points released this morning. The June Swiss may retest Wednesday’s record highs near the 119.30 area, but could well have a severe pullback if Payroll numbers do come in stronger than expected.

POUND: The June Pound has fallen down to a new low for the week, pressured by a negatively received private survey of UK non-Manufacturing industries. Sluggish data in front of next week’s Bank of England meeting has made a negative impact on the June Pound, but a poor set of US numbers could see these losses reversed in a hurry. The June Pound may find support near the 162.70 level, but will likely be another currency whose ultimate direction today will be determined by how well US Payroll numbers are received by the market.

CANADIAN DOLLAR: The June Canadian remains under pressure from the pullback in energy prices late this week, and has been unable to return back towards the recent highs. The June Canadian will not have to go through having jobs data from both sides of the US/Canada border within a few hours of each other, but stronger US numbers could help to revive the June Canadian’s recent rally. The June Canadian may find support near the 102.10 level, but should avoid taking out last month’s lows, unless commodity prices come under heavy pressure today.

TODAY’S MARKET IDEAS: The Dollar’s direction will almost certainly be determined by how the market receives this morning’s US jobs data. Stronger than expected Payroll numbers could produce a Dollar recovery back towards the 75.00 level, while weaker data could see the Dollar make a nose-dive back towards the early May lows. The main beneficiary of weak US numbers should in all likelihood be the June Euro, while the June Swiss may hold onto this morning’s support and post another new record high.

Currencies: Swiss May Take Leadership Role

by Dave Hightower on May 25, 2011

DOLLAR: While a number of news services continue to tout the presence of residual Euro zone debt concerns, the Dollar isn’t apparently benefiting from that angle in the early US Wednesday trade. In fact, talk that the US was poised to strike a deal to extend its debt ceiling, in exchange for up to $1 Trillion in spending cuts, only seemed to give the Dollar marginal support. Perhaps the trade thinks the US economy will suffer in the event that austerity measures are implemented, or perhaps the Dollar trade is simply anticipating a soft US durable goods report later this morning. Nonetheless, the June Dollar is showing some slightly positive early action, but so far the charts show an inside day with a pattern of lower highs still developing for this week. It is possible that the Dollar is being partially undermined by talk of a French head of the IMF. Initial up trend channel support in the June Dollar Index today is seen at 76.10 but the US durable goods report might temporarily send the Dollar back below 76.00.

EURO: While a decline in German consumer sentiment readings overnight could have weighed on the Euro, the Euro has generally held together inside the prior two day’s ranges. However, talk of restructuring Greece’s debt package seems to have applied some fresh pressure to European equity markets and that in turn has pushed the Euro downward on its charts. The Euro also saw fresh new lows versus the Swiss overnight and that would seem to leave the Euro vulnerable to more losses ahead. In fact, we think that traders should consider implementing fresh shorts in the Euro this morning, especially if the June Euro manages a bounce off the US durable goods readings. If the outlook for Germany continues to deteriorate that could put the Euro under significant duress and that in turn could mean a decline in the June Euro to the lowest levels since March 17th.

YEN: The Yen seems to have entrenched into a pattern of lower highs and lower lows. BOJ comments overnight seemed to suggest that the recovery from the natural disasters were likely to take time, but that the Japanese fiscal house needed to be reformed even before the quake hit. In fact, the BOJ suggested that the need for further credit easing was on the rise, instead of on the decline and that would seem to suggest that the June Yen is poised for the lowest trade since April 28th. Sell rallies in the June Yen back up to 122.07.

SWISS: The Swiss is in the throes of another flight to quality rise. In addition to slack German consumer sentiment readings, the trade also expects to see rather soft US durable goods news this morning and that would seem to leave the Euro and the Dollar off balance because of classic fundamental news flow. With a restructuring of Greek debt also possible ahead, the June Swiss might be poised for a rise to the highest levels since May 10th. Support in the June Swiss rises to 114.05, with little in the way of resistance seen until 114.84.

POUND: Apparently sluggish UK growth figures haven’t undermined the Pound this morning, as the currency made fresh new highs for the week. In other words, the Pound is seen as the lesser of two evils, when compared to the Euro. Down trend channel resistance today was initially violated at 1.6234 and a close above 1.6225 could cause the currency trade to begin speculating on a more significant recovery in the Pound. Holding back the Pound are concerns that extremely weak UK house hold spending figures at the start of the New Year could present a problem to the currency at higher exchange rate levels later in the year.

CANADIAN DOLLAR: With a fresh downside breakout in the June Canadian putting the currency at the lowest level since March 28th, it is possible that the Canadian is poised to see some stop loss selling by the bull camp. Apparently a more positive view on commodities from Goldman was of little lasting benefit to the Canadian, which looks to maintain a pattern of lower highs and lower lows directly ahead. Next significant downside support in the June Canadian Dollar is seen at 101.58.

TODAY’S MARKET IDEAS: The Swiss might become the primary leadership market, especially in the face of slowing evidence from a number of key global economies.

Currencies: Dollar Off Lows but May Need Good Factory Orders to Keep Going

by Dave Hightower on May 3, 2011

DOLLAR: The Dollar was able to maintain this week’s recovery, although prices were unable to rally outside their recent trading range. The death of Osama bin Laden has not triggered a complete Dollar turnaround, but at least has improved sentiment enough for prices to move well away from the recent lows for the move. Today’s US data may be relatively quiet, but the market may already have shifted focus towards Friday’s key US Employment figures. While the Dollar has plenty of work ahead to move clear of these low price levels, the market appears to be consolidating these recent gains. The Dollar may find resistance near the 73.50 area today, but should stay well clear of yesterday’s lows for the move.

EURO: The June Euro continues to pull back from Monday’s 16-month highs, as debt problems with the peripheral EU nations have begun to weigh on prices again. Today’s Euro zone PPI number indicates fairly strong inflation levels, but the ECB may have to balance those concerns against adding too much pressure on EU nations with problematic debt situations. Although higher Euro zone rates are very likely by the end of summer, the increasing likelihood of unchanged rates at this week’s ECB meeting may help to take prices away from their recent highs. The June Euro may find support near the 147.25 level this morning, but another fresh high for this move, may need to have diminished peripheral EU debt concerns.

YEN: The June Yen was able to extend yesterday’s rebound, and made another new high for the move today. While repatriation support has been a consistent source of strength for the June Yen during the past few weeks, the market may have some difficulty extending this rally beyond the recent highs unless there is some sort of resolution with the Fukushima nuclear crisis fairly soon. The June Yen may find resistance near the 123.75 level, but may have some difficulty posting a strong move above these recent highs.

SWISS: The June Swiss made a new record high during the overnight session, but has since drifted back from those levels this morning. Safe-haven support may be driving the June Swiss up towards new high ground, but quiet news conditions may lead to a moderate pullback over the course of today’s trading. The June Swiss may find support near the 115.20 level today, but this current uptrend is very likely to remain intact and a new high for the move could occur if there is a global risk flare-up during today’s session.

POUND: The June Pound has come under heavy pressure this morning, and has fallen sharply away from the recent highs. A weaker than expected private survey of UK manufacturing has further damaged the case for the Bank of England to raise rates at this week’s meeting. UK inflation remains at elevated levels, but recent data is clearly not strong enough for any new rate hikes to occur. The June Pound may find support near the 164.30 level, but looks to be squarely on the defensive for the balance of today’s session.

CANADIAN DOLLAR: The June Canadian was unable to find any lasting benefit from yesterday’s Parliamentary election, and is falling back towards the lower end of the recent trading range. While the Conservatives were able to form the first majority government in Canada for 7 years, a sell off in gold and crude oil prices this morning has helped to turn the market back towards the downside this morning. The June Canadian may find support near the 104.60 level during today’s session, but could see further erosion of support now that post-election strength has been eroded by commodity weakness.

TODAY’S MARKET IDEAS: The Dollar continues to climb further away from the recent lows, but may need a strong Factory Orders numbers in order to break out above the recent trading range. The June Swiss could see a return towards new high ground if there are any global risk flare-ups during today’s session.

Currencies: Dollar Should Hold Gains; Euro Will Pull Back If More Debt News

by Dave Hightower on April 18, 2011

DOLLAR: The Dollar has made a relatively strong move to the upside to start out the trading week, and has reached the highest price levels since a sharp sell off on April 8th. Most of today’s strength has come from events across the Atlantic, as last Friday’s mild CPI numbers took some stream out of any hopes that the US rate differentials would improve anytime soon. The most recent Commitment of Traders report showed that non-Commercial traders were trimming back their net-short Dollar position as of last Tuesday, even before prices made a new low for the move. A divided Fed and the prospect that the Fed’s quantitative easing measures will go through the middle of the year are likely to weigh on the Dollar over the longer-term, but today’s rebound could extend itself further to the upside if Euro zone rumors have some substance. The Dollar may find resistance near the 75.65 level, but may have trouble getting beyond that level unless there is fresh news for the market to digest. The Commitments of Traders Futures and Options report as of April 12th for US Dollar showed Non-Commercial traders were net short 9,679 contracts, a decrease of 1,963 contracts. The Commercial traders were net long 9,543 contracts, a decrease of 1,679 contracts. The Non-reportable traders were net long 136 contracts, a decrease of 285 contracts. Non-Commercial and Non-reportable combined traders held a net short position of 9,543 contracts. This represents a decrease of 1,678 contracts in the net short position held by these traders.

EURO: The June Euro has come under heavy pressure this morning, and now has fallen below last week’s trading range. Rumors of possible Greece debt restructuring were given some credence by a newspaper report that the Greek government told the IMF and the EU that it wishes to discuss those issues later this year. In addition, Portugal’s debt aid package may have been thrown into doubt by the success of an anti-Euro party in Finnish parliamentary elections over the weekend. The most recent Commitment of Traders report showed that non-Commercial traders were adding on to an already large net-long Euro position as of last Tuesday, which may be putting further pressure on the June Euro during today’s sell off. While the prospects for higher Euro-zone rates have lifted the June Euro up towards these recent 31/2-year highs, problems with the peripheral EU nations could weigh on prices during the next several sessions. The June Euro may find support near the 142.75 level, but is likely to remain on the defensive until the market is satisfied that current debt problems are not going to spread. The Commitments of Traders Futures and Options report as of April 12th for Euro showed Non-Commercial traders were net long 67,262 contracts, an increase of 4,575 contracts. The Commercial traders were net short 81,137 contracts, an increase of 5,485 contracts. The Non-reportable traders were net long 13,875 contracts, an increase of 910 contracts. Non-Commercial and Non-reportable combined traders held a net long position of 81,137 contracts. This represents an increase of 5,485 contracts in the net long position held by these traders.

YEN: The June Yen was able to extend last week’s rally even further to the upside, and has reached price levels last seen in late March. Repatriation support has begun to improve again, but the aftermath of last month’s earthquake makes it very unlikely that Japanese yields are going to improve anytime in the near future. The June Yen may find resistance near the 121.00 level later on in the session, but the chance for any stronger upside move from these levels may depend on a turnaround in the Dollar.

SWISS: The June Swiss has fallen back from last week’s highs for the move, but recent debt problems in the Euro zone have provided enough support for prices to remain within the recent trading range. Safe-haven support from global risk events has helped to underpin recent gains, but comments by Swiss National Bank officials on the negative impact of a strong Swiss Franc on exports could weigh on prices over the near term. The June Swiss may find support near the 111.50 level today, but could be vulnerable to a larger pullback from these levels if recent support starts to fade.

POUND: The June Pound has drifted lower this morning, but has found support just above last week’s lows. The recent drop in UK CPI numbers continues to weigh on the June Pound, as the chances for a Bank of England rate hike may have been weakened by softer data. The June Pound may find support near the 162.40 level, but will need to see stronger UK data in order to retest this month’s highs.

CANADIAN DOLLAR: The June Canadian remains in last week’s trading range, but weaker crude oil and gold prices have pressured the market lower this morning. Canadian economic data later on in the week could help to revive the rally, but slack commodity prices today are likely to keep the June Canadian on the defensive this morning. The June Canadian may find support near the 103.50 area this morning, but will need some help from commodity prices in order to lift back towards the upper end of the recent trading range.

TODAY’S MARKET IDEAS: The Dollar has been able to hold overnight gains, and with little on the US data front this morning may be able to sustain this recovery rally through the balance of today’s session. The June Euro may extend today’s pullback further to the downside if there is further news of Euro zone debt problems during today’s session.

Currencies: Dollar Gains Overnight but Will Have Trouble Extending

by Dave Hightower on April 5, 2011

DOLLAR: The Dollar has been able to grind out a modest gain this morning, and looks to be putting together a mild recovery from the recent lows. With few US economic numbers during the early part of this week, there may be added emphasis on the release of Fed minutes later today to gauge the likelihood of quantitative easing measures being extended, or if monetary policy may be tightened during the near future. Much of the market’s focus remains on overseas issues, but the Dollar appears to be finding some benefit from generally positive US data over the past few weeks. While there may be few data points for the Dollar to find support from during the next session or two, there may be enough uncertainty from overseas issues for prices to avoid another retest of the lows over the near future. The Dollar may find resistance near the 76.40 level this morning, but is likely to consolidate near these present prices levels as outside markets continue to hold the market’s attention.

EURO: The June Euro has come back on the defensive today, and has fallen back from yesterday’s highs for the move. A credit ratings downgrade on Portugal’s sovereign debt may not be much of a surprise to the market, but that action underscores the problems that peripheral EU nations may have with the ECB starting up a series of rate hikes. Today’s Euro zone Retail Sales number was lukewarm at best, but elevated inflation levels appear to be the key economic indicator for the market to watch for during the near future. The June Euro may find support near the 141.20 level during today’s session, but this sort of price action in front of Thursday’ ECB meeting could lead to an extended move to the downside.

YEN: The June Yen has come under heavy pressure in the wake of this morning’s Chinese rate hike, and is closing in on a new low for this sell off. Ongoing problems at the Fukushima power plant remain an issue for the June Yen, as overseas assets may wait to be repatriated until the crisis has reached some sort of conclusion. The June Yen may find support near the 118.25 level during today’s session, but will need to find some positive news in order to turn this sell off around.

SWISS: The June Swiss appears to be consolidating just above the 108.00 level, showing little reaction to developments with several risk flare-ups around the globe. While safe-haven support has kept the June Swiss at these elevated price levels, upcoming Swiss economic data will need to remain positive in order to avoid a retest of last week’s sharp sell off. The June Swiss may find resistance near the 108.50 level later on this morning, but may have trouble breaking out of this week’s trading range unless there is another risk event that starts to generate news headlines.

POUND: The June Pound put together a strong rally this morning, strengthened by a surprisingly good private survey of UK service industries. While today’s number may not have enough impact to change the Bank of England’s actions at this week’s meeting, a UK rate hike by this summer may not be out of the question. The June Pound may find resistance near the 162.25 level, but looks strong enough to hold prices well above last week’s trading range.

CANADIAN DOLLAR: The June Canadian has recovered from the overnight lows, but has fallen back below yesterday’s 31/2 year high for the move. Strong energy prices and recent strength in Canadian economic data should keep the June Canadian well supported at these levels. The June Canadian should find resistance near the 103.50 level, but may have trouble moving up into new high ground in the wake of this morning’s Chinese rate hikes.

TODAY’S MARKET IDEAS: The Dollar has been able to post a moderate gain this morning, but will have trouble extending this rebound with no US data and the market’s focus on overseas events. The June Pound may extend today’s rally further to the upside, finding benefit from strong UK data in front of the Bank of England meeting later on in the week.

Currencies: Dollar on the Defensive; Pound Strong on Good UK Numbers

by Dave Hightower on March 22, 2011

DOLLAR: The Dollar continues a descent down towards new lows, but does not have the same downward velocity as was seen late last week. A lack of substantive US economic data during the early part of the week has left the market digesting a poor private survey of US Existing Home Sales, which has helped to underscore prospects for widening interest rate differentials between the US and Europe. As long as the market sees the Fed’s quantitative easing program going the full distance and possibly beyond, the Dollar will have a challenge putting together an extended recovery from these levels. US data later on in the week may provide the opportunity for a minor upside move, but for now the Dollar is likely to remain on the defensive during the balance of today’s session. The Dollar may find support near the 75.50 level this morning, but will need help from outside markets in order to lift away from the recent lows.

EURO: The June Euro has been able to hold near the highs for this move, but has been unable to extend this recent rally much further into new high ground. Recent comments by ECB officials appear to have given the market further confidence with projecting Euro zone rate hikes next month, but there are upcoming votes in Portugal and Ireland that could bring sovereign debt concerns back to the market’s attention. Elevated Euro zone inflation levels are likely to keep the June Euro well supported during the next few sessions. However, the sharp rally since last week does leaves some room for a technical pullback if negative news comes in to dampen recent positive fundamental sentiment. The June Euro may find resistance near the 142.40 level later today, but may be in need of additional supportive news to extend this current rally.

YEN: The June Yen has calmed down quite a bit from the extreme volatility of the past few sessions, but has kept up with a gradual move lower this week. The main question in the market will be whether Japanese officials feel these Yen levels are far enough below the recent highs to put the brakes on further intervention activity. While the proximity to the Japanese fiscal New Year may provide another surge of repatriated funds back to Japan over the next several sessions, the threat of fresh central bank activity may keep a lid on any strong upside moves during the rest of this week. The June Yen may find support near the 123.10 level this morning, but chances for a large move outside this week’s trading range remain large enough to keep a very close watch on this market!

SWISS: The June Swiss has been unable to retest last week’s record highs, but global risk levels remain sufficiently high to keep prices at the upper end of this month’s sharp rally. Today’s strong Swiss Trade surplus numbers will help to reinforce ideas of comparatively good Swiss economic conditions, but the June Swiss may need events in North Africa and the Middle East to remain volatile in order to post another fresh record high. The June Swiss may find resistance near the 111.00 level during today’s session, but finding new high ground again may need a fresh news catalyst in order to trigger the move.

POUND: The June Pound moved up to a new 14-month high this morning, as a strong UK CPI number helped to lift prices well into new high ground. Today’s data was a strong sign of high UK inflation levels, but the market will be listening closely for official rhetoric to gauge whether the Bank of England has moved closer to hiking UK rates. The June Pound may find resistance near the 164.00 level today, but any further move beyond that level, may require additional evidence that higher UK rates are close at hand.

CANADIAN DOLLAR: The June Canadian has overcome a sluggish day in the commodity markets to move back towards the higher end of this current recovery rally. While another rally in energy and precious metals prices would help the June Canadian return to the highs from earlier this month, today’s Canadian economic data needs to maintain a positive tone in order for prices to hold at those levels. The June Canadian may find resistance near the 102.50 level this morning, but may need a combination of stronger commodity prices and strong Canadian data to have a chance of reaching new high ground again.

TODAY’S MARKET IDEAS: The Dollar remains squarely on the defensive this morning, and is in need of positive news in order to turn this sell-off around. The June Pound may extend this current rally further into new high ground this morning, as a high UK CPI number has strengthened the case for a near-term Bank of England rate hike.

Currencies: Dollar Holds Onto Week’s Gain, Lack of US Data Could Limit Extension

by Dave Hightower on March 9, 2011

DOLLAR: The Dollar has traded within a relatively tight overnight range today, but has been able to consolidate this week’s recovery from the lowest price levels since late 2009. While there have been few recent items of US economic data for the market to digest, a focus on overseas issues may have been to the Dollar’s benefit. In addition, the Dollar has received further support from the pullback in crude oil prices. While the prospect of Euro zone rate hikes during the final stages of the Fed’s quantitative easing measures has kept the Dollar on the defensive during the past few weeks, this recovery could find further strength if US economic numbers later this week maintain their recent positive tone. The Dollar may find resistance near the 77.25 level this morning, but would need sentiment to shift negative once again in order to retest the lows from earlier in the week.

EURO: The June Euro has been unable to shake off this week’s decline, and posted a new low for this pullback during overnight trading. Risk concerns for the sovereign debt of EU peripheral nations has flared up again, with Portugal’s longer-term yields reaching record high levels in front of their 2-year auction this morning. Elevated inflation levels in Germany and France may be emphasizing the case for an ECB rate hike next month, but there are going to be serious issues with several Euro zone nations who would be hurt by those higher benchmark rates. The March Euro may retest support near the 138.40 level again this morning, but may need further evidence of economic strength from core EU nations to make a return towards this week’s highs.

YEN: The June Yen remains on the defensive this morning, unable to find much lasting benefit from decent Japanese Machinery Orders data during the overnight session. A pullback in energy prices has helped to erode some of the June Yen’s recent safe-haven strength, and put the market’s focus back on the nearly flat Japanese yield curve. The June Yen could find support near last week’s low of 120.45 later on today, but a further slide towards last month’s lows for 2011 could occur if sentiment continues to deteriorate.

SWISS: The June Swiss was able to recover from an extension of yesterday’s sell off, as a strong Swiss CPI number this morning underscored comparatively good Swiss economic conditions. Lukewarm energy prices may be eroding recent safe-haven support for the June Swiss, and could prove difficult to overcome for
any sort of return towards this month’s record highs. The June Swiss may find resistance near the 107.75 area today, but may require a fresh risk flare-up in order to find new high ground once again.

POUND: The June Pound has been able to lift away from this week’s lows, supported by a UK trade deficit number that was smaller than expected. Further positive data may be required to provoke the Bank of England into raising UK interest rates, although today’s data was one of the last major economic numbers before tomorrow morning’s meeting. The June Pound could find resistance again around the 162.00 level, but any larger move to the upside may have to wait until the Bank of England meeting is out of the way.

CANADIAN DOLLAR: The June Canadian has surged above the recent trading range, and is closing in on a new 3-year high this morning. Generally strong Canadian economic data has been doing the heavy lifting, as this up move has occurred while energy prices have been pulling back. The June Canadian should find resistance at the previous high of 103.03, but any sort of recovery in energy prices today, would provide more than enough support to trigger an upside breakout to new high ground.

TODAY’S MARKET IDEAS: The Dollar has held onto a recovery from this week’s lows, but a lack of US economic data this morning could limit the ability to extend this move further to the upside. The June Canadian is likely to move up to new high ground if energy or precious metal prices can show further strength during today’s session.

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