Afternoon US Dollar Wrap-Up
US data today was mixed giving both USD bulls and bears something to work with and the USD remained two-way in volatile action all during the New York session today. Initially mixed overnight the greenback traded inside established ranges while the major focus remained the Yen crosses. USD/JPY remained higher eventually tackling offers at the 117.50 area before a modest bout of profit taking by the longs dropped the rate back to the 117.00/10 area during early New York trade.
GBP/JPY also off the highs to start on mixed interest from Russian names seen the past few sessions. US data this morning was USD unfriendly at first; PPI came in over expectations at +1.3% front number and core at +0.4% but reaction was muted due to the major rise in the headline number coming from tobacco and truck sales. Without those numbers the rate would be in line with expectations and the USD remained inside overnight ranges. TICS out a bit later was neutral to bearish as the amount of US Debt sold covered last weeks Balance of Trade data. Philly Fed disappointed below expectations barely avoiding a negative reading at 0.2 giving the USD a decidedly negative tone but the London Fix had a demand for USD and the Greenback rallied to intraday highs against the Yen for a high print at 117.76 before selling capped the move.
Remaining firm all day after that USD/JPY had lighter volumes both on the up move into stops and after suggesting that traders are not convinced the USD has the strength to rally into the 118.00 area easily. GBP rallied to 1.9400 area over night with a high print at 1.9397 and just shy of reported stops said to be resting at 1.9400/10. EURO firm also and making highs during New York trade but unable to penetrate into the 1.3260 area easily; high print at 1.3253 apparently still shy of the reported stops for size said to be somewhere over the 1.3250/60 area. Perhaps on CPI data tomorrow the EURO bears will throw in the towel.
In my view the set-up for the weaker USD is about done for the week. The signals and signs are there that the USD has reached the extended end of the potential pullback areas. Strength in the Greenback is a selling opportunity in my view; look for the USD to weaken a bit overnight and end on the defense.
USD/JPY Daily
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R3: ?
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R2: 8700
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R1: 8650
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Current Price : 8603
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S1: 8580
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S2: 8560
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S3: 8520
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Rate continues to remain under pressure but two-way action likely to cap a rally into the 8650 area near-term and support a break into 8480 area; look for 100 bar MA to offer support with stops on the other side likely. Look for the rate to rally briefly on book-squaring overnight ahead of US data tomorrow.
GBP/USD Daily Futures
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R3: 1.9500
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R2: 1.9420/30
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R1: 1.9380
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Current Price : 1.9359
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S1: 1.9320
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S2: 1.9280
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S3: 1.9250
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Pair grinding higher and showing willing buyers on very tight dips into existing minor support areas; argues for a large rally near-term should US data continue to disappoint into next week. Stops building in the 1.9420 area of 100 bar MA where resistance likely to be offered. Stops under the weekly low likely out of range due to lack of downside follow-through.
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Jason
Jankovsky
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