U.S. Dollar. Our bias NEUTRAL, on the sidelines till a clearer picture develops.
• U.S. Dollar Index closed out the week at 74.83
• A break lower on Nikkei and Dax required to see sustained Dollar strength on global risk aversion
• QE2 set to expire end of this month
• PPI and retail sales reports due Tuesday, CPI on Wednesday
• Support at 73.50, resistance 76.00
• We maintain a neutral Dollar bias this week until a clearer picture develops with regard to risk trends.
Euro Dollar. Our bias NEUTRAL, on the sidelines till a clearer picture develops.
• Sharp fall during late Friday trade saw the EURUSD close at 1.4345
• ECB boss Trichets’ “strong vigilance” phrase points to a rate hike in July
• EURUSD declines on further Greek debt concerns after Trichet and Schäuble comments
• Continuing declines in equity markets likely to see further Euro weakness
• Support at 1.4300, resistance 1.4500
• We maintain a neutral Euro bias this week until a clearer picture develops with regard to risk trends.
Japanese Yen. Our bias BULLISH, we’re looking to buy on dips
• Yen closed the week virtually unchanged against U.S. Dollar at 80.29 on Friday
• Risk aversion sentiment momentum likely to see further Yen strength
• USDJPY test of 79.50 levels may see central bank intervention
• Bank of Japan rate decision due Tuesday with possibility of expanded Asset Purchase Program
• Support at 79.70, resistance 80.90
• We remain Yen bullish in the week ahead and are looking to buy on dips.
British Pound. Our bias BEARISH, we’ll be looking to sell on rallies
• Sterling down 1.2% against the U.S. Dollar at Fridays close after poor industrial and manufacturing data
• MPC member Andrew Sentence finishes tenure and replaced by Ben Broadbent
• Credit Suisse Overnight Swaps now factor in only 25 bp in rate hikes for the next twelve months
• U.K. inflation report on Tuesday, employment numbers Wednesday and retail sales due Thursday
• Support at 1.6160, resistance 1.6310
• We remain Sterling bearish in the week ahead and are looking to sell on rallies.
Canadian Dollar. Our bias BEARISH, we’ll be looking to sell on rallies
• Canadian Dollar closed virtually unchanged against the U.S. Dollar on Friday at 0.9796
• Loonie price action closely aligned to S&P500 price movement
• QE2 conclusion likely to see further Loonie weakness
• Light economic calendar for Canada in the week ahead
• Support at 0.9720, resistance 0.9850
• We remain Loonie bearish in the week ahead and are looking to sell on rallies.
Australian Dollar. Our bias NEUTRAL, on the sidelines till a clearer picture develops.
• Aussie fell 1.5% against U.S. Dollar last week on risk aversion sentiment, dovish RBA and weak employment report
• Full-time employment fell by 22K jobs in May, with the previous month’s print revised down to -57.2K from -49.1K
• Chinese economic data on Tuesday likely to impact Aussie
• Support at 1.0500, resistance 1.0700
• We maintain a neutral Aussie bias this week until a clearer picture develops with regard to risk trends.
New Zealand Dollar. Our bias NEUTRAL, on the sidelines till a clearer picture develops.
• New Zealand Dollar closed the week at 0.8210 against the U.S. Dollar after rallying to a fresh record high at 0.8230 on Thursday
• Credit Suisse Overnight Index Swaps show borrowing costs for Kiwi to increase by more than 50bp over the next 12 months
• Retail sales due Tuesday
• RBNZ Governor Alan Bollard comments the Kiwi is overvalued and suggests markets have over-reacted to last weeks policy statement
• Support at 0.8190, resistance 0.8300
• We maintain a neutral Kiwi bias this week until a clearer picture develops with regard to risk trends.