Session close (Monday, May 14): Settled at 1.19705, down 1 tick
Fundamentals: Today’s tape was characterized by dueling central bank speak. Early this morning ECB official and Bank of France Governor Villeroy said the current slowdown in inflation is temporary and that they are on pace to finish QE later this year as scheduled. He then added that a rate hike would follow in a matter of “quarters, not years”. These hawkish comments early this morning set a bullish tone for the Euro which reached a high of 1.2025. Not so fast though, ECB official Coeure said he sees rates at current levels for an extended time and well after the wind down of QE; the Euro lost more than half a penny upon these comments. These remarks from the ECB took precedence today and those from St. Louis Fed President only added to early weakness in the Dollar for a brief period; he said the Fed is tightening too aggressively and pointed to the flattening yield curve as a repercussion.
Tomorrow starts early and quickly German GDP is due at 1:00 am CT and French CPI and Nonfarm Payrolls are at 1:45 am CT. Arguably, the most important read of the morning could be the German ZEW Economic Sentiment; last month, it was the lowest since November 2012. This along with Eurozone GDP, Industrial Production and Sentiment are to be released at 4:00 am CT. From the U.S, a crucial read on Retail Sales is due at 7:30 am CT along with NY Empire State Manufacturing. Business Inventories are released at 9:00 am CT and Treasury International Capital data is at 3:00 pm CT. At noon, current San Francisco Fed President and soon to be New York Fed President Williams speaks.
Technicals: Price action settled right in our pivot level. The low last week opened the door for a change in momentum but after stalling, any potential edge gained late last week is now neutralized.
Session close: Settled at .9138, down 32 ticks
Fundamentals: The yen finished lower on the session as the dollar strengthened. The real culprit was Treasury yields, the U.S 10-year again has reached 3% and not only does this signal a risk-on trade that puts pressure on the yen, it makes the U.S investment more attractive than that in Japan. PPI data from Japan was in line with expectations last night. There is a 30-year JGB auction at 10:45 pm CT. Tomorrow’s U.S. data slate will be critical with Retail Sales early, but traders must not sleep on the potential volatility, especially in the Yen, from the TIC data at 3:00 pm CT.
Technicals: After settling right at the 200-day moving average and our pivot on Thursday and Friday, the yen started the week on very soft footing.
Session close: Settled at .7527, down 17
Fundamentals: After a tremendous finish to last week, swinging a penny and a half from Wednesday’s low, today’s soft session was a casualty to the broader markets. Equity markets slipped from early highs and the U.S. dollar gained strength on stronger yields and a what became a weaker Euro. Tonight is crucial for the Aussie though and this likely abated some sellers. RBA Monetary Policy Meeting Minutes are due at 8:30 pm CT and Assistance Governor Debelle speaks. Additionally, China releases Industrial Production, Fixed Asset Investment and Retail Sales data at 9:00 pm CT; China is Australia’s number one trade partner.
Technicals: Last week’s bounce was strong, but must prove it is more than just that, a bounce in a downtrend.
Session close: Settled at .78175, down 7
Fundamentals: Price action held ground well considering the miss on Employment Change. Though it finished lower on Friday, the door was open for a bounce back. However, today’s session was the lowest volume since April 2nd. Traders await Thursday’s NAFTA deadline but, a positive turn will be bullish the Canadian, though we do not believe a failure to get something on paper is outright bearish. There was no data today and will be none tomorrow. The emphasis will be on the U.S slate.
Technicals: Price action remains above first key support and a long-term level at .7790.