EURUSD Mulls 200-day MA, USDJPY Ponders 100

 | Jul 02, 2013 07:39AM ET

Today is a day for relative quiet ahead of the storm of event risks that pick up with tomorrow’s key US data and then continues through the end of the week. Tonight sees significant input for AUD traders.

Yesterday’s slightly stronger than expected ISM manufacturing failed to do much for the greenback, as more important inputs for the market await in the form of tomorrow’s ISM non-manufacturing and the Friday employment report. EURUSD rejected an attempt at the 200-day moving average close to 1.3075 this morning (thus far at least – ranges are tight) and USDJPY had a sniff near the 100.00 level after a relatively upbeat Asian session despite Wall Street limping into the close yesterday. The Nikkei has managed an impressive 1000+ points over the last four trading days.

The RBA meeting overnight was rather dovish, but failed to surprise significantly as there was no actual rate cut, which a small minority of observers were expecting. The statement complained that the Australian dollar remains too strong – and that the inflation outlook provides scope for further easing, should that be necessary. The reaction was fairly immediate as the Aussie sold off, but the currency has come back a bit in Europe and is finding some support in term. There was no real reaction in rate markets or the STIRs, so the market will be looking for further developments and I wonder if the potential for a near-term Aussie squeeze is building. Tonight’s data will likely provide a clue, and there’s no evidence just yet in the likes of AUDNZD, which plunged back close to the lows for the cycle near 1.1750 overnight.

Chart: USDJPY
The 100.00 area is double significant because of the psychology of that level (remember the extensive tease near there just after the watershed April 3-4 BoJ meeting) and because it is the 61.8% Fibo retracement of the move from the 103.75 top to the 93.80 low.