Littlefish FX | Aug 03, 2015 06:27AM ET
US equities ended Friday’s session slightly weaker as earnings disappointed. European equities were modestly firmer. US Treasuries rallied across the curve, with U.S. 10-Year yield at 2.19% this morning. Commodity prices, led by oil and copper were broadly weaker. CRB index is down to fresh 12-year lows. Monetary tightening-bias currencies USD and GBP continued to firm against most currencies. USD initially fell in New York trade Friday off the back of weak July sentiment and 2Q employment cost data, but reversed most of its losses on better than expected Chicago PMI and Fed’s Bullard’s comments that he was open for a September rate move.
EUR/USD rose to an intra-day high of 1.1114 (Friday) on better than expected July core CPI amid broad USD weakness but reversed fortunes to close 1.0984. EUR was last at 1.0976 levels this morning. Expect EUR to consolidate in the range of 1.0860 – 1.1060 until it breaks out of this consolidation phase.
GBP/USD closed firmer above the 1.56-handle overnight. GBP/USD was around 1.5620’s levels at time of writing. Medium term outlook remains positive in UK outlook and still favors GBP/XXX amid ongoing economic recovery setting the stage for BoE to hike possibly as soon as 2Q 2016. But near-term, many positives appear to have been priced in and that exposes GBP to the downside. There needs to be further impetus for follow-through moves higher. July PMI on tap later; data disappointment could see some vulnerability on the downside.
USD/JPY tested offers at 124.50 briefly last week before heading back below the 124-handle Pair is back above the 124-handle to start the week, likely on the back of a sell-off in the JPY against the EUR and GBP. Lacking fresh impetus for most of the week, market is likely to remain cautious ahead of the US NFP print on Friday. While BOJ meets on Friday, it is likely a non-event given BOJ Governor Kuroda’s recent reiteration that there was no immediate need for additional monetary easing though the central bank stood ready to adjust policy if the need arises
h3 Technical Commentary /h3EUR/USD Short Term (1-3 Days): Bullish – Medium Term (1-3 Weeks) Bearish
GBP/USD: Short Term (1-3 Days): Bullish – Medium Term (1-3 Weeks) Bearish
USD/JPY: Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks) Bullish
EUR/JPY: Short Term (1-3 Days): Bullish – Medium Term (1-3 Weeks) Bearish
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