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DOLLAR: The Dollar has been able to extend its rally to new highs this morning, although the market appears to have calmed down somewhat from yesterday’s turbulence. European issues continue to be the center of attention, as an inability to resolve the Greece debt situation fully has no doubt fueled speculation of problems in other EU nations this week. While the relative strength of economic numbers between the US and Europe has not produced that much of a contrast, it has been the continuation of problems from the EU, real and imagined, that has left the Dollar the beneficiary of risk aversion support. If today’s trading remains calm, the Dollar may lose some minor ground through profit-talking but there seems to be little on the near-tern horizon that can totally shake the Dollar’s underlying strength over the near-term. Look for the Dollar’s downside to be limited to a pullback to 83.20 at most, as the market’s concerns with Europe remain unanswered.
EURO: Although the descent has moderated, the June Euro remains below the 1.30 level this morning, as the market tries to digest the severity of yesterday’s sharp down move. Comments made by the EU Economic Commissioner this morning has struck the right tone, particularly in regards to Greece and its problems, but there may be more attention paid to German legislators, as they begin debating a bill for the Greece aid package. With so much ground covered so quickly, there is a good chance that the June Euro could see a sharp short-covering rally over the next day or so. Unless sentiment changes drastically, however, those types of price moves should be used as selling opportunities, as problems in Europe look to have placed a ceiling on the June Euro’s upside for now.
YEN: As the risk aversion trend has calmed down in the markets, the June Yen has returned to its downtrend posture this morning. It is interesting to note that the June Yen has made fresh lows despite lingering flight to quality issues and that is a very telling sign that the bull camp really isn’t interested in the Yen. However, it would appear that the market is somewhat reluctant to test the 105.00 level coming out of the Golden Week holidays in Japan. With European weakness providing some measure of support for the June Yen, it may be difficult for prices to probe the downside today, but it seems unlikely that the market can avoid a breech of 105.00 level during the near future.
SWISS: It may be surprising given the relative strength of the Swiss economy to its European neighbors that the June Swiss should be on the verge of 1-year lows against the Dollar, but that may be the price paid by the Swiss National Bank for consistent intervention. As long as European debt problems hold the market’s sway, it is likely that the June Swiss will remain under considerable pressure. Look for a test of the 90.00 level by the June Swiss over the remainder of the week.
POUND: While the June Pound found itself caught up in the risk aversion sell off yesterday, prices have lifted themselves off of their lows today as the Pound has gained some ground against the Euro. This would be considered the calm before the storm, as the market prepares itself for tomorrow’s UK election. A late rise in the polls by the ruling Labour party has added to the uncertainty over the ultimate results, although much of those gains have come at the expense of a third party. The June Pound is likely to remain within a range between 1.51 and 1.52, although there is a possibility of a sharp move, if late polls show a decisive move for any of the three major parties.
CANADIAN DOLLAR: The calming of the forex markets after yesterday’s risk aversion tidal wave have allowed the June Canada to find some support this morning, albeit at its lowest levels since late March. If the European debt situation can stay out of the headlines today, then the June Canada stands a good chance of building on this morning’s bounce off of the lows. Look for a move towards the 98.00 level in the June Canada over the course of today’s trading.
TODAY’S MARKET IDEAS: While the markets have calmed down, the European currencies clearly remain on the defensive. In addition, the move away from risk aversion may now drive the June Yen towards a test of the 105.00 level.
Currency Market Commentary – 2010.05.05
by Dave Hightower on May 5, 2010
Below is a sample of our Daily Commentary. To get this comment, and our daily coverage of 15 additional markets and trade ideas, visit futures-research.com for your free 2 week trial!
DOLLAR: The Dollar has been able to extend its rally to new highs this morning, although the market appears to have calmed down somewhat from yesterday’s turbulence. European issues continue to be the center of attention, as an inability to resolve the Greece debt situation fully has no doubt fueled speculation of problems in other EU nations this week. While the relative strength of economic numbers between the US and Europe has not produced that much of a contrast, it has been the continuation of problems from the EU, real and imagined, that has left the Dollar the beneficiary of risk aversion support. If today’s trading remains calm, the Dollar may lose some minor ground through profit-talking but there seems to be little on the near-tern horizon that can totally shake the Dollar’s underlying strength over the near-term. Look for the Dollar’s downside to be limited to a pullback to 83.20 at most, as the market’s concerns with Europe remain unanswered.
EURO: Although the descent has moderated, the June Euro remains below the 1.30 level this morning, as the market tries to digest the severity of yesterday’s sharp down move. Comments made by the EU Economic Commissioner this morning has struck the right tone, particularly in regards to Greece and its problems, but there may be more attention paid to German legislators, as they begin debating a bill for the Greece aid package. With so much ground covered so quickly, there is a good chance that the June Euro could see a sharp short-covering rally over the next day or so. Unless sentiment changes drastically, however, those types of price moves should be used as selling opportunities, as problems in Europe look to have placed a ceiling on the June Euro’s upside for now.
YEN: As the risk aversion trend has calmed down in the markets, the June Yen has returned to its downtrend posture this morning. It is interesting to note that the June Yen has made fresh lows despite lingering flight to quality issues and that is a very telling sign that the bull camp really isn’t interested in the Yen. However, it would appear that the market is somewhat reluctant to test the 105.00 level coming out of the Golden Week holidays in Japan. With European weakness providing some measure of support for the June Yen, it may be difficult for prices to probe the downside today, but it seems unlikely that the market can avoid a breech of 105.00 level during the near future.
SWISS: It may be surprising given the relative strength of the Swiss economy to its European neighbors that the June Swiss should be on the verge of 1-year lows against the Dollar, but that may be the price paid by the Swiss National Bank for consistent intervention. As long as European debt problems hold the market’s sway, it is likely that the June Swiss will remain under considerable pressure. Look for a test of the 90.00 level by the June Swiss over the remainder of the week.
POUND: While the June Pound found itself caught up in the risk aversion sell off yesterday, prices have lifted themselves off of their lows today as the Pound has gained some ground against the Euro. This would be considered the calm before the storm, as the market prepares itself for tomorrow’s UK election. A late rise in the polls by the ruling Labour party has added to the uncertainty over the ultimate results, although much of those gains have come at the expense of a third party. The June Pound is likely to remain within a range between 1.51 and 1.52, although there is a possibility of a sharp move, if late polls show a decisive move for any of the three major parties.
CANADIAN DOLLAR: The calming of the forex markets after yesterday’s risk aversion tidal wave have allowed the June Canada to find some support this morning, albeit at its lowest levels since late March. If the European debt situation can stay out of the headlines today, then the June Canada stands a good chance of building on this morning’s bounce off of the lows. Look for a move towards the 98.00 level in the June Canada over the course of today’s trading.
TODAY’S MARKET IDEAS: While the markets have calmed down, the European currencies clearly remain on the defensive. In addition, the move away from risk aversion may now drive the June Yen towards a test of the 105.00 level.
Tags: Canadian, Dollar, Pound, Swiss, Yen
About Dave Hightower