Currency movers for July 09, 2015

9 July, 2015

Today’s Currency Movers

EURUSD, Daily

EURUSD has found support at a weekly pivot candle and moved closed above the previous day’s high yesterday making this candle a new pivot. The pair rose slightly after yesterday’s close and has at the time of writing failed to challenge the trend channel bottom and a resistance level at 1.1117. This level is not far from a weekly low at 1.1130 and therefore made buyers hesitant. This level also coincided with the upper Bollinger Bands in a 4h chart. Market has been now moving lower after a 60 min rejection candle at 1.1170 resistance was created. I am seeing support at 1.0957 to 1.0976. Significant daily support and resistance levels: 1.0930 and 1.1135.

European stocks rose slightly yesterday and futures are pointing to a higher opening today, while core bond yields rose and peripheral yields declined following Greece’s formal request for a 3-year ESM loan program. The details of the promised reform plans were once again missing though and the risk is another setback, if today’s reform list once again falls short of expectations. For many Grexit becomes the main scenario now.

FOMC minutes revealed concerns over Greece and China, among other considerations, that encouraged a steady policy stance, as was evident in the policy statement and other materials. While views on the economy and labor market were generally upbeat, as Q1 sluggishness was attributed to temporary factors and seasonal adjustment issues, there were offsetting elements that reflected a very cautious group of policymakers. A number of officials warned against premature tightening and wanted to see stronger conditions before pulling the trigger. It was also stressed that policy decisions would be on a meeting-by-meeting basis. With the Greek and Chinese situations having eroded further since the June 16, 17 meeting, the FOMC may be even more gun-shy about liftoff, adding to market speculation the Fed could remained sidelined in September. We’ll wait for Yellen’s upcoming comments, as well as data, before we shift out of our September forecast.

Yesterday’s US consumer credit climbed $16.1 bln in May after a $21.4 bln April surge (revised up from $20.5 bln). Non revolving credit paced the strength with a $14.5 bln increase versus the $12.9 bln gain in April (revised from $11.9 bln). Revolving credit was up $1.6 bln versus the prior $8.5 bln print (revised from $8.6 bln).

2015-07-09_1026

Currency Pairs, Grouped Performance 

After yesterday’s strong movements in favour of JPY we are now seeing a rather strong reversal. This suggests that the need for safe haven did go a bit too far in some of the JPY pairs. CADJPY for instance reached a daily pivot candle from March and is reacting strongly higher from it. GBPJPY hit a weekly pivot high from February this year and bounced higher. USDJPY found support from a range formed in May but has resistance above. There should be more volatility and trading opportunities in these pairs over the coming days.

Significant daily support and resistance levels for these pairs are:

2015-07-09_1025

Main Macro Events Today

  • China’s CPI grew at a 1.4% y/y pace in June, better than expected following the 1.2% pace in May that was the slowest pace since January’s 0.8% growth rate. CPI was a year peak of 1.5% y/y in April.
  • Australia’s employment rose 7.1k in June, contrary to an expected dip after a revised 40.0k gain in May (was +42.0k) The unemployment rate rose to 6.0% in June but from a revised 5.9% in May, leaving an unemployment rate that undershot expectations in June.
  • BoE Interest Rates Decision. Bank of England is expected to maintain the current level of interest rate at 0.5%. The BoE should once again announce a no-change outcome, which would be a non-event for markets as the central bank doesn’t normally issue statements after unchanged decisions, so we’ll have to wait until the minutes are published on Jul-22 for insight.
  • US Initial Jobless Claims are expected to decline slightly from the previous number of 281k to 275k.

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