2 Jul 2015
Kiwi weakest in Asia, ECB minutes, US Non-farm payrolls – Key events
FXStreet (Mumbai) - The latest series of impressive US fundamentals boosted the USD bulls, bringing them back in the driver’s seat with USD/JPY better bid above 123 handle. While Kiwi extends slide and reached fresh five year lows below 0.67 barrier in early moves. On the other hand, the Aussie ditched its Oz neighbor and edged higher despite downbeat domestic trade data.
Key headlines in Asia
Australia's trade deficit widens more-than-expected in May
New Zealand ANZ Commodity Price: -3.1% (June) vs -4.7%
Japan's giant pension funds to invest more aggressively in domestic equities
Dominating themes in Asia - centered on JPY, AUD, NZD
A low key affair in Asia, with the US dollar broadly lower on minor profit-taking following the recent upbeat US data-led strength. However, USD/JPY seems to be unperturbed and extends its positive momentum this session, as markets continue to cheer above estimates ADP employment, manufacturing PMI and construction spending data released on Wednesday.
The Kiwi remained near five year lows around 0.67 barrier, with downside accentuated by falling dairy prices as reflected by GDT price index released on Wednesday. Dairy products are the top exports of New Zealand. While the Aussie remained little affected by widening trade deficit numbers released today. Australia's trade balance came in at -2751M for May, which is below forecasts of -2200M.
Among the Asian indices, the Nikkei 225 in Tokyo jumped over 1% and now trades at 20529 largely driven by a weaker yen, while Australian benchmark the ASX 200 trades 1.50% higher at 5590.20.
Heading into Europe - centered on EUR, GBP
We have data-thin European calendar for today with UK’s construction PMI report and ECB’s monetary policy accounts of June 3 meeting expected to be the main highlights. While we expect Greece headline to keep flowing in, spurring volatility across the Fx space.
The UK construction sector reading is expected to stay well in expansion at 56.5, slightly better than the previous 55.9 result. While we have couple of speeches to look forward to - ECB President Mario Draghi is scheduled to deliver opening remarks at the T2S launch celebration organized by the ECB in Milan, Italy. ECB Executive Board member Yves Mersch is also scheduled to deliver closing remarks at the same event.
Moving ahead, we have most influential economic data of the week – the US non-farm payrolls data. Traders are optimistic of a better show today after Wednesday’s ADP employment data, the traditional teaser for the crucial non-farm payrolls increased to 237,000 in June. While for non-farm payrolls data, markets forecast about 230,000 new job creations in June, with the jobless rate sliding to 5.4%.Moreover, fresh figures for average hourly earnings will be eyed as well, for assessing when the Federal Reserve will begin to lift its interest rates.
EUR/USD Technicals
Dmytro Bondar, Technical Analyst at RBS explains, “The pair was trying to break below 1.10 and trigger a bear flag, but failed to do so, as Monday’s weak opening was quickly rejected and the pair sustained a level above the 1.1084 support. In my view, these levels provide an excellent risk/reward ratio for buying EUR/USD, as the risk level of 1.10 is very close, but potential target goes as far as 1.24. This is the ultimate target of a potential inverted Head and Shoulders pattern, which would be triggered on a break above 1.1450. If so, the targets will include 1.1850, 1.2090 and 1.2470. Stop is a close below 1.0965.”
Key headlines in Asia
Australia's trade deficit widens more-than-expected in May
New Zealand ANZ Commodity Price: -3.1% (June) vs -4.7%
Japan's giant pension funds to invest more aggressively in domestic equities
Dominating themes in Asia - centered on JPY, AUD, NZD
A low key affair in Asia, with the US dollar broadly lower on minor profit-taking following the recent upbeat US data-led strength. However, USD/JPY seems to be unperturbed and extends its positive momentum this session, as markets continue to cheer above estimates ADP employment, manufacturing PMI and construction spending data released on Wednesday.
The Kiwi remained near five year lows around 0.67 barrier, with downside accentuated by falling dairy prices as reflected by GDT price index released on Wednesday. Dairy products are the top exports of New Zealand. While the Aussie remained little affected by widening trade deficit numbers released today. Australia's trade balance came in at -2751M for May, which is below forecasts of -2200M.
Among the Asian indices, the Nikkei 225 in Tokyo jumped over 1% and now trades at 20529 largely driven by a weaker yen, while Australian benchmark the ASX 200 trades 1.50% higher at 5590.20.
Heading into Europe - centered on EUR, GBP
We have data-thin European calendar for today with UK’s construction PMI report and ECB’s monetary policy accounts of June 3 meeting expected to be the main highlights. While we expect Greece headline to keep flowing in, spurring volatility across the Fx space.
The UK construction sector reading is expected to stay well in expansion at 56.5, slightly better than the previous 55.9 result. While we have couple of speeches to look forward to - ECB President Mario Draghi is scheduled to deliver opening remarks at the T2S launch celebration organized by the ECB in Milan, Italy. ECB Executive Board member Yves Mersch is also scheduled to deliver closing remarks at the same event.
Moving ahead, we have most influential economic data of the week – the US non-farm payrolls data. Traders are optimistic of a better show today after Wednesday’s ADP employment data, the traditional teaser for the crucial non-farm payrolls increased to 237,000 in June. While for non-farm payrolls data, markets forecast about 230,000 new job creations in June, with the jobless rate sliding to 5.4%.Moreover, fresh figures for average hourly earnings will be eyed as well, for assessing when the Federal Reserve will begin to lift its interest rates.
EUR/USD Technicals
Dmytro Bondar, Technical Analyst at RBS explains, “The pair was trying to break below 1.10 and trigger a bear flag, but failed to do so, as Monday’s weak opening was quickly rejected and the pair sustained a level above the 1.1084 support. In my view, these levels provide an excellent risk/reward ratio for buying EUR/USD, as the risk level of 1.10 is very close, but potential target goes as far as 1.24. This is the ultimate target of a potential inverted Head and Shoulders pattern, which would be triggered on a break above 1.1450. If so, the targets will include 1.1850, 1.2090 and 1.2470. Stop is a close below 1.0965.”