Currencies Well Bid into London Fix; SELL EUR/USD @1.4180 (Midday Snapshot)


Currencies are well bid heading into the London fix, with broader risk appetite looking quite healthy as market participants also look to buy back into equities. The raft of economic data out of the US has come and gone and the result has been on the whole on the weaker side. The earlier releases of [B]MBA mortgage applications[/B], Challenger job cuts and ADP, were all discouraging, while ISM manufacturing and pending home sales were in line to slightly better. Finally construction spending was weaker than expected. The Canadian Dollar continues to outperform after showing some strong demand on the cross rates and tracking some 1.50% higher against the buck, aided by an impressive rally in oil prices. Meanwhile, the Yen is the underperforming currency, down some 0.32% against the USD on the day. All major US equity indices are well bid on the day, led by the DJIA, up some 1.50%. Commodities are also well bid with both oil and gold surging by 2.25% and 1.50% respectively.


Eur/Usd: Price action remains quite choppy as the market consolidates below the recent 2009 highs by 1.4340. We do not anticipate rallies to extend much beyond the 1.4175 highs from June 11, and will look to take advantage of a break above this level to establish a fresh short trade. The Average True Range (ATR) in the Euro comes in at 185 points and based off the current daily low by 1.4000, suggests that a potential high on Wednesday would be ideal by 1.4185. Strategy: SELL @1.4180 FOR AN OPEN OBJECTIVE, STOP @1.4360. Recommendation to be removed if not triggered by NY close (5pm ET) on Wednesday.

Written by Joel Kruger, Technical Currency Strategist for
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