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EUR: Eurozone finance ministers meet later in the day, but there are no potentially market-moving events are on the agenda.   Nevertheless, there always remains the risk of stray comments from finance ministers impacting the single currency.

USD:  Retail sales are seen falling 0.3% in April, after a 0.4% fall in March.   Firmer data should be dollar supportive, although the positive relationship between strong data and the dollar has been declining recently.

Idea of the Day

The forex market has been breaking down barriers over the past few sessions following on from a period of reticence. The break above 100 on USDJPY has been given further impetus by the noises from the G7 meeting over the weekend in which they re-iterated their February commitment not to target exchange rates and made no noises of concern regarding the yen.

At the same time, we’ve seen the Aussie break out of the broad 1.02-1.06 range that has held in place for the past 10 months now, pushing below parity at the end of last week.   We’ve also seen AUDNZD reach levels not seen since late 2009.   These moves are worth keeping a close eye on for this week, because a continuation could well see long-term players change their view, especially on the Aussie which has continued to defy calls for a weakening over many months.   The question is whether we are looking at the sort of re-assessment seen on the yen over the past 6 months. Most likely not, but there could be some parallels.

Latest FX News

JPY:  The move higher on USDJPY has continued, with 102.15 high marked out at the start of the week.   The weekend G7 meeting did nothing to stand in the way or criticise the weaker yen, removing another hurdle to further yen weakness.

AUD:  Still flirting with the parity level vs. the USD and trading slightly softer during the Asia session.   Data on home loans was on the firm side, rising 5.2% MoM.   NAB business confidence data came in to the soft side though.   A sustained break through parity would likely see more liquidation of Aussie longs from bigger long-term players.

GBP:   Holding its ground, with the latest forecasts from business group the CBI sounding more optimistic on the economy.   Near term resistance is seen at 1.5412.

EUR: A steady Asia session with EURUSD holding below the 1.30 area.   EURJPY reached a high of 132.40.

Further reading: EURUSD weekly outlook.