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Article / 02 June 2014 at 15:10 GMT

FX Board for June 2, 2014: USD pulling stronger versus the smalls

Head of FX Strategy / Saxo Bank
Denmark
By John J Hardy

Today’s developments in the major currencies are, after somewhat weak CPI and PMI survey data out of Germany and a stagflationary May ISM Manufacturing report (high prices paid and lower than expected overall survey reading) out of the US, as follows: 

  • Euro and EURUSD in a holding pattern after mixed data and as we await ECB.  
  • USDJPY rally sees some follow through higher after downside twice failed to develop recently – keeping outlook strategically uncertain. 
  • AUDUSD ripped lower on weak housing data – key 0.9200 area support not far away as RBA approaches tonight. Trending measures slipping into negative for both short and medium term and now we look for whether we see follow through. 
  • USDCAD rallied from recent support, posting nice bullish reversal, but 1.0925 is the next area that needs to give way if we’re to see something bigger to develop to the upside. 
  • EURNOK poking at a key resistance zone – could be a rapid squeeze through here if oil continues to sell-of and the G-10 small currencies remain broadly weak. This would put it back in the old range. 

USDJPY

USDJPY failed to push lower after the recent break of range support and has rallied a bit, although the next key-resistance area is rapidly approaching as the Ichimoku cloud lower boundary at 102.40 (top boundary at 102.65) swings into view. The action could remain very nervous until the other side of this Friday’s US employment report.

USDJPY


























Source: Saxo Bank

AUDUSD

A sharp sell-off today as we look toward the key 0.9200 area that will stand or fall around the Reserve Bank of Australia  tonight. There seems to be an interest in selling emerging market currencies and the less liquid G10 today.

AUDUSD


























Source: Saxo Bank

USDCAD

A chunky rally today, but we’re still in the range and need to take out the 1.0930-40 resistance with confidence to bring the higher range into play back toward the 1.1200-plus top.

USDCAD


























Source: Saxo Bank

EURNOK

The less liquid major and minor currencies did poorly today, including NOK, as the EURNOK bounce is trying to become a rally and is focusing now on the key 8.1750/8.20 zone. A squeeze is a risk if this focus on selling the less liquid currencies continues and if oil continues to sell off.



























Source: Saxo Bank

-- Edited by Martin O'Rourke

John J Hardy is Head of FX Strategy for Saxo Bank. Read more of John's commentary here.



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FX Board for June 2, 2014

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