Daily forex rundown: Euro, yen, Aussie & CAD

June 5, 2018 08:26 AM

Euro (June)

Session close (Monday, June 4): Settled at 1.1709, up 34

Fundamentals: The euro exhausted the downside last week in the face of the Italian crisis. We are now seeing a relief rally as political tensions in both Italy and Spain are seeing greener pastures, for now. Our most important takeaway is something that began Friday; both the wage and job growth components of U.S. Nonfarm Payroll beat, and ISM Manufacturing followed with a strong read, yet the dollar could not extend gains. Whether the case being the Euro exhausting the downside or the U.S Dollar the upside, the trade was due to come in.

Most importantly, this week will set a tone for next week’s Fed and then ECB Meetings. Tomorrow’s data will be more crucial than today’s snoozers. Eurozone CPI missed and U.S Durable Goods Orders, Factory Orders and Cap Goods Non-Defense were mixed. Tomorrow brings regional Services and Composite PMI data early before the Eurozone read at 3:00 am CT. U.S NFIB Small Business Optimism is due at 5:00 am CT. PMIs are at 8:45 am CT. The big reads of the day are ISM Non-Manufacturing and JOLTs Job Openings at 9:00 am CT.

Technicals: Major three-star resistance has been spot-on. Today’s tape reached a high of 1.1755 but could not hold out above. Still, this is extremely constructive price action to hold up above the 1.17 handle. Furthermore, today’s positive move clearly settled above a trend line from April 19th, where the selloff began. Minor resistance does come in just above but a close out above major three-star resistance and a continued close above will open the door for a test.

Yen (June)

Session close: Settled at .91195, down 20

Fundamentals: The yen has given back all of last Tuesday’s gains from the Italian crisis. Rising U.S. Treasury yields on the calming of those fears and strong U.S economic data coupled with a push higher in U.S. and Asian equity markets has been a detriment to the safe-haven yen. Household Spending data is due out of Japan tonight at 6:30 pm CT and we will look to a slew of U.S data tomorrow. The Bank of Japan, the ECB and the Federal Reserve all meet next week. Trade will remain in the headlines as the G7 Summit nears and boiling tensions would be a catalyst for Yen strength.

Technicals: After spiking to a high of .9261 on last Tuesday’s session, price action struggled to hold first key resistance at ...  Please sign up for a Free Trial at Blue Line Futures to view our entire technical outlook and proprietary bias and levels

Aussie (June)

Session close: Settled at .7654, up 84

Fundamentals: The Aussie was the Tradable Events this Week, if you missed it, please click this link. Economic data has begun to turn a corner for Australia and Retail Sales beat Sunday night. The currency finished a strong session on the heels of our bullish outlook. Still, tonight’s RBA monetary policy meeting at 11:30 pm CT will be crucial, but we believe the downside to be limited; pullbacks are buying opportunities.

Technicals: Price action broke out above the .76 mark and traded to what is now key resistance at .7644-.7660.

Canada (June)

Session close: .77365, up 24.5

Fundamentals: The Canadian notched a solid session despite weakness in crude oil. The real driver for strength today was continued weakness in the U.S. dollar. This comes on the heels of a strong Nonfarm Payroll report. Instead, the Fed’s rate hike expectations have dissipated a bit with a more dovish tone from officials coupled with geopolitical uncertainties. During this time, the Bank of Canada has signaled the potential for a July rate hike. Data beginning Wednesday with Ivey PMI will be critical in confirming this strength.

Technicals: Price action is finding first key support and building a base. 

About the Author

Bill Baruch is President and founder of Blue Line Futures, a leading futures and commodities brokerage firm. Bill has more than a decade of trading experience and focuses on developing trading strategies for both long and short-term trading approaches. Prior to Blue Line, Bill was the Chief Market Strategist at iiTRADER.  Bill is a featured expert on CNBC, Bloomberg and the Wall Street Journal as well as other top tier publications.