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Euro Takes It On The Chin

The EURUSD major was especially active on the day, making it into the top three market movers in the North American session.  The main culprit behind the move seemed to be Euro weakness stemming from weaker than expected economic figures and some cross pair liquidation through the EURJPY.  According to Eurostat, the regions statistics office, the Euro-Zone trade balance is sporting a considerable deficit compared with a positive surplus just witnessed last year at the same time.  This is even more bearish when considering the fact that the emerging export market in <?xml:namespace prefix = st1 ns = "urn:schemas-microsoft-com:office:smarttags" />Europe is basically what is keeping the economy churning ahead.  As a result, this should place some added weight to the recent downtrend in the pair during the week with a limited number of European based reports to spark any reprieve.  Notably, the market will be looking ahead to tomorrows housing data report.  Although the market remains bearish on the sector due to the NAHB reading that fell to a 42 print, some stabilization can be expected on sustained residential demand.

Rumorville

Buyers coming in heavy at 1.2550 are continuing to prop up the spot price as we head into the Asian session.  Further bidding runs deeper all the way down to the figure at 1.2500 with stops tightly below the price.  Comparative selling is keeping the pair from making any potential gains with heavy sellers at 1.2610.

EURCAD

Traders Position For CPI Tomorrow

Contrary to the days commodity fluctuations, the Canadian dollar gained momentum against the Euro following pessimistic figures regarding the Euro-zones trade balance.  Positioning ahead of tomorrows consumer price index report, traders are looking to side with a stronger Canadian figure against German producer prices which look have pulled back slightly in May.  Previously rising a whole percentage point in the previous report, prices at the producer level are expected to climb by only 0.3 percent in the monthly comparison.  Comparatively, Canadian consumer prices are estimated to have risen once again, purporting a whopping 2.7 percent annualized measure.  Rising ever closer to the upper end of the Bank of Canadas target benchmark, the figure, should it rise once again, could spark further speculation of near term monetary tightening.  Contributing to the loonie strength was rumored USDCAD buying by a Canadian pension fund which trickled into the cross.

Rumorville

With orders set in the Euro major, Canadian dollar buying remains heavy with USDCAD major offers at the 1.1255 and 1.1300 figures.  Bids are considerably lower at 1.1190.

CHFJPY

Data Enormously Positive For CHF

Rumors of North Korean missile tests weighed on the Japanese yen along with the current scandal involving Bank of Japan Governor Fukui all throughout the North American session.  Meanwhile, comparative positive economic data spelled strength for the Swiss economy, creating a bias as interest rates are likely to rise faster in the region.  For the record, first quarter industrial production was higher by a whopping 9.2 percent as orders bolted higher by 15.5 percent.  The figures purport further speculation that Swiss National Bank Chairman Roth will be considering another round of rate hikes as expansion and growth are likely to boost consumer prices.  However, a shift of sentiment for the cross may turn as the Bank of Japan monetary policy meeting minutes are set for release in the overnight.  Any suggestions that policy makers are done adjusting liquidity may spark a near term bid bias for the yen as expectations run high for a hike decision as early as next month.