EUR

Dollar Falls Victim To Global Growth Fears

US weekly jobless claims rise to 472,000; worse than expected
ISM manufacturing index falls to 56.2 in June from 59.7 in May, weaker than expected
US pending home sales tumble 30% in May from April as home-buyers credit expires
US equities recoup most of big early losses, end 0.3% lower at 1027
US Treasury yields rebound after making new trend lows; end at 2.95% from 2.88% intraday
Gold tumbles $45, closes at $1197.50; oil falls $3.00 to $72.70

EUR/USD traded nearly vertically today, vaulting 1.2400 in early US trade and the important 1.2500 level late in the session. The roots of the rally arent exactly clear. The very well-entrenched correlation between the EUR and the S&P broke down utterly today. Whether the break is permanent or a temporary phenomenon, only time will tell. BoYAH!!!!

Weak US data is usually associated with risk off but today we saw the reverse as the dollar fell across the board. The dollar index broke important technical support during the morning and the euro broke similar resistance near the close, suggesting a medium-term dollar top/EUR bottom is in place.

Some suggest hedge funds were forced out of EUR shorts and gold longs today to fund positions in other markets. Others suggest that despite seeming calm in European money markets as the LTRO expired today, tensions remain that forced banks to buy euros in the market that they are unable to buy elsewhere. Others see weak US data as simply making the dollar a less appealing safe-haven from European woes and fears of a Chinese slowdown than previously, while austerity puts Europe in a better light. Choose youre favorite cause Im baffled. I vote none of the above.

USD/JPY fell as low as 86.95 after the US data but talk of very large bids from semi-official Japanese accounts as well as rumors of BOJ rate checking helped set off a short-covering bounce. A rebound in US yields also contributed to a recovery in USD/JPY as the day wore on. We end at 87.65. Sellers are seen at 87.95/00 and 88.20/25.

EUR/JPY made a double bottom around 107.30/50 and closes at 109.73, helping sustain the euro rally late in the day.

Cable rallied along with the EUR, reaching 1.5190 toward the close, a modest improvement on 1.5165 London highs. EUR/GBP rallied, slowing Cables recovery. It ends t 0.8250 from 0.8215 US lows.
Commodity currencies rallied but lagged the pace. Global growth fears are being fueled by the rapid US slowdown and fears China could follow suit. If the US and China slow, how will a debt laden Europe fare? Not good.

USD/CAD ends down at 1.0590 from 1.0660 highs after the ISM data. AUD is at 0.8435 after finding support at the 8350/55 area post-ISM.

Hedge funds were EUR/CHF buyers today, covering shorts. Some suspected the SNB was in as well, though it seems unlikely theyd want any more EUR/CHF, thank you. We did a 1.3230/1.34 moonshot at one point and end at 1.3270.

EURAUD after days of testing, resisting and breaking 1.4070 barrier, the pair takes off and yes it has finally open ways for a leg above higher than May's high after testing it early in the month. Above 1.4965 will confirm that May's retest. While EURCAD still firm broke 1.3135 barrier well in form which does firmly suggest that pair can easily test its 1.3676 68.1% retracement level. Though I disagree that we will see a run clearly up there, may well be a deep sell off from 1.3550 area. EURCAD along with CADJPY, GBPAUD, GBPCAD each yielded 400 to 900 points each over a period of 14-15 days. We can look for same pairs to shake off confidence in some bears.

Pipster - care to share the requirements? I'm still on hold and considering it

Hey Pipster -

Yeah, it looks to be holding strong - but I feel if it holds, I'll still have time to short it, if it breaks out to the upside - it's off to the races. I'm going to wait a bit and see what Asia brings.

On the Euro/Dollar daily chart there is an inverse Head & Shoulders pattern in play - starting from mid-May 2010 - which may bring Euro/ Dollar near to 1.28 levels.

Do you have any comment/view on such case?

just that euro will stay a funding currency in carry trade
the dynamic in regional blocs implies that the equilibrium point in the asia pac "battle" is not finished yet. the term "for an extended period of time" as long as the critical debt is not reached but the usa is reaching it soon.
the rally in eurusd can go as far as 1.27ish 1.30 without impacting the overall downtrend. expect a rebound in SP but short lived
on the commodities side currencies, i will keep a closer look on what is happening to OIL especially at the 73.75 level reach today. a clear break below this level might signal fresh seller in comm ccry and flight to safe heaven one like swissie and yen.
playing SEK NOK DKKpositive against euro.