EUROPEAN session review: the main currencies extend losses

Data released (actual, consensus, previous):                    

06:00    DE    EUR    Producer Price Index (MoM) (May)    -0.3%    -0.1%    -0.2%         

06:00    DE    EUR    Producer Price Index (YoY) (May)    0.2%    0.3%    0.1%         

06:00    CH    CHF    Trade Balance (May)    2,224M    2,410M    1,698M 

07:28    DE    EUR    Markit Manufacturing PMI (Jun)Preliminar    48.7    49.8    49.4         

07:28    DE    EUR    Markit Services PMI (Jun)Preliminar    51.3    50.0    49.7         

07:30    CH    CHF    SNB Interest Rate Decision (Jun 20)    0%    0%    0%         

07:58    EMU    EUR    Markit Manufacturing PMI (Jun)Preliminar    48.7    48.6    48.3         

07:58    EMU    EUR    Markit PMI Composite (Jun)Preliminar    48.9    48.1    47.7 

08:30    UK    GBP    Retail Sales (YoY) (May)    1.9%    0.2%    0.8% 

08:30    UK    GBP    Retail Sales (MoM) (May)    2.1%    0.8%    -1.1% 

08:30    UK    GBP    Retail Sales ex-Fuel (MoM) (May)    2.1%    0.9%    -1.2%     

08:30    UK    GBP    Retail Sales ex-Fuel (YoY) (May)    2.1%    0.5%    0.6%

The main currencies extend its losses after Federal Reserve Chairman Ben S. Bernanke said the bank may end bond purchases next year if the economy strengthens in line with forecasts. 

The Federal Open Market Committee yesterday left the monthly pace of bond purchases unchanged at $85 billion, saying that “downside risks to the outlook for the economy and the labor market” have diminished. Policy makers raised their growth forecasts for next year to a range of 3 percent to 3.5 percent and reduced their outlook for unemployment to as low as 6.5 percent.

EURO: remain under pressure after yesterday’s selloff caused by Bernanke’s speech. Weak European PMI data added pressure on the common currency. 

EUR/USD tested support at $1.3170 (minimum June, 10) and bounched back. Nest support EUR may find at $1.3060. Nearest resistance is at $1.3300, more - at $1.3400.

POUND:

U.K. retail sales including fuel rose by 2.1% last month after slipping by 1.3% in April. 

Sterling has strengthened 3.3% in the past three months, the best performer after the euro among 10 developed-market currencies. Europe’s common currency gained 3.5% and the dollar advanced 0.8%. 

GBP/USD is consolidating in $1.5450 area. Initial resistance comes at recent high on $1.5670, extending to channel line at $1.5730. Next resistances could be found at $1.5765 (Feb 7 high) and $1.5800 (psychological level). Break under session’s lows will widen losses to $1.5380 (June  6 base and 50% of $1.5006-$1.5750).

YEN:

Asian markets tumbled, with declines deepening after China’s interbank interest rates climbed and a preliminary survey showed a slump in manufacturing. 

USD/JPY remain near Y98.00. The upside move is targeting Y98.80, for a close above Y99.00 and to reach the psychological Y100.00 the June highs. Minor support placed at Y96.00, ahead of Y95.00

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