US session review: Dollar surges

Data released (actual, consensus, previous):                   

12:30 GMT USA Initial Jobless Claims (Jun 15)   354K    340K    336K       

12:30 GMT USA Continuing Jobless Claims (Jun 8) 2.951M    2.960M    2.991M               

14:00 GMT USA CB Leading Indicator (MoM) (May) 0.1%    0.2%    0.8%       

14:00 GMT USA Existing Home Sales Change (MoM) (May) 4.2%    0.6%    0.6%        

14:00 GMT USA Existing Home Sales (MoM) (May)  5.18M    5.00M    4.97M        

14:00 GMT USA Philadelphia Fed Manufacturing Survey (Jun) 12.5    -0.2    -5.2

The dollar surged against counterparts as the Federal Reserve’s signal it is getting closer to reducing monetary stimulus pushed volatility to the highest in a year and spurred losses in carry trades.

A Bloomberg survey following the FOMC shows the consensus estimate is for the Fed to begin tapering in September by cutting back by $20B/month to $65B/month. The survey shows the consensus is for bond buying to halt completely in June 2014.

US data showed existing U.S. home sales rose 4.2% to an annual rate of 5.18 million in May, topping expectations for a pace of around 5 million and the Philadelphia Fed’s manufacturing index came in stronger than expected.

Earlier, data showed U.S. weekly jobless claims rose more than expected. U.S. jobless claims for the week ended June 15 rose by 18,000 to a seasonally adjusted 354,000, more than expectations of a rise to 340,000. The weaker-than-expected claims data gave more credence for the oil selloff.

EURO:

The purchasing manager’s indexes for the euro zone showed the region’s downturn eased in June. The composite output PMI reading climbed to a 15-month high of 48.9 from 47.7 in May, exceeding analyst expectations. The manufacturing PMI rose to 48.7 from 48.3 in May, marking the highest level in 16 months.

EUR/USD remain under pressure after yesterday’s selloff. Support is around $1.3170 (Jun 10 lows) and $1.3100 (Jun 6 high). Above $1.3300 and $1.3400 (initial resistance, Jan 14 highs) resistance comes at $1.3480, then - near $1.3540 (channel resistance line from May 29).

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.

GBP/USD remains under pressure with sup[port comes at $1.5380 (June  6 base and 50% of $1.5006-$1.5750).  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).

YEN:

The yen sharply rallied versus the US dollar.

USD/JPY managed to break above 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.

DATA AHEAD:

There is no key data for today.

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