ASIA session review (02.07.2013): Dollar gains vs Yen; Aussie weakens

Data released (actual, consensus, previous):           

04:30 GMT Australia RBA Interest Rate Decision (Jul 2) 2.75%    2.75%    2.75%        

04:30 GMT Australia RBA Rate Statement                   

07:00 GMT Spain Unemployment Change (Jun)  -127.2K    -83.5K    -98.3K        

08:30 GMT UK  PMI Construction (Jun)  51.0    51.1    50.8   

The dollar climbed to the highest in almost a month against the yen as signs of improvement in the U.S. economy buoyed speculation the Federal Reserve will start scaling back asset purchases this year.

The greenback approached the strongest level in almost a month versus the euro before a report economists said will show factory orders gained by the most in three months. Data this week is forecast to indicate a drop in the unemployment rate as companies in the world’s biggest economy continued to add jobs.

Companies in the U.S. added 160,000 workers last month after increasing positions by 135,000 in May, analysts predict before a report tomorrow by ADP Research Institute.

The dollar has climbed 6.2% this year. The euro rose 5$%. The yen dropped 9% in the same period, the largest decline on the gauge.

EURO:

Despite the positive news from the Spanish labour market, where the Unemployment Change surprised investors dropping by 127.2K during June, the shared currency keeps ignoring the calendar or events ahead of the ECB meeting on Thursday.

EUR/USD holds above $1.3000 with initial support comes at recent lows on $1.2980. Below support comes at $1.2960 (Apr 24 and Jun 3 lows) и $1.2840 (May 29 lows). Key support remains at $1.2800 (May 17 low). Resistance comes at $1.3100 (Friday’s high). Above gains may extend to $1.3160 (Jun 20 lows), then - at $1.3255/60 (Friday’s high) and $1.3300 (Jun 6 high).

POUND:

Data released showed UK PMI Construction increased to 51 points in June, from 50.8 points in May. The result is slightly below market consensus of 51.1 points.

GBP/USD remains under pressure, despite the recovery from Friday’s lows on $1.5160 (initial support). Below losses may widen to $1.5140 (May 24 high and May 31 lows), then - to $1.5000 (May 29 lows). Initial resistance comes at Friday’s high on $1.5280, then - at $1.5340 (Thursday’s high), then - at $1.5400 (Wednesday’s high), then - at $1.5450/60 and $1.5530 (Jun 21 high).

YEN:

The yen continued to slide despite the yesterday’s Bank of Japan’s quarterly tankan survey showed a sharp improvement in sentiment at large businesses.

USD/JPY tests Y99.90 after breaking above the Y98.80 resistance (50% Fibo of the Y103.80- Y93.80 decline) yesterday and retreated a bit. Above resistance comes at Y99.90/00 (61.8%). Below Y98.80 support comes at Y97.20, with a break under targets last Friday’s lows near Y96.90.

COMMODITY CURRENCIES:

AUSSIE: The Aussie has been extending its decline post the RBA rate decision, as traders disccount further rate cuts by the central bank going forward.

Amid expectations that the rate would be on hold, all the focus was on the wording used by the RBA. Unfortunately for the anxious bulls, there was no surprise on the dovish tone either, with the RBA repeating the old line "the inflation outlook, as currently assessed, may provide some scope for further easing, should that be required to support demand."

What is worse, the RBA stated "The Australian dollar has depreciated by around 10% since early April, although it remains at a high level", which was a hint that despite the dramatic fall, the currency is still not low enough.

DATA AHEAD:

At 14:00 GMT US reports May Factory Orders. Analysts predict 2.1% rise after 1.0%.

At 23:30 GMT Australia issues Jun AiG Performance of Services Index.