EUROPEAN session review: sterling dropped despite data

Data released (actual, consensus, previous):                     

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    

09:00 GMT EMU PPI (May)  -0.3% m/m, -0.1% y/y

The greenback approached the strongest level in almost a month versus the euro and rose versus yen and pound. 

The focus now turns to US data again, with the monthly non-farm payrolls number out on Friday. The number has been given added impetus by Federal Reserve chairman Ben Bernanke, who said he would start tapering off the US quantitative easing programme as soon as data, and employment numbers in particular, allows.

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 amid rising EUR/GBP. 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. 

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.

DATA AHEAD:

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