US session review (02.07.2013): dollar gains grounds against the main rivals

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

13:45    US  ISM New York index (Jun)    47.0        54.4        

14:00    US   Factory Orders (MoM) (May)    2.1%    2.0%    1.3%

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.

The dollar has climbed 6.2% this year, the best performance among the 10 developed-nation currencies. The euro was the second-biggest gainer, rising 5%.

The yen dropped 9% in the same period, the largest decline on the gauge. The Aussie dollar was the second-worst performer, falling 7.2%.

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 under $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 has breaked above the Y99.90/00 (61.8%) and reached Y100.45/50. Break above will target Y101.20.  Below Y98.80 support comes at Y97.20, with a break under targets last Friday’s lows near Y96.90.

COMMODOTY CURRENCIES:

AUSSIE:  Australia’s dollar weakened as the Reserve Bank flagged declines in the currency after keeping borrowing costs unchanged at a meeting today.

“It is possible that the exchange rate will depreciate further over time, which would help to foster a rebalancing of growth in the economy,” Stevens said in a statement today.

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