EUROPEAN session review

Data released: 

06:00 GMT Germany Gfk Consumer Confidence Survey (Jun) 8.5 8.5 8.5

The euro bounced off the three-month low against the dollar.

The 18-nation currency fell before European Central Bank President Mario Draghi speaks at a forum in Portugal amid speculation the ECB will expand stimulus in June. 

The common currency fell below its 200-day moving average for a second day after protest parties racked up gains across the 28-nation European Union in elections to the bloc’s Parliament. The yen dropped to the lowest in a week versus the greenback as Bank of Japan Deputy Governor Kikuo Iwata said excessive gains in the currency are bad for the nation’s exports.

U.S. and U.K. financial markets are closed today for public holidays.

The euro has declined 1.4% in the past month, the worst performer after the Swiss franc of 10 developed-nation currencies The dollar gained 0.2% and the yen advanced 0.4%.

EURO

The euro has been sliding three days in a row, pressured by expectations of easier monetary policy from the ECB, and weaker than expected data out of some countries. 

Data released showed Germany Gfk Consumer Confidence index met forecasts (8.5) in June.

ECB’s Draghi said he saw slow consolidating recovery.

Protest parties surged in Greece, France and the U.K. in elections to the region’s Parliament, while Chancellor Angela Merkel’s bloc won the most votes in Germany. Merkel’s Christian Democratic bloc won 35.5%, the least since voters began choosing European Union lawmakers in 1979. 

EUR/USD posted session high around $1.3650. Initial resistance remains at $1.3770/80. Support comes at recent low on $1.3610 (also Feb 24 lows). Break lower will open the way down to $1.3560 (Feb 12 lows).

POUND

The pound rose a bit. 

GBP/USD holds near $1.6840. Initial resistance comes at $1.6920 (May 21 high). Strong support is near $1.6780 (trend line from Nov 11’2013). Below support comes at $1.6660 (Apr 15 lows).

YEN

BOJ’s Iwata said today that yen will appreciate if only Japan has deflation:

-excessive yen rises under deflation bad for exports;

-inflation target policy helps lessen hyperinflation fear;

-Japanese economy continuing moderate recovery, moving smoothly to end deflation;

-BOJ’s QE isn’t intended to rely on rise in import prices backed by yen’s fall to meet price target;

-BOJ will take appropriate steps in line with framework of it’s price target should economy overheat and inflation rises above 2%;

-role of monetary policy is to beat deflation and reach goal;

-BOJ to keep easing until inflation stable at 2.0%.

Bank of Japan minutes of April policy meeting showed:

-most BOJ members said they would examine risks and make appropriate adjustments to policy when necessary;

-exports have been somewhat weak;

-economy likely to grow above potential from summer;

-members agreed that it is important to implement the Abe government’s growth strategy to maintain sustainable growth.

USD/JPY retreated from Y102.00 to current Y101.85. Resisatance comes at Y102.00/10 (channel line from Apr 4) with a break above targets Y102.75 and Y103.40. Stronger one remains at Y104.30/80. Support comes at recent lows on Y100.80/70 (Feb 7 lows). Below losses may widen to Y99.50 (Nov 19’2013 lows).

COMMODITY CURRENCIES

KIWI

New Zealand’s dollar dropped versus all except two of its 16 major peers as government data showed exports exceeded imports by NZ$534 million ($456 million) last month, narrowing from a revised NZ$935 million trade surplus in March. Economists predicted NZ$634 million.

DATA AHEAD

There is no key data for today.

Source of information>>

More information>>