Releases from Australia:
Forecast Actual
April Building Approvals (MoM) - 0.1% +7.8%
April Building Approvals (YoY) - 3.3% +5.2% In spite of a robust rise in building approvals the RBA announced an unchanged policy which had been expected. The CB commented that the current policy was appropriate for now and expects inflationary pressures to abate with the economy now seeing signs of moderation evidenced by softening retail sales & credit growth data. They made no hint of the timing of any future cuts which, while inflation remains at elevated levels, is unlikely to happen any time soon.
Releases from Japan:
Forecast Actual
May Monetary Base (YoY) - 0.8% - 0.9%
Very clearly the BOJ are maintaining the steady decline in the monetary base in line with their preference to prepare for normalization of interest rate levels. However, any interest rate hike is extremely unlikely at present until there are stronger signs of a recovery in the global economy. Given that is unlikely any time soon we can be pretty certain that the status quo will remain unchanged for the foreseeable future.
The following economic releases are due today:
Q1
Euro-zone GDP (P) (QoQ) +0.7%
Euro-zone GDP (P) (YoY) +2.2% April
Euro-zone PPI (MoM) +0.8%
Euro-zone PPI (YoY) +6.1%
U.S. Factory Orders (MoM) - 0.1% May
Swiss CPI (MoM) +0.4%
Swiss CPI (YoY) +2.4%
U.K. Construction PMI 45.8
There was a little more movement than expected yesterday and in some pairs price is really pushing the limits of some structures which means we really need keep and eye on these. The most obvious of these were in Dollar-Yen and Cable.
My preference for Euro-Yen to take a dive came through well and it took losses in Dollar-Yen to create that move. Overall, the decline in the latter is pushing the credibility of the 106.82 target but has not yet broken down the structure. Euro-Yen reached a decent support at 162.13 but this doesn’t look like being the end. However, in this case I suspect the Euro is due another attempt lower and it should be this that pushes Euro-Yen lower today. It should also prevent Dollar-Yen from gaining too far today and we’ll have to see how this develops. For a bullish move it really needs to move back above 105.25-50. As for the Euro itself, while just a little messy it has so far failed to break back above the 1.5588-1.5614 resistance and I still feel this should continue to be the case to provide the avenue for losses down to the 1.5409 area and it is from here we are likely to see a recovery – else look for a move all the way back to 1.5283. Now, the other pair that is pushing limits is Cable. That drop to 1.9596 is the most with which I can feel comfortable within a bullish scenario. It’ll need a break back above 1.9723 and then 1.9772 to provide ammunition for a push above the 1.9849 high. Until then there does seem to be an inherent risk of stronger losses – next major support is around 1.9498. However, overall, even taking in the Swissie I feel this should be a Dollar positive day but once we achieve targets the rest of the week could well turn soft again within a rather messy and erratic style of development that is normally the risk in larger sideways trading ranges.
Note important support and resistance areas:
USDJPY EURUSD USDCHF GBPUSD
Res: 105.50-86 1.5644-88 1.0425-49 1.9773-11
Res: 104.65-89 1.5588-15 1.0386-05 1.9677-95 Spt: 103.62-84 1.5460-85 1.0324-50 1.9566-96
Spt: 102.72-02 1.5385-09 1.0253-88 1.9478-98 | 
