Forex Daily Wrap-Up: New highs for most USD pairs

on Jul 2, 2013

**EUR/USD** Tuesday July 2nd: In the late Asian session today the EUR/USD hit a three-day high at 1.3076. Following the latest Redbook Index releases, the pair retraced to a session low at 1.2988, decreasing 0.76 percent so far intraday.

The Eurozone PPI, released today, logged a fall of 0.1 percent year-on-year in May, compared with a fall of 0.2 percent in April. Month-on-month, the index was down by a seasonally adjusted 0.3 percent in May, against expectations for a 0.2 percent drop and April’s fall of 0.6 percent.

The latest Redbook Index carried annual and monthly sales readings for large American retailers for the week ended June 23. Year-on-year, the index was up slightly at 2.9 percent from the prior week’s 2.8 percent and on a monthly basis the index matched the prior week’s 0.5 percent fall.
At 15:00 BST the May reading of US Factory Orders came out, showing a rise of 2.1 percent to $485 billion, pretty much in line with expectations for a two percent rise. April’s reading was revised up to a 1.3 percent rise.

The greenback remains supported by yesterday’s upbeat US economic data and has traded higher against the other major peers today.
Yesterday’s updates had Construction Spending increased by 0.5 percent month on month in May, reaching its highest level in nearly four years. The ISM Manufacturing PMI rose to 50.9 in June from May’s 49.0 and the ISM Index of Manufacturing Prices rose to 52.5 in June from 49.5 in May.

Today’s Asian session saw the GBP/USD at 1.5215, with a downtrend developing from the beginning of European trading and seemingly unaffected by the latest UK economic updates. The quote has since fallen to 1.5135, its lowest rate since May 31.
Earlier in the day, the UK Debt Management Office held an auction for £3.5 billion ($5.32 billion) worth of 10-year gilts. The benchmark 10-year yield was little changed at 2.41 percent, with the price for the 1.75 percent security maturing in September 2022 being set at £94.63.
The UK construction purchasing managers index rose to a seasonally adjusted 51.0 in June, up from 50.8 in May but slightly below the forecast 51.1.
During today’s trading the US dollar has strengthened against the yen, with the pair finally breaking back through 100 to a two-month high at 100.42, an intraday increase so far of 0.82 percent.

The uptrend started in the Asian session with the latest release of Japanese monetary base and labour cash earnings updates.
Japan’s monetary base data was reported to have increased a record 36 percent in June, albeit missing expectations for a 41.2 rise. The country’s Labour Cash Earnings for May y/y came out at zero percent change, the same as in May and below expectations for a 0.6 percent rise.
Late in the European session, the US dollar traded slightly higher against the CAD with the quote edging up to a 21-month high at 1.0576, for an intraday gain of 0.72 percent since the Asian session opening at 1.0498.
With no Canadian economic data scheduled for the day, the pair was affected only by the day’s US releases.
Tomorrow at 13:30 BST, Statistics Canada is due to release the country’s May trade balance data.
The AUD/USD opened the Asian session today at 0.9240 but by late European trading the quote had fallen to a near three-year low at 0.9134, down 1.06 percent for the day so far.
The Australian dollar was again under pressure following announcement of the Reserve Bank of Australia’s decision to keep its key interest rate unchanged at 2.75 percent, intimating its view that the AUD has scope to drop further.
Tomorrow at 00:30 BST should see release of the Australian AiG Performance of Services Index update for June, followed by the May reading for the HIA New Home Sales, retail sales data for May m/m and Australia’s trade balance, also for May.
The greenback continues to find support in the ongoing speculation that an end is in sight for fiscal stimulus in the US, with attendant increase in bond yields. The dollar today climbed to a one-month high against the Swiss franc at 0.9528.
With a lack of Swiss economic updates today, the pair’s rise of 0.81 percent so far intraday is down to the day’s US updates.
Yesterday the SVME Swiss Purchasing Managers Index for June came out, showing a fall to a seasonally adjusted 51.9 from May’s reading of 52.2. The drop in manufacturing activity was at a slower rate than expected though, and the reading remains comfortably above the 50 mark separating expansion from contraction.
Swiss CPI data for June y/y and m/m is due to be released this Friday at 08:15 BST.


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