Forex Daily Wrap-Up: Active day for all majors

on Jul 3, 2013

**EUR/USD** Wednesday July 3rd:_ The EUR/USD started the day at 1.2973 and following the latest Eurozone PMI-Services updates for June dropped to a one-month low at 1.2921.

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A number of significant updates for the euro were released today.
Markit’s Italy Services index for June fell to 45.8 from May’s 46.5 and below the estimates for a rise of 47.0. German PMI – Services increased to 50.4 points in June, up from 49.7 in May but below market expectations for 51.3.
June’s Eurozone PMI – Services increased to 48.3 points, up from the prior month’s 47.2 points and slightly below the expected 48.6.

The Eurozone PMI – Composite climbed from 47.7 points in May to 48.7 in June, also slightly below expectations at 48.9.
Eurostat reported that Eurozone retail sales fell 0.1 percent in May y/y, an improvement on April’s one percent contraction and confounding forecasts of a two percent slide. The index rose one percent m/m in May, compared with the 0.2 percent drop in April and above expectations for an increase of 0.2 percent.

Later in the day ADP’s US Employment Change for June recorded an increase of 188,000 jobs, against May’s revised drop of 134,000 The United States’ May trade balance came out as an overall deficit of $45.03 billion, well up on April’s revised $40.15 billion.
Yet another update from the US had the ISM non-manufacturing PMI down to 52.2 in June from a reading of 53.7 in May, missing expectations for a rise to 54.0.

Tomorrow the annualised reading of Eurozone GDP for the first quarter of the year is due out at 09:00 BST, followed by the ECB’s Interest Rate Decision.
Being the 4th of July, tomorrow is the US Independence Day and banks in the country will be closed.
The Asian session saw the GBP/USD at 1.5149, but in New York trading the pound has held its ground against the dollar, with the pair rising to a four-day high at 1.5281.
UK shop prices for June were today reported to have fallen 0.2 percent on an annual basis from 0.1 percent in May, dropping for the second consecutive month and the biggest monthly fall since February 2007.

The UK services PMI rose to a 27-month high of 56.9 in June from May’s 54.9, indicating solid expansion in Britain’s services sector.
The Bank of England is due to release its Interest Rate Decision and Asset Purchase Facility at 12:00 BST tomorrow. Forecasts are for no change at 0.5 percent and £375 billion respectively.
In today’s trading so far, the US dollar has retreated to 99.24 against the yen, a current session low and an intraday drop of 1.5 percent, with yesterday’s push through the 100.00 mark looking increasingly historical.
The June reading of China’s non-manufacturing PMI – measuring construction, transport and telecommunications – came out earlier today, showing a fall to 53.9 from May’s 54.3. Later though, the HSBC Chinese Services PMI indicated modest expansion in business activity in June, with a rise to 51.3 from May’s 51.2.
Meanwhile the Nikkei average edged down to 14,059.20, to shed 0.3 percent intraday, while the broader Topix index eased 0.1 percent to 1,170.33.
Tomorrow at 00:50 BST Japan’s foreign bond investment and foreign investment in Japanese stocks are due to be released, with BoJ governor Haruhiko Koruda later speaking on monetary policy.
The USD/CAD started today’s Asian session at 1.0549 but during European trading the quote fell to 1.0516, an intraday low going into the tail-end of the day. This followed yesterday’s 0.72 gain for the pay, with a 21-month high of 1.0576 being reached.
Since today’s Canadian updates though, the quote has again risen, to a high for the day so far at 1.0562.
Canada’s trade deficit unexpectedly narrowed to C$303 million in May, well down from the C$951 million shortfall in April as merchandise imports fell 3.2 percent to more than offset the 1.6 percent decline in exports.
The pair started the day at 0.9137 and in early European trading descended to a three-year low at 0.9050.
The Australian dollar was again under pressure following statements by the Reserve Bank of Australia governor Glenn Stevens who said that the RBA’s governing board deliberated for “a very long time” before deciding to leave the cash rate unchanged and that the Australian economy would probably get a lower dollar “if it needed it”.
The AiG Performance of Services Index for June checked in today 41.5 points, up from April’s 40.6 but still well on the wrong side of 50, the reading which divides expansion from contraction.
Australian new home sales data were released later, showing a rise for a third straight month to a seasonally adjusted 1.6 percent in May m/m, to be at the highest level in 18 months after April’s 3.9 percent rise.
Australian retails sales for May came out at a 0.1 percent rise, below the expected 0.3 percent increase, but a recovery from April’s 0.1 percent fall.
Meanwhile Australia’s trade balance for May came out as a surplus of A$670 million, well up from April’s AU$171 million and confounding forecasts for a deficit of A$53 million.
In late European trading today, the USD/CHF recorded a session low at 0.9458, seeking to erase yesterday’s gains.
With the absence of Swiss news today and apparent market indifference to the latest US economic updates, the quote has continued to descend in New York trading to an intraday low at 0.9445 so far.
The most significant data for the quote this week is due to be released on Friday – Switzerland’s foreign currency reserves, plus annualised and monthly readings for June CPI.


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