Today's Currency Movers

EURUSD, Daily
The dollar has retained the perkier tone that established yesterday. EURUSD has been moving lower yesterday and this morning. The move has correlated with a fresh spike in Grexit concerns, though the ECB has stressed that it will not cut ELA to Greek banks should Greece miss an IMF repayment, while Draghi and others at the ECB have been stressing that the QE program will be fully implemented.

At the time of writing EURUSD is trading below the 23.6% Fibonacci level and at support created by a pivot candle. I pointed to this level in yesterday as a potential support and suggested we look for the correct price action to find long opportunities. At the time of writing price has not reflected strong buying interest but 4h Stochastics is deeply oversold and the level that turned price higher the last on May 11th is near. EURUSD is now at key levels. If price turns higher above 1.1131 and today’s bar closes above the rising trendline the daily technical picture maintains its upward momentum. If this doesn’t materialise then the next support level is at 1.1035. Nearest daily resistance level is at 1.1324



Currency Pairs, Grouped Performance (% Change)
This morning’s theme has been EUR weakness against all the currencies. The biggers movers have been EURNZD, EURJPY, EURCAD and EURUSD. The weakest of the lot, EURNZD, is falling lower from a 50 week SMA after creating a shooting star candle yesterday. EURJPY has moved to a pivot support while EURCAD is currently trading at 50 Fibonacci level (measured from May 5th low to the latest high) and EURUSD is also trading at a pivotal support. Therefore a bounce higher in EUR pairs could be in order today.

Main Macro Events Today

• RBA Meeting’s Minutes: Reserve Bank of Australia said May’s lack of policy guidance will not limit action that they deem appropriate at future meetings. The minutes to the May meeting, where they delivered an as-expected 25 bp cut to 2.0%, reference the February cut as another time where they did not offer guidance on the future policy path. On the Australian dollar, they not surprisingly said further deprecation is likely and necessary, a view that also found its way in to the quarterly Statement on Monetary Policy.
• RBNZ Inflation Expectations rose slightly in the second quarter remaining below the mid-point of the RBNZ target band. The survey showed business managers expected annual inflation to average 1.32 per cent over the coming year and two-year inflation expectations edged up to 1.85 per cent.
• UK Consumer Price Index and Core CPI: the headline CPI is expected to remain unchanged at 0.0% y/y in April. That would make it two consecutive months at zero after dipping from 0.3% y/y in February. The on-going impact of lower oil prices and the pound’s assent to seven-year highs against the euro maintains a benign outlook for price pressures. The core CPI is likely to remain at 1.0% y/y, unchanged from the prior month. PPI figures will also be released, where we expect -1.7% y/y figure in output prices.
• Eurozone Consumer Price index and Core CPI: At the end of April the ECB report highlighted the decline in inflation expectations has been halted and the numbers confirm that deflation risks have diminished, and that headline rates will continue to rise gradually amid stabilising growth and a weaker EUR and as negative base effects from lower energy prices fall out of the equation. No change is expected in either of the indices. CPI is expected come in at 0.0% and Core CPI at 0.6%.
• German ZEW Economic Sentiment: Eurozone GDP data showed a broadening of growth at the start of the year, but recent confidence indicators have been mixed and this week’s round of May ZEW, PMI and Ifo readings are likely to level off as concerns about the strength of the U.S. recovery, along with the slowing in Chinese growth, are weighing especially on investor sentiment. The headline ZEW reading is expected to contract to median 48.8 from 53.3.
• US Building Permits are expected at 1,055k in April from 1,042k in March. March of last year was the first time since June 2008 that starts broke above the 1,000k unit pace level before they set a new high in November.
• US Housing Starts are expected to climb 8.0% to a 1,000k unit pace in April following the 2.0% rebound to 926k in March. This compares to a recent high of 1,098k in July and a low of 521k in April ’09.
• BOC Governor Poloz Speaks on the topic “The Way Home: Reading the Economic Signs,” with a press conference to follow. The four-month high for the Canadian dollar will not be lost on the Bank, but accompanied by strength in crude oil. And data has not yet contradicted the Bank’s constructive outlook beyond Q1. It has been suggested that the Bank is seriously looking at raising its inflation target.
• Japan GDP: GDP growth was revised lower to a 1.5% pace (q/q) in the second preliminary Q4 report. No change is expected now and the GDP growth should come in at 1.5%.

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