Daily Report: Aussie and Euro Higher against Dollar and Yen
Aussie stages a strong rebound against dollar and yen today after stronger than expected retail sales report. sales jumped 0.7% mom in May, rebounding from prior -0.2% fall and beat expectation of 0.1%. The strength in consumer spending argues that prior tightening may not be enough to really slow demand and inflation. Technically speaking AUD/USD's up trend remains intact with pull back contained above mentioned 0.9492 minor support. Break of 0.9595 minor resistance indicates that an such pull back should be over and momentum is gathering for a retest of 0.9667 high. Nevertheless, markets could remain cautious ahead of Friday's NFP.
While most majors are still consolidative, Euro is quieting gaining some momentum against dollar and yen too. Today's PPI release from Eurozone, which is expected to show acceleration in producer inflation from 6.1% to 6.7% yoy will catch some attention. But main focus remains on tomorrow's highly anticipated rate hike from ECB and post meeting conference.
Talking about the main events of the week, Non-farm payroll tomorrow is definitely the another major focus. ADP employment report today will provide a preview to NFP. Markets expect the report to show that private sector lost -20k jobs in Jun, down from prior month's 40k expansion. Note that the ADP report lost some predictive power recently. Nevertheless, a disappointing report today, coupled with yesterday's deep contractionary reading in ISM manufacturing's employment component, will add further speculations that NFP on Thursday will disappoint.
EUR/USD Daily Outlook
Daily Pivots: (S1) 1.5734; (P) 1.5780; (R1) 1.5838; More
EUR/USD's rally from 1.5302 resumes today and is now pressing mentioned 1.5843 resistance. At this point, further rally is still expected as long as 1.5718 minor support holds. As discussed before, decisive break of 1.5843 will add favors to the case that consolidation from 1.6019 has completed with three waves down to 1.5302 already. Further rise should be seen to retest 1.6019 record high first. On the downside, though, below 1.5718 will argue that rise from 1.5302 has completed and EUR/USD could have started the final leg of triangle towards 1.5302 support to complete the consolidation from 1.6019.
In the bigger picture, a medium term top is in place at 1.6019 after meeting 1.6 psychological resistance. Subsequent sideway consolidation should be close to completion, if not finished already. As mentioned above, above 1.5843 will indicate that such consolidation has completed. Further decisive break of 1.6019 will confirm this case and bring rise to 61.8% projection of 1.4309 to 1.6019 from 1.5284 at 1.6341 first. On the downside, while another setback could still be seen before completing the consolidation, downside should be contained above 1.5302 support. Break of this support level is needed to switch to the case that price actions from 1.6019 are developing into deep correction to test 1.4966 cluster support.
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Economic Indicators Update
| GMT |
Ccy |
Events |
Actual |
Consensus |
Previous |
Revised |
| 1:30 |
AUD |
Australia Retail sales M/M May |
0.70% |
0.10% |
-0.20% |
|
| 8:30 |
GBP |
U.K. PMI construction Jun |
|
43.1 |
43.9 |
|
| 9:00 |
EUR |
Eurozone PPI M/M May |
|
0.90% |
0.80% |
|
| 9:00 |
EUR |
Eurozone PPI Y/Y May |
|
6.70% |
6.10% |
|
| 12:15 |
USD |
U.S. ADP employment Jun |
|
-20.0K |
40.0K |
|
| 14:00 |
USD |
U.S. Factory orders May |
|
0.50% |
1.10% |
|
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