Midmorning checkup on the markets today shows some bearish volume toward the dollar on more threats from North Korea and weaker than expected U.S. economic data from PPI (-0.1% v 0.1% forecast) and Initial Jobless Claims (244k v 240k forecast).
USD/JPY saw strong declines from the opening, down about 70 pips to the 109.35 level. The pair is expected to see further declines throughout the day and quite possibly through tomorrow’s CPI report, should the report come in weaker than the expected 1.7%. Initial support can be found at the 109 handle, after which we may see a decline to the June 14 low of 108.80 followed by the April 17 major low at 108.133.
The NZD/USD pair had a delayed reaction to the RBNZ commentary yesterday and initially saw a strengthening of the kiwi. However, several hours later, the affects of central bank’s dovish stance took hold and saw the pair down some 100 pips from the initial high. The kiwi saw a break of the 73 cent handle falling as far as 725 before retracing up a bit to settle around the 728 level. Further pressure is expected as this is only the first day after the dovish press conference from the RBNZ. Expect to see the 725 level again followed by the 72 cent handle in coming weeks.
In Europe, the pound and euro are seeing a consolidation period it appears, based on the continuing threat from North Korea and the weak U.S. data. Investors are holding position as these events unfold and we still have yet to see CPI numbers, set to be released Friday morning. Depending on which way the numbers go will likely determine the trajectory of the major currency pairs, particularly the dollar, for the next few weeks as the markets go quiet in recess
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