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Morning Brief
At the London session open the US dollar is finding strength against the rest of the G7 currencies. The DXY has traded back up to the weeks opening price ahead of the US ADP Employment figures and Initial Jobless Claims.
Thursday is quite a full day for Tier 1 economic data as we receive the Final Markit PMI’s for German, UK and US services.
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The Australian dollar dropped at the European open after the Australian Trade Balance grew more than expected. The AUDUSD is back into the daily Ichimoku cloud which is acting as support for the current week. If the DXY was to keep strengthening into the end of the week and the NFP numbers tomorrow, the Aussie could break lower and signal the start of a bearish breakdown towards the 0.7600-0.7650 zone.
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The USDJPY is rising, which is helping to support the Nikkei 225, after reports came out that Prime Minister Suga is likely to call an election after the summer’s Olympics. The ActivTrader sentiment indicator is currently balanced with 52% of traders shorting versus 48% of the traders bullish the currency pair.
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In the overnight session Chinese data showed that services growth slowed during May. The Caixin China General Services PMI fell to 55.1 in May from a four-month high of 56.3 in April, still pointing to the 13th straight month of increase in the services sector. The PBoC have been successful this week in getting the Yuan to depreciate against the US dollar. The worse than expected data today has helped lift the USDCNH to 6.3907 with market structure likely to act as resistance at the February 2021 lows. The US plans to amend its list of Chinese military-linked blacklisted companies in the defence and surveillance technology sectors. The amended order is expected to be signed by Biden later this week and is still broadly in line with the previous administration’s actions.
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EUR/USD has embarked on a steady uptrend after defending the interim support near 1.1700 and the monthly 20 and 50 exponential moving averages. The pair is above the Ichimoku cloud on a monthly timeframe, which indicates upside momentum is still prevalent having broken higher at the end of 2020. The fib extension shows 1.338 would be a measured move on continued bullish momentum.
