The Hightower Report

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DOLLAR: The Dollar has unable to sustain any sort of recovery today, and has fallen back towards the lows of yesterday’s selloff. The global rebound in equity markets continues to dampen general risk concerns, which in turn has kept the Dollar under pressure this morning. While yesterday’s Consumer Confidence number managed to lift some of the gloom toward upcoming US economic prospects, there will be an increasing focus put on tomorrow’s US Employment report during today’s session. Even if today’s data comes in fairly positive, there may be some reluctance from the market to make any strong Dollar moves before tomorrow’s numbers are heard from. The Dollar is likely to be weak during the balance of today’s session, but should find support near the 82.25 area today, as the market waits for tomorrow’s numbers.

EURO: The September Euro has been able to continue with a recovery, supported by decent Euro zone economic data, as well as some well-received debt auctions from France and Spain today. Even with the positive tone for the September Euro, it may be difficult for prices to travel far to the upside with the shadow of tomorrow’s US Employment data hanging over the market. There may be an additional boost for the September Euro, if news from today’s European Central Bank meeting produces no surprises, but a large extension of this current rebound may have to wait until US Employment data comes out tomorrow. The September Euro may see a test of the 1.2860 level post-ECB meeting, but that may be as far as today’s strength can take the market.

YEN: While the volatility in the September Yen appears to have calmed down, the uncertainty has not as prices continue to hold their ground near the highs for the move. Although comments by the probable challenger to the Japanese Prime Minister may project a more aggressive attitude towards weakening the September Yen’s current strength, the Bank of Japan will likely have the final say when stronger measures will be applied to their problem. The erosion of safe haven support due to the global equity rebound may keep any gains for the September Yen under control, at least until tomorrow’s economic data is out of the way. Look for the September Yen to drift back towards the 119.00 resistance level during the course of today’s session, but prospects for a large downside move will increase later on this week, so a move back to today’s highs may be used as an area to enter into long put option strategies.

SWISS: A strong Swiss GDP number this morning has been able to support the September Swiss this morning, which has been weakened by the loss of safe-haven support from the global equities rally. The swift pullback from yesterday’s rally above the 99.00 level may be an indication that the September Swiss may be topping out, particularly with the threat of intervention from the Swiss National Bank, if they feel the market has become too strong. The September Swiss should continue to remain well supported, but look for a move back towards the 98.25 level before considering the long side

POUND: A weak private survey of UK housing data has added to the pressure on the September Pound, which has moved back towards the lower end of this week’s trading range. The recent contrast with UK and Euro zone economic data has not been to the September Pound’s benefit, even as the longer-term UK economic situation remains fairly positive. Look for the September Pound to move towards support near the 1.5350 level, but it should hold at those levels unless there is a major reversal in global equity market strength today.

CANADIAN DOLLAR: Calmer market conditions continue to support the Sept Canadian, even as recent Canadian economic data has lost its upbeat outlook. Given the recent volatility with the Sept Canadian, a consolidation at these levels may be of some benefit as there will likely be a large reaction to tomorrow’s US Employment numbers in any case. Look for the Sept Canadian to find support near the 95.00 level, but a strong move above this trading range may wait until tomorrow’s numbers are out of the way.

TODAY’S MARKET IDEAS: The Dollar may remain weak during today’s session, but any big moves are likely to wait for tomorrow’s US Employment numbers. The September Swiss should continue to remain strong, but a pullback towards today’s lows should be considered before entering the long side.

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DOLLAR: While the Dollar has not seen much in the way of sharp movement during overnight trading, prices have held their ground so far this morning. With little in the way of recovery from global equities, there may be some residual safe haven support holding with the Dollar going into today’s session. Today’s set of US economic numbers may not have the potential to disappoint the market as badly as yesterday’s Existing Home Sales number, so the amount of further flight to quality for the Dollar may be limited at best. With US longer-term yields continuing to hold at historically low levels, the Dollar may be hard-pressed to hold on to this week’s strength for an extended period. For today, the Dollar should find resistance near the 83.60 level but the market may see a pullback over the next few days.

EURO: After a quick run higher in the wake of a surprisingly good business sentiment number from Germany, the September Euro has given back ground and drifted back into negative territory. Yesterday’s late downgrade of Irish sovereign debt continues to cast a long shadow, but cannot have come as too much of a surprise given the ongoing debt problems within EU peripheral nations. Even so, it may take more than improving sentiment to lift the market above and beyond this recent down move. Look for the September Euro to find support near the 1.2625 level, but any stronger move lower will need additional news to trigger it.

YEN: While there has been an expected pullback from the lofty highs of yesterday, the September Yen remains well into 15-year high territory going into the opening. Rhetoric from Japanese officials has had little effect in turning the September Yen’s direction around, but last night’s lackluster trade number may be a quick reminder of how damaging a stronger Yen could be to Japanese exports. The markets may be goading Japan into some concrete action, but until that occurs the September Yen is likely to hold these levels. If they do take some sort of action, then long put strategies are likely to start accumulating value in a hurry.

SWISS: The problems from the Euro zone have been able to lift the September Swiss up close to new high ground this morning, but the market appears to be reluctant to break through to the upside just yet. The market may not have much longer to wait, as Swiss economic numbers later on in the week should help to confirm a relative advantage over the rest of Europe. Look for the September Swiss to find resistance near the 97.50 level, but any pullbacks could be seen as buying opportunities by more aggressive traders.

POUND: There has been little in the way of recovery from the September Pound, which remains down near the low end of the recent sell off. While decent UK economic numbers have been there for a while, sentiment needs to improve dramatically in order to turn the market back towards the upside. Look for the September Pound to find support near 1.5375 level this morning, but we may need to see even stronger global equity markets before the Pound can turn itself fully around.

CANADIAN DOLLAR: The Sept Canadian continues to erode, but at least has avoided testing yesterday’s spike lows so far today. The benefits from the attempted hostile takeover of Potash have been eroding as well, with the elevated risk concerns and weak Canadian data keeping the Sept Canadian squarely on the defensive. Look for the Sept Canadian to find support near the 94.00 level today, but the market will need to send some signs of strength from the Canadian economy before a distinct turn back to the upside can be contemplated.

TODAY’S MARKET IDEAS: The Dollar may hold this current safe haven support today, but any sort of rebound in global equities leaves the market vulnerable to a pullback. The September Swiss appears to be on the verge of posting new highs this morning.

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DOLLAR: The Dollar has been able to move away from 2-month lows, and it also hasn’t shown any inclination to make any sort of extended recovery. Equity markets have held their ground and might try to move higher again today and that has kept the Dollar off balance. As tensions continue to ease going into the weekend, it may be increasingly difficult for the Dollar to make a dramatic turnaround from its current downward drift. There is always the chance of a surprise news item sending the markets into frenzy, but what currently is on the near-term horizon does not appear to have the potential impact needed to change sentiment on a summer Friday. As long as the tone of the markets remain subdued, the Dollar may grind its way lower with any upside potential capped at the 84.25 level, as the markets finish out the week.

EURO: The Sept Euro has not been able to hold near the 1.27 level so far today, but it does look set to finish out the week in a much better position than it held at the end of June. Recent bank stress tests new items have helped to revive positive sentiment for the Euro zone, even if their criteria may not have been as stringent as the market would have hoped for. With the risks of a debt contagion still being dampened, the Sept Euro should be able to hold these current levels but an end-of-week liquidation move lower is certainly not out of the question later today. Look for the Sept Euro to descend towards support at the 1.2625 level, but the current up move will likely remain intact going into the weekend.

YEN: The Sept Yen continues its tumble from recent highs, and is clearly on the defensive this morning. Although the erosion of safe-haven support has been a key factor, the increasing likelihood that the current government will suffer a setback in upcoming Japanese elections has also weighed on the Sept Yen. While the chances are that this sell off gains momentum next week, the Sept Yen may be limited today to a move towards support around the 112.50 area.

SWISS: Although there has been no major change in the fundamentals, the Sept Swiss has come under pressure this morning, as profit-taking has sent prices away from the highs. The rapid climb over the past month has left the Sept Swiss vulnerable to this sort of price action, but the overall trend remains solidly toward the upside. Further liquidation pressure may take the Sept Swiss below the 94.40 area, but any move of that size would likely present a longer-term buying opportunity.

POUND: The Sept Pound has been able to hold within the current trading range, showing little impact from this morning’s UK economic data flow. The focus for the Sept Pound continues to be on budget austerity measures by the UK government, which provides a strong contrast with the approach being used by the US government. While there may not be enough momentum this late in the week for a test of the highs, the Sept Pound should be able to hold support at 1.5150 as further gains should be expected for this move next week.

CANADIAN DOLLAR: The Sept Canadian will likely take its cue from today’s positive Canadian Employment numbers, as strong economic conditions have been the main supportive factor for the Canadian over the past few months. If overseas risk factors remain quiet, there may be an increased chance that the current rally can be sustained, as risk concerns have derailed the Sept Canadian several times during this period. Look for the Sept Canada to hold support near 95.50 as the chances of upcoming Canadian rate hikes remain strong.

TODAY’S MARKET IDEAS: The Dollar may not have enough momentum for a strong upside move, but should be able to hold overnight gains. Look for any pullbacks in the Sept Swiss and Sept Pound.

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DOLLAR: The Dollar has generally held its ground to start the new week, as the G20 meeting produced little in the way of game-changing news. With no major impact for the equity markets as well, there has been a lack of strong momentum either way this morning. While there is a chance that the US Personal Income number may shake things up a bit, there appears to be enough Dollar strength to avoid making new lows for the move today. Look for the Dollar to find support around the 85.50 level, but it may be difficult to start a rebound unless fresh news fires up the market. The Commitments of Traders Futures and Options report as of June 22nd for US Dollar showed Non-Commercial traders were net long 20,710 contracts, a decrease of 1,287 contracts. The Commercial traders were net short 23,745 contracts, a decrease of 935 contracts. The Non-reportable traders were net long 3,035 contracts, an increase of 352 contracts. Non-Commercial and Non-reportable combined traders held a net long position of 23,745 contracts. This represents a decrease of 935 contracts in the net long position held by these traders.

EURO: The Sept Euro found little benefit from the G20 meeting, and has moved lower after being unable to hold a move above the 1.24 level. With the market focus still not fully returning to Euro Zone specific issues, the Sept Euro may find difficulty in sustaining momentum in either direction as the jury is still out on the future. In fact, unless there is a large improvement in overall sentiment, the Sept Euro will continue to find solid resistance around the 1.24 area and support just above the 122.50 area. The Commitments of Traders Futures and Options report as of June 22nd for Euro showed Non-Commercial traders were net short 64,509 contracts, an increase of 9,410 contracts. The Commercial traders were net long 76,225 contracts, an increase of 6,252 contracts. The Non-reportable traders were net short 11,716 contracts, a decrease of 3,158 contracts. Non-Commercial and Non-reportable combined traders held a net short position of 76,225 contracts. This represents an increase of 6,252 contracts in the net short position held by these traders.

YEN: A weak Japanese Retail Sales numbers overnight has weighed on the Sept Yen, but there has been enough carryover strength from last week’s rally to keep prices in a relatively tight range so far. Although safe-haven support will remain a key factor, look for the Sept Yen to test support near the 111.50 area as there has been little positive news from Japan to sustain prices at these levels particularly because the flight to quality angle doesn’t appear to be playing loudly today.

SWISS: Comments from a Swiss National Bank official that deflationary risks were easing have helped to drive the Sept Swiss to new highs for the move. With the continued support coming from a string of new all-time highs against the Euro, the Sept Swiss looks to have the strongest momentum of any of the major currencies today. Look for the Sept Swiss to make a run at resistance above the 95.60 level during today’s trading.

POUND: While the Sept Pound has lost some of its upside momentum, an ability to consolidate above the 1.50 level indicates the underlying strength behind the recent rally. There may be another move towards support at 1.50 today, but look for the longer-term rally bias to remain intact.

CANADIAN DOLLAR: The Sept Canadian has been able to grind its way higher, but remains well below last week’s highs. Quieter markets may provide an opportunity for further gains today, but the upside for the Sept Canadian may be capped off around the 97.00 level as US scheduled data might serve to dampen expectations for North America later this morning.

TODAY’S MARKET IDEAS: The Sept Swiss has the benefit of fresh news to propel this rally, and looks to have further upside potential during today’s trading.

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DOLLAR: Even though the Dollar has moved lower this morning, it remains near the high end of the recent rally, as there has been little conviction for a wholesale removal of a risk aversion premium. There was little direction offered from yesterday’s divergent statements by US Fed officials, so with another day lacking major US economic numbers to digest, the Dollar will once again take most of its cues from overseas events. The situation with the Euro Zone is nowhere near a solution, but the lack of any fresh negative flare-ups this morning may keep the Dollar on the defensive versus the Europeans. If the current rumors of a strong Chinese export number tonight come to pass, then the resulting support for world equity markets will also put some pressure on the Dollar. The markets has shown they have little tolerance for any potential problems, but as long as there are no further market tensions, the Dollar will likely remain on the defensive this morning. Look for the Dollar to move towards support near the 88.50 level, but substance will be needed in order for prices to make an extended run lower to last month’s trading range.

EURO: As long as the Euro Zone smolders instead of burns, the Sept Euro has been able to lift itself away from the recent plunge in value. Given the general lack of confidence in the EU’s crisis prevention package, it is interesting to note that the Sept Euro has so far been able to avoid a further move beyond Monday’s low of 1.1884. Statements by Hungarian political leaders appear to have put out the risk aversion fires from that area, so as long as there are no new flare-ups, then the Sept Euro may be able to build upon today’s initial strength. If the lackluster tone of world equity markets can be turned around as well, then that could be seen as a positive for the Sept Euro as well. A test of resistance above the 1.2000 level is likely during today’s session, but an extended move higher will need some additional positive Euro Zone news.

YEN: The gradual erosion of risk aversion support this morning may keep the Sept Yen on the defensive this morning, but there does not appear to be much urgency with exiting a safe haven currency. While the Japanese government would like to see a lower Yen valuation from here, the market will likely need to have more confidence in the Euro Zone before a test of last week’s lows will occur. However, today’s tone for the Sept Yen still looks to be negative, and a move towards support around the 109.00 level would not be out of the question.

SWISS: After not showing its hand through new record highs against the Euro, the Swiss National Bank appeared to intervene at the 1.3750 Swiss/Euro level during yesterday’s session. This may be an indication that they are willing to accept a higher valuation for the Swiss Franc, as long as the moves are gradual. The Sept Swiss continues to build upon recent strength, and is likely to make a run at the 87.60 resistance level, as the first step towards an extended move to the upside.

POUND: The Sept Pound has been able to recover from yesterday’s sell off, as the market has been able to digest the credit rating agency warning in stride. Look for the Sept Pound to head to resistance around 1.4530 this morning, but it may have trouble getting beyond that area as concerns over European issues will continue to weigh on the Pound.

CANADIAN DOLLAR: Sept Canada has been able to benefit from the easing of risk tensions in the market, and looks to be on the verge of rising past the 95.50 resistance level. As long as financial markets remain quiet, the Sept Canada is likely to continue grinding slowly higher but it remains the most likely candidate for a renewed sell off if any negative news story from Europe hits the market.

TODAY’S MARKET IDEAS: The Dollar is likely to remain weak this morning, as long as news headlines remain subdued. The Sept Swiss looks to be ready for an extended move higher, but may need a successful test of the 87.60 level before accelerating further to the upside.

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DOLLAR: After a two-sided night of trading, the Dollar finds itself slightly weaker going into the US opening. The risk aversion theme that has kept the Dollar close to 14-month highs may be fading somewhat as the market approaches the holiday weekend, but there are plenty of factors still in play that are likely to keep any extended move lower from occurring during this session. Comments from Chinese officials on the Korean situation and how European debt problems will affect the global economic recovery have reinforced the Dollar’s safe haven support, although that may dissipate if the general recovery in world equity markets extends itself into today. Today’s US Personal Income numbers may provide some direction if they surprise the market, but there are too many unresolved areas of concern for the market to contemplate a full scale Dollar retreat. Look for the Dollar to hold support near the 85.75 level, but the Dollar will still need some substantial news in order to move any further to the downside.

EURO: Although the June Euro has been able to extend yesterday’s recovery, much of that move has been due to end-of-month rebalancing in front of the holiday weekend. With the Chinese placing blame on European debt problems, and with news that the city of Rome was placed on a negative credit rating watch yesterday, the burden of proof for a recovery has been placed squarely on the June Euro’s shoulders. If world equity markets can find enough strength to have a second day of large gains, there may be some hope of a move beyond 1.25 but the concern of being long over a holiday weekend may act to limit any upside potential. The June Euro is likely to find resistance near the 1.2450 level, but the June Euro will need a new catalyst for an extended move towards the upside.

YEN: Already pressured by the erosion of safe-haven support, the June Yen was forced to deal with two negative Japanese economic numbers overnight. Japanese Unemployment was higher than expected, while the Japanese CPI had a larger than expected decline. With both numbers pointing towards an economy that needs to be revived quickly, the gains that the June Yen has posted over the past few weeks have to be seen as a huge economic liability. While the approaching holiday weekend may keep prices somewhat supported, the June Yen may look to again trade near support around the 109.40 level as quieter news and stronger equity markets remove a great deal of its risk aversion strength.

SWISS: A stronger than expected Swiss Leading Indicator number this morning may illustrate the relative strength of their economy versus the rest of Europe, but may have little in the way of immediate impact, as the Euro continues to recover this morning. Even so, look for the June Swiss to make a run at resistance levels near the 87.40 level, as a quieter pre-holiday trade should insure that the lows for the move have been put in earlier in the week.

POUND: The June Pound’s breakout of the recent trading range has seen little in the way of follow-through this morning, but prices have been able to withstand a weaker than expected UK Consumer Confidence number from last night. There appears to be enough positive pan-European sentiment out in the markets to hold the June Pound in positive territory, but the lack of upside momentum going into a holiday weekend should leave prices finding resistance near the 1.4650 level.

CANADIAN DOLLAR: June Canada continues to extend a recovery rally into today’s session, as the move away from risk aversion has been a major supportive factor for the commodity currencies over the past few days. With a relatively strong economic situation already in place, the June Canada is likely to see this move hold going into the weekend. Look for the June Canada to make a run at resistance near the 95.90 level, as quieter markets reinforce the strength of its recovery.

TODAY’S MARKET IDEAS: While the Dollar may be under pressure at the moment, the volatile trade overnight may indicate that caution be applied to holding any long position in the European currencies. Look for the June Canada to extend its recovery rally going into the weekend.

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DOLLAR: The Dollar has retained its safe haven strength this morning as a lack of progress in resolving a now expanding European sovereign debt crisis may be adding to a capital flight out of Euro-denominated assets and into the US Dollar. While the chances for a full default are still remote, the loss of investment grade status on Greek debt creates its own set of problems for many investment firms who are unlucky enough to still be holding those issues. Equally frightening to the market was the Portuguese credit downgrade yesterday, which may only be starting to have a Greek-type decline, but as yet has an unknown price tag for the EU. With events in Europe holding the market’s focus, the FOMC announcement later today has probably lost some of its relevance but it would seem almost impossible that the Fed would make any sort of move in the wake of yesterday’s events. As long as EU debt concerns hold the market in its sway, the Dollar will remain well supported across the board. Unless there are concrete moves towards a solution to this crisis and that doesn’t look to be in the cards today, look for the June Dollar to hold its gains above the 82.50 level and perhaps make even more new highs for the move.

EURO: The June Euro remains under pressure this morning as a resolution to the EU sovereign debt crisis still appears to be far away. The May 19th deadline for Greece to find some sort of aid package in order to roll out some longer-term debt may provoke some sort of compromises over the next few weeks, but as long as political posturing on both sides takes center stage, the June Euro is likely to be remain under selling pressure for the near future. While the chances for a sharp short-covering rally rise whenever officials start to make statements, look for the June Euro to continue its descent past the 1.3120 level unless concrete steps are put into place quickly. The Germans don’t want Greece to get off easy, but they might have already shot themselves in the foot by allowing the Greece crisis to undermine the situation in Portugal.

YEN: The benefit that the June Yen was receiving from European weakness has been turned around overnight, as risk aversion strength may have been offset by ideas that many in the government are looking for a weaker Yen in order to stimulate the deflationary Japanese economy. Unless there are further problems in Europe today, look for the June Yen to head back towards the 106.00 level.

SWISS: The June Swiss has been fairing the best of the European currencies as a flight-to-safety finally appears to be giving the Swiss some benefit. While the Swiss National Bank is likely to be keeping any gains versus the Euro in check, look for the June Swiss to hold its lows above the 92.00 level.

POUND: Politics has finally taken a back seat for the June Pound as it has been caught-up in the general weakness in European currencies. Although the ideas that the UK will be caught up in the sovereign debt contagion are a stretch at best, it does point to the fiscal problems that the new government will have to contend with after the May 9th election. While the June Pound should benefit from any Euro-related rally, look for any gains to be capped off around the 1.53 level unless there are new UK election-related developments.

CANADIAN DOLLAR: The June Canada has had the worst performance of the major currencies since the European credit-downgrades, as the risk aversion wave has caused a flight out of riskier currencies like the June Canadian. With the economic situation in Canada remaining positive, any sort of support found near these levels may be the start of an eventual move higher but recent price action should lead any longs to proceed cautiously.

TODAY’S MARKET IDEAS: A relief rally may take the European currencies off of their lows, but unless the market sees a solution to the EU debt crisis on the horizon, the Dollar is likely to hold its strength over the near future.

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DOLLAR: After some heavy initial pressure overnight versus the Euro, the Dollar has found some support as the reality of the Greece situation has taken some downside momentum out of the market. While having concrete details about a potential $40 billion EU/IMF aid package provided European currencies with a measure of support this morning and that in turn undermined the Dollar, it is important to remember that Greece still has to ask for this aid first, something that they have not done yet. The market may have to wait until Greece tries to sell some debt in the market this week before we see whether the aid package will be implemented. With little in the way of economic input from this side of the Atlantic, before the Treasury Budget announcement late in the session today, we may continue to see the focus of today’s trading remain on European issues. While well below its recent range, look for the Dollar to remain toward the upper end of today’s early trading range and possibly head back towards the chart gap area that was left just above the 80.85 level. A number of markets seem to have had a major knee jerk reaction to the EU Package news and have failed to sustain their initial reactions and that might suggest that all markets have indeed over reacted. Therefore we suspect that the June Dollar index will manage to hold above close-in support of 80.52 today. The Commitments of Traders Futures and Options report as of April 6th for US Dollar showed Non-Commercial traders were net long 30,248 contracts, a decrease of 5,040 contracts. The Commercial traders were net short 33,306 contracts, a decrease of 6,158 contracts. The Nonreportable traders were net long 3,058 contracts, a decrease of 1,117 contracts. Non-Commercial and Nonreportable combined traders held a net long position of 33,306 contracts. This represents a decrease of 6,157 contracts in the net long position held by these traders.

EURO: The June Euro started out overnight trading above its trading range for the past few weeks, but it has been unable to build upon that sharp rally as the market appears to be somewhat skeptical of whether the EU aid package will live up to the initial hype. Although Greece is saying that they have not yet asked for this aid, it is clear that a 200 basis point benefit from where Greece debt currently trades and what the EU/IMF package will charge in interest almost compels them to go with the aid. Also, there are some strong doubts that this 16-nation consensus will hold, if other EU nations come forward asking for help, or if possible Greece repayment problems escalate into a test of the EU’s “no-bailout” clauses. The timing of these announcements over the weekend had no small part in the market’s severe reaction to this aid package, and has likely helped the June Euro put in a near-term high. While remaining well supported, it is more likely that the June Euro will move back towards Friday’s highs around the 1.35 level than make a test of the overnight highs near 1.37. The Commitments of Traders Futures and Options report as of April 6th for Euro showed Non-Commercial traders were net short 64,017 contracts, a decrease of 19,183 contracts. The Commercial traders were net long 73,813 contracts, a decrease of -22,152 contracts. The Non-reportable traders were net short 9,796 contracts, a decrease of 2,969 contracts. Non-Commercial and Non-reportable combined traders held a net short position of 73,813 contracts. This represents a decrease of 22,152 contracts in the net short position held by these traders.

YEN: Early strength from the broad-based Dollar weakness has dissipated, and the June Yen looks to be weaker going into the opening. Comments made by Bank of Japan officials indicate that there is a difference of opinion on the need for more Japanese rate cuts in the near future. However, the deflationary economy in Japan may ultimately have the final vote and that should keep the June Yen lagging behind most of the major currencies over the near future. Look for the June Yen to continue its move below the 107.00 level.

SWISS: The June Swiss has received the most carryover support from this weekend’s EU/IMF deal, gaining back much of what it lost from last week’s post-intervention sell off. However, the near-term easing of Greece debt tensions will continue to keep the June Swiss under pressure against the Euro and should keep the market well away from making new highs. Even so, the June Swiss is more likely to hold last night’s lows near the 94.25 levels, as its overnight move was nowhere near as violent as the June Euro move.

POUND: Although the June Pound has extended last Friday’s rally into this week, early strength has been eroding as the market appears tentative to move outside of its recent range. Political factors are starting to override economic numbers, as the first weekend of the election period saw agreement over the issue that a “hung” Parliament would be problematic for the UK economy. With the Dollar still likely to remain weak this morning, look for the June Pound to stay above the 1.54 level but it is also unlikely to make a move towards new highs.

CANADIAN DOLLAR: June Canada is still coming under pressure from Friday’s Canadian Employment numbers, but has held those lows and is still within sight of parity this morning. The weak US Dollar this morning may keep the market on the defensive, but given the underlying strength in the Canadian economy, it is unlikely that we will see a move below this recent trading range. June Canada may test the lows later today, but is also likely to head back towards the 99.75 level over the next day or so, with another attempt to break above 100.00 likely in the cards this week.

TODAY’S MARKET IDEAS: While European strength is likely to be the story of the day, we may have already seen the highs made during overnight trading. Look for a successful test of the lows today as a first step towards the June Canada making another run at parity with the US Dollar.

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DOLLAR: The Dollar seems to be getting a distinct bid off renewed concerns that the EU summit that begins on Thursday won’t provide tangible support to Greece. It is also possible that the Dollar is catching a bid because of renewed US/Chinese trade war dialogue. However, in the wake of the initial US/China rift over the vale of the Chinese currency, the Dollar didn’t seem to be at all interested in the trade war threat. Therefore, we suspect that most of the Dollar gains this morning are the result of EU debt issues. In fact, the Euro is very weak against the Dollar this morning, despite Euro zone PMI readings and German Ifo readings that could have been considered supportive of the Euro. Perhaps a downgrade of Portugal overnight is another element adding into the Dollar bulls case. In short, the bear items in the Dollar are being shunted to the sidelines and the bullish items are being fully embraced and that is the hallmark of a bull trending market. In fact, the Dollar might rally today even in the face of slack US economic readings. A big range up extension in the Dollar would seem to leave support on the charts today at 81.60. Perhaps the trade is happy with ideas that the US Fed remains content with low rates and that ultimately a recovery will be entrenched before they pull back on the reins.

EURO: With the Dollar soaring to new highs and the Euro falling to new lows, it would seem like the trade is fully focused on the prospect that Greece will be left hanging on their debt issues. In fact, as mentioned already, the Euro zone saw a series of numbers overnight that could have provided support to the Euro but instead the market is fixated on the Greece threat. Surprisingly the trade is discounting any help for Greece, despite the fact that the EU summit hasn’t even started yet! Perhaps the market is doing its job to force the Germans to step up and provide something for their fellow EU member. In the mean time, the market looks to sell the rumor, but we aren’t sure they will be a “fact” to buy once the EU summit has ended. One has to look to the weekly charts for the next layer of support in the Euro down at 1.3297.

YEN: The June yen has been trampled by an ultra strong Dollar and perhaps because of the potential spillover from a US/China trade flap. In fact, weaker Japanese exports to China recently might suggest that the Japanese economy isn’t feeding off Chinese growth as much as many had expected. The technical damage on the charts would seem to leave little in the way of support in the June Yen until the 109 level.

SWISS: The Swiss National Bank won’t have to worry about intervention anytime soon, as the rug has been yanked out from under the Swiss and the Euro. Apparently the trade is poised to fully factor in no help from the EU for Greece and that in turn means that all fortunes on the continent are reduced. However, the Swiss was facing an all time high versus the Euro overnight and that might in turn create a very negative conundrum for the Swiss economy. Near term downside targeting in the June Swiss is now seen down at 93.00.

POUND: The Pound bulls are lucky today because the Euro, Swiss and Yen are so weak that some of the potential selling pressure on the Pound was avoided. However, the Dollar is so strong that one has to expect a certain amount of follow through selling in the Pound directly ahead. Underpinning the Pound somewhat is the news that some Euro zone numbers were good overnight, but in the event that US numbers are weak this morning, that could prompt a slide in the June Pound down to 1.49.

CANADIAN DOLLAR: The Canadian is caught in a negative commodity/strong Dollar vortex. We also think that the Canadian is temporarily being deflated by a let down in overall macro economic expectations but that doesn’t mean that the long term up trend in the Canadian has ended. In fact, our pick for a key low in the June Canadian is seen down at 96.50 and perhaps the market won’t even be able to make it down to that level, unless the US numbers directly ahead foster distinct concern for US growth patterns ahead.

TODAY’S MARKET IDEAS: It’s all Dollar today, as Euro woes and slack global economic views are currently the mantra of the financial markets.

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DOLLAR: With a number of global equity markets showing signs of noted strength today (even the Nikkei was up aggressively) one gets the impression that flight to quality interest is falling and the interest in risk associated currencies is on the rise. In short, the trade seems to want out of the Dollar and into what is thought to be undervalued Non Dollar currencies. Apparently the currency markets don’t need much in the way of data to foster ideas that the global recovery remains in place and therefore we suspect that the Dollar will remain weak this morning, even in the face of a slight decline in US retail sales readings. In fact, the June Dollar index this morning has already fallen to the lowest level since early February and would appear to be capable of a very weak trading session ahead. However, the market did see some better than expected Euro zone Industrial production readings overnight and that might have given the Dollar sellers an added incentive. Technical traders might point to a gap in the June Dollar Index down at 79.91 to 79.86 as an initial target for the Friday morning trade in the Greenback.

EURO: As suggested already, concerns toward the Greek debt situation are mostly missing from the headlines and given an early upward thrust in US equities, traders are apparently showing definitive buying interest in the Euro. With the Euro zone also managing to post a very impressive Industrial production reading overnight, one might also suggest that the Euro is even seeing macro economic differential buying in the early Friday morning trade. Apparently the market was fully capable of discounting the fifth straight decline in Greek GDP readings overnight and that highlights a trade that is fixated on increasing its risk holdings at the expense of the Dollar. A big range up extension on the Euro chart would seem to leave little in the way of chart resistance until the 1.3834 level.

YEN: With the Dollar down sharply this morning and the Yen not definitively benefiting from that action, it is clear that pressure generally remains in place on the Yen. In fact, if the weak Dollar weren’t providing a measure of support to the Yen today, we suspect that the June Yen might have fallen to the lowest level since February 23rd on the charts. On the other hand, the markets are sensing progression in the global recovery, with the Nikkei even posting stellar gains overnight. Therefore the path of least resistance in the Yen looks to remain down, with a near term slide below 110.00 probable in the coming trading sessions.

SWISS: Apparently the trade isn’t overly concerned about SNB intervention holding the Swiss down. In fact, we suspect that the SNB realized that today’s strength would be too much to stand in the way of. With a number of technical areas violated on the charts we suspect that a certain amount of technical stop loss buying is capable of extending the Swiss rally on the upside. There would appear to be little in the way of resistance on the charts until the 95.00 level.

POUND: The Pound looks to be coming alive in the wake of a lot of positive outside market action. In the face of discouraging economic sentiment, the Pound is apparently a high beta decliner, but in the face of optimism, the trade apparently expects the Pound to benefit from concentrated short covering action. Apparently the Pound saw some support from news that Conservatives in the UK are once again thought to be capable of winning a majority in the upcoming election. Perhaps some Pound buyers were emboldened by BOE talk this morning, that gave equal time to tightening and easing issues. In the recent past, the trade assumed that the UK economy was so weak that the only decision from the BOE was to go forward with quantitative easing.

CANADIAN DOLLAR: With the overall macro economic tilt upbeat this morning, that should feed right into the recent pattern of strength in the Canadian Dollar. In fact, the fresh round of new highs in many equity measures overnight and general interest in risk instruments would seem to be confirmation of the bullish trend in the Canadian over the last two weeks. In short, we suspect that the Canadian is poised to reach the highest level since October 2009.

TODAY’S MARKET IDEAS: Expect everything to gain against the US Dollar today.