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 made a strong rally overnight, recovering all of the post-FOMC losses and reaching a new high for this rebound rally. An initial knee-jerk reaction towards the Fed’s actions has been replaced by a more pessimistic attitude for global economic prospects. The Dollar has been able to find some safe-haven support, particularly after a Chinese government planning agency stated their expectations for the US recovery to continue while casting doubt on the Euro zone and Japan. With the global selloff in equities during overnight hours, this current Dollar strength may be extended well into today’s trading. If sentiment continues to deteriorate, the market may be at a turning point for the Dollar’s longer-term direction. For now, look for the Dollar to find resistance near the 82.00 level as this rally gains more momentum.

EURO: The September Euro has come under heavy pressure over the past few hours, and has fallen further away from the recent highs for the move. With the Fed already dampening sentiment for the global markets, today’s statements from the Chinese towards the Euro zone are in sharp contrast to the optimism from earlier in the month. With risk concerns becoming more of a factor as the week goes on, this current plunge is likely to gain further momentum. The September Euro should find support near the 1.2980 level, but a further acceleration to the downside may occur if the markets cannot shake today’s negative tone.

YEN: Today’s flare up in risk has helped the September Yen to approach new 15-year highs, in spite of recent weak Japanese economic data. With authorities in Japan appearing to be more tolerant of recent Yen strength, there may be a test of those highs soon if the global move out of equities picks up steam. Look for the September Yen to find resistance at the 117.90 level, but a move beyond that area may need further deterioration from other markets.

SWISS: The September Swiss has not able to benefit from heightened risk concerns with the markets, giving back a good portion of yesterday’s late recovery. With other problem areas taking the market’s attention, relatively good economic condition in Switzerland may help to support the September Swiss during this market turbulence. The September Swiss is likely to find support near the 94.60 level, but any strong move back towards the highs may require a major improvement with global sentiment.

POUND: Yesterday’s late revival of the September Pound has been reversed this morning, as elevated market risk has derailed the longer-term rally. A report from the Bank of England which projects low inflation levels going forward has added to the pressure, and sent the September Pound diving to new lows. Look for the September Pound to test support near the 1.5660 this morning, but will need a vast turnaround in sentiment in order to reverse this selloff.

CANADIAN DOLLAR: The revival of risk concerns with the market continues to plague the Sept Canadian, which has returned towards yesterday’s lows over the last few hours. There may be little chance that the Sept Canadian can turn this downmove around as long as global equity markets are under pressure, but the generally positive view towards the Canadian economy may be enough to keep this slide from getting out of hand. Look for the Sept Canadian to find support near the 96.18 level during today’s session.

TODAY’S MARKET IDEAS: The Dollar will continue to gain ground, as long as sentiment for global markets remains weak. The September Yen will also benefit from risk aversion support, but look for the September Swiss to make a turnaround if risk concerns can be dampened over the next few hours.

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DOLLAR: The Dollar has been able to put the brakes on the recent slide, and has moved away from the recent lows. Sentiment for the Dollar has shown little improvement overall, so this recovery may be due more to a profit-taking move out of European currencies than to a change in trend. US economic numbers have weighted on the Dollar recently, generally being weak but not bad enough to provide a risk shock to the US equity markets. As long as most of the market headlines are being generated here instead of overseas, the Dollar is likely to stay on the defensive, with the chances of an extended recovery limited at best. Even so, the Dollar may be able to rally back to the 81.00 resistance level this morning, as long as there are no surprises from this morning’s US ISM Non manufacturing data.

EURO: The September Euro has lost upward momentum today, and drifted back below the 1.32 level. Today’s Euro zone economic numbers may not have been that bad, but they were more than enough to slow down this current rally. With most of the market’s attention on the US lately, the September Euro may need another risk flare-up or some seriously negative economic news in order to derail the longer-term up move pattern. While a descent towards the 1.3170 level may occur during today’s session, any further move below that area may be difficult without fresh concerning news out of Europe.

YEN: The September Yen continues to be the main beneficiary of the Dollar’s protracted weakness, and is now within striking distance of new 15-year highs. While safe-haven support has underpinned this move higher, there seems to be few fundamental reasons from the Japanese economy to justify this sort of currency rally. With a large portion of their economy tied to exports, it should be no surprise that there is concern from both the Japanese government and the Bank of Japan over the strength of this move. Today’s up move will likely hold during the rest of the session, but the chance for a sharp downside reversal are increasing by the day.

SWISS: Although fairly close to a new high for the move, the September Swiss appears to have lost upside momentum this morning and has begun to drift lower. Look for the September Swiss to continue moving lower this morning, but the Swiss should find support near the 95.75 level as this uptrend should remain intact.

POUND: The September Pound has remained near the top end of the recent rally, but has come under mild pressure from a private survey of UK service industries. Look for the September Pound to find strong support near the 1.59 area as another new high for this rally may occur later on today.

CANADIAN DOLLAR: The Sept Canadian has been able to hold above the 97.00 level, but has been sluggish in extending this move higher. Unless there is another risk flare-up, however, the Sept Canadian should find support near the 97.30 area, as this rally appears to have more strength than other recent up moves over the past few months.

TODAY’S MARKET IDEAS: While the Dollar has held its ground this morning, sentiment has shown little change so any potential for extensive gains may be limited at best. Look for the September Pound to post a new 6-month high later on during today’s session.

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DOLLAR: The Dollar appears to be coming out of a volatile overnight session with some strength, and has been grinding higher. US equities have been weak, and the positive vibe out of the Euro zone may be eroding with a rumor that at least one German bank might fail the stress tests. There is one US economic number today to digest, but Housing Starts have been a chronic sore spot for the US economy and that may add to the darkening tone for the markets. While there may not be enough on today’s plate to change the direction of the overall trend for the Dollar, it appears now that new lows may be off the table for now. Look for the Dollar to find resistance up near the 83.05 level, but any further upside move from there, may require some solidly negative news outside of the US to sustain an upside thrust.

EURO: Today’s well-received debt auctions from Spain and Greece helped to send the Sept Euro up to a new high for the move, but a change in direction has sent prices back below the 1.30 in a hurry and that action seemed to be the result of weakening global equity prices. Talk that a German real estate bank might fail the EU’s stress test may be applying some pressure to the Euro, although the actual results will not be released until Friday. Whether this change in sentiment will be enough to fully derail the current longer-term rally attempt in the Euro remains to be seen, but weakening equity prices on both sides of the Atlantic are not helping the Sept Euro’s cause. Look for a further pullback for the Sept Euro down to the 1.2870 level, but the longer-term rally may have enough underlying support to withstand today’s temporary pressure.

YEN: In spite of the elevated risk concerns out of Europe this morning, there has not been much benefit to the Sept Yen so far. With prices already at high levels from the recent sharp rally, there may be signs that the current move may be topping out. While the Sept Yen will likely move back into positive territory from safe-haven support, prices will likely find resistance around the 115.70 area, as the upside momentum appears to be leveling off.

SWISS: While Swiss Trade numbers today indicated a larger surplus than expected, the Sept Swiss has been unable to gain ground due to the carryover pressure from fresh Euro zone problems. There may be some cause for concern, as profit-taking may become heavy if the 94.75 level is taken out today. The Sept Swiss should hold that area today, but there is a distinct possibility of getting swept up in a European liquidation sell off.

POUND: The Sept Pound has been consistently drifting further away from the recent highs, with today’s UK Public Sector borrowing numbers adding an additional negative tone to the market.
The longer-term up trend should remain intact, but there are concerns that pressure on the Euro zone may eventually entangle the Sept Pound in any extended sell off. The Sept Pound may continue to descend towards the 1.5140 level this morning, but it should find support down at those levels.

CANADIAN DOLLAR: Although the elevated risk concerns have taken prices off of their highs, the Sept Canadian has been able to hold its ground, as the market prepares for this morning’s Bank of Canada meeting. There is a general consensus that Canadian interest rates will move higher today, so anything short of that will obviously be a problem. Look for the Sept Canadian to hold the 94.50 support level before the BOC meeting, then we expect the September Canadian to move back above the 95.00 level when and if the rate hike is announced.

TODAY’S MARKET IDEAS: The Dollar should hold this current strength during the course of today’s trading, as risk concerns may provide ongoing support during today’s session. The Sept Swiss is likely to have the best chance of regaining positive territory, and look for the Sept Canadian to see a post-rate hike rally.

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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: After showing some overnight strength, the Dollar turned around and moved lower this morning, reaching the lowest level since the middle of May. There has been a change in tone, as the results of today’s sovereign debt auctions in Spain and France were well received by the market and that has apparently dampened market fears of further problems in the Euro Zone. While the chances that a longer-term change in direction for the Dollar will require time and further substantive actions, the recovery in equity markets on both sides of the Atlantic will likely keep the Dollar bulls on the defensive this morning. Today’s US economic numbers will give the market plenty to digest later in the session, so we may not have seen the last of today’s volatility. However, the Dollar looks to be on the defensive going into the opening and may need some positive news of its own to find some support. With momentum against it, look for the Dollar to find support down near the 85.75 level.

EURO: While today’s sovereign debt auction in Spain indicated plenty of demand from the marketplace, the potential of a 4.86% yield from a Euro-denominated 10-year bond may have had a lot to do with today’s enthusiasm as well. In any case, the Sept Euro has found plenty of strength from the auction results both in Spain and France and therefore the Euro bulls looks to have the upper hand for today’s session. With the Euro now reaching towards the highest levels since late May, however, it will be interesting to see whether this week’s recovery has enough momentum to achieve an upside breakout. The Sept Euro is likely to make a test of resistance near the 1.2430 level during today’s session particularly if today’s US economic numbers give a boost to the equity markets both in the US and in Europe.

YEN: The change in market tone for the Euro Zone may ultimately put pressure on the Sept Yen, but prices have been able to hold up well this morning in spite of the change in Euro Zone sentiment. Look for the Sept Yen to find support around the 109.45 area, as it appears that safe-haven support may not exit the trade quickly.

SWISS: The news highlight of today’s Swiss National Bank meeting was the removal of a pledge to intervene against excessive gains against the Euro. This had the effect of a sharp rally, taking the Sept Swiss above the 90.00 level very quickly. Although the market may have lost upward momentum, the overnight gains have held up fairly well going into the US opening. While the move higher was fairly quick, look for the Sept Swiss to make a further move up to the 90.25 area, if the positive vibe for Europe can sustain itself through today’s US report slate.

POUND: With the market’s attention on other areas of Europe this morning, the Sept Pound has not found much in the way of carryover support although there has been a large recovery from overnight lows. Even with a stronger UK Retail Sales number this morning, look for the Sept Pound to lag behind the Euro and the Swiss as the unwinding of cross-spreads may keep the pressure on.

CANADIAN DOLLAR: If today’s Euro Zone debt auctions play a role in dampening risk aversion throughout the markets, then the Sept Canada should be a major beneficiary. The monthly survey of Canadian Manufacturing may prove to be a hurdle after the opening, but Canadian economic numbers have been relatively strong over the past few months. Look for the Sept Canada to make another test of the highs at 97.75 this morning, especially if economic numbers on both sides of the US/Canada border are strong.

TODAY’S MARKET IDEAS: The Dollar is likely to stay under pressure this morning, especially if there are no negative surprises from the US economic numbers later on in the day. The Sept Swiss should remain well supported this morning, but the Sept Canada still looks to have the most upside potential from present levels.

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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.