EUR

From Bank of New York Mellon: The euro could come under some pressure says a research note from Bank of New York Mellon on Tuesday. “…the price movements seen in all the relevant markets in recent weeks (from the continued strengthening of the CHF to the upward pressure seen in the key Eurozone government bond spreads) are consistent with the long term reassessment of the EUR that has been underway since January,” explains the report. “However, we have also learnt this year that possibly the best leading indicators of developments in the EUR and underlying debt markets have been our own flow data. We therefore find it telling that while outflows from Greek debt remain modest for the moment, we are registering continued outflows from Italian debt and renewed selling of Portuguese debt. More importantly, we have also begun to register significant fresh outflows from the EUR itself at the sort of pace we were seeing through much of Q1 of this year. Given the scale of the buybacks we registered through June and July, however, there is still plenty of space for this trend to develop further. Given this, we therefore wonder whether the growing concerns highlighted in the FT over the refinancing of Irish and Spanish bank debt through September could provide the catalyst for just such a move.”

From KBC: The euro is not likely to hang on to short term gains for very long, says a research note from KBC on Tuesday. “Yesterday, EUR/USD trading again followed the paradigm that negative global sentiment should be seen as euro negative,” says the report. “However, last week negative news from the US sometimes also caused some dollar weakness across the board. So, the question is whether additional negative news from the US should be that bad for EUR/USD. Nevertheless, yesterday’s price action suggests that any protracted EUR/USD rebound will be difficult unless global sentiment turns more constructive again.”

From TD Securities: EUR/USD is getting ready for another round of declines, says a research note from TD Securities. “EUR/USD has recovered from the gentle selling pressure seen through the course of our session yesterday and looks in modestly better shape on the short-term chart at the moment,” explains the report. “We still look for resistance in the low/mid 1.27 area, however, and feel that the main directional risk remains lower for the EUR, based on the still-strained sovereign credit situation in Europe. IMM data showed a decent building g EUR net shorts last week (albeit from very low levels) while 1-month risk-reversals are near the largest discount for EUR calls since early June. The spec market seems to be gearing up for a resumption of the EUR slide.”

From Mizuho: EUR/USD could manage some gains in the short term, says a research note from Mizuho on Tuesday. “Slow work but the Euro is trying to hold above the 50% Fibonacci retracement support and the Ichimoku ‘cloud’, a blip above the 9-day moving average at 1.2756 maybe causing a little short-covering. Decent futures volume as the Euro was dropping this month suggests consensus opinion is still for a weaker Euro,” says the report. The firm suggests, “Attempt[ing] longs at 1.2725; stop well below 1.2580. First target 1.2800, then 1.2925.”

CAD

From TD Securities: The Canadian dollar is hurting after a downbeat GDP report from Canada, says a research note from TD Securities. “It was widely expected that economic activity would decelerate in the second quarter, but few expected it would slow by as much as it did,” explains the report. “The key market takeaway of this report is the 1.0% forecast error by the Bank of Canada. Although its magnitude is relatively small, its impact is compounded by the recent weakness in US data as well as a softer-than forecast outturn for Canadian core CPI. While we retain our call for a hike, we acknowledge that with virtually no domestic data set to be released between now and the September FAD, the OIS market will likely scale back expectations for a hike. Further out the curve, Canadian yields will likely return to their lows observed earlier last week. While fluctuations in investor risk appetite have played a much more important role in determining the movement in the currency, this release will provide an additional boost to USDCAD towards the top of its summer trading range.”

GBP
 

From RBC Capital Markets: Some upbeat economic data out of the UK is failing to stall the selloff in sterling, says a research note from RBC Capital Markets on Tuesday. “GBP rallied through the Asian session, pushing EUR/GBP down to 0.8172,” explains the report. “A reversal in London, despite generally better than expected data, leaves GBP little changed on the day against both EUR and USD. GfK consumer confidence recorded a surprise improvement in August (-18; consensus -24; previously -22), continuing a run of better than expected consumer data in the UK. July consumer credit expanded slightly (GBP0.2bn; consensus GBP0.0bn) and July mortgage approvals rose slightly (48.7K; consensus 46.5K).”

From Mizuho: Cable could be gearing up for a bounce, says a research note from Mizuho on Tuesday. “Interesting to see the 26-day moving average turning up while the 9-day one is below it and moving sideways,” observes the report. “Cable continues to try to form an interim base against the 38% Fibonacci retracement of the rally since May, but progress is slow. The Lagging Span appears to have found support from the candles around 1.5300 and steeply rising candles will hopefully help lift it over the coming week. A weekly close above 1.5525 would also help add to current low levels of bullish momentum.” The firm recommends “Attempt[ing] longs at 1.5505; stop below 1.5320. First target 1.5600, then 1.5700.”

AUD
 

From Scotia Capital: The Australian dollar is declining despite some good economic data in the overnight, explains a research note from Scotia Capital on Tuesday. “Australia is failing to benefit from better than expected retail sales, current account and trade data today, as it is caught up in weakness that seems to be leaving the commodity currencies looking relatively heavy,” says the report. “Australia’s Q2 current account balance improved to -1.7% of GDP from an average of over –5% in the previous year, helped by a sharp improvement in exports. The export improvement in the second quarter is very encouraging as it shows that demand for Australia goods from its main trading partners remains solid. AUD has actually been one of the better performing currencies over the month of August, and held its value as global equities have weakened off. This outperformance can be at least partially attributed to Australia’s relative disconnection from Western (particularly US) growth dynamics, and more towards Asia’s resilience.”

From RBC Capital Markets: The Australian dollar has failed to capitalize on a barrage of upbeat economic data this morning, explains a research note from RBC Capital Markets. “The array of data overnight were largely firmer than expected, including July retail sales at 0.7% m/m (consensus: 0.4%), July building approvals at 2.3% m/m (cons -0.7%), the current account at -AUD5.6bn (consensus: -AUD6.5bn) and net exports added 0.4ppts to Q2 GDP (consensus: 0.3ppts),” begins the report. “RBC is looking for Q2 GDP (overnight tonight) to come in around 0.7% q/q (RBA: 1%q/q). Election update: Labor regained a slender lead of 700 votes in the 2-party preferred vote (after falling behind the Coalition by 1900 votes yesterday).”

JPY
 

From TD Securities: The momentum into the yen continues to build, according to a research note from TD Securities on Tuesday. “The JPY is a little higher against the USD but has lagged the gains of the better performers on the session – EUR, SEK and CHF – so far,” begins the report. “Japanese officials continue to talk a good game, with one finance ministry official suggesting that any BoJ intervention should be “unsterilized” to be more effective. This is keeping the intervention risk squarely in the market’s radar though we remain to be convinced that – after a rather anaemic “emergency” easing move earlier this week – there is much appetite at the BoJ for any intervention at all. The chances of intervention will perhaps rise if spot nears 80 but the chances of successful intervention remain low, in our opinion. BoJ buying USD/JPY will simply give investors better levels to sell into. Technically, price action Monday should put a firm cap on USD/JPY in the 85.20 area for now. The downtrend retains strong momentum and only a move back through 85.90/00 will relieve short-term bear pressure.”

From KBC: Yen traders are looking for that level where the Japanese government will intervene to weaken the currency, says a research note from KBC on Tuesday. “This morning, a series of Japanese eco data came out (slightly) better than expected, but as usual these data had no lasting impact on markets. Asian stocks remain under downward pressure and this is bringing the yen close to multi-year highs against the dollar. Japanese Finance Minister Noda said again that the government would take decisive action on currencies when necessary. However, for now markets are not impressed. The key question of course remains what will be the line in the sand for the Japanese authorities.”

From RBC Capital Markets: The yen is completely ignoring the economic data, explains a research note from RBC Capital Markets on Friday. “USD/JPY continued to fall through the Asian session (84.06 low), reflecting a generally risk-negative environment, before finding something of a base in London,” says the report. “Japanese data overnight were consistently better than expected, but as usual had little market impact. Amongst other indicators (industrial production, retail sales, housing starts) a rise in Shoko Chukin small business confidence to a new cycle high is further notable evidence that JPY strength is having more limited impact on activity than might have been expected.”

From Mizuho: “Consolidating neatly at multi-year lows in a sort of ‘triangle’ formation, stuck between the bottom of a potential ‘wedge’ formation and below the 9-day moving average,” explains the report. “Note that the US dollar is not oversold against the yen, the 14-day RSI at 41.40. Current low level bearish pressure might increase if we hold below 85.00 again today, as would a weekly close below here.” The firm suggests “Attempt[ing] shorts at 84.75; stop above 85.50. First target 84.00/83.50, then more.”

CHF
 

From RBC Capital Markets: Risk aversion continues driving capital into the Swiss Franc, says a research note form RBC Capital Markets on Tuesday. “Overnight markets have seen a continuation of yesterday’s negative tone for risk, CHF and JPY outperforming and NZD underperforming as domestic news compound global themes,” explains the report. “US stock futures are down ~0.3% and European markets are playing catch-up with the weak close in the US yesterday. EUR/CHF traded to a new record low of 1.2898.”