Expert Analysis of Today's Market

• The dollar was mostly lower on Monday ahead of Fed Chairman Ben Bernanke’s talk on inflation at the National Bureau of Economic Research in Cambridge, Massachusetts at 1:00 PM tomorrow. The Canadian dollar touched a fresh 30-year high against the dollar on widespread expectations the Bank of Canada will raise interest rates 25 basis points to 4.50% on Tuesday. The high-yielding British pound and Australian dollar were stronger. The yen pared overnight losses against other key currencies after stronger-than-expected Japanese machinery orders and Vice Finance Minister Hideto Fujii’s comment to strengthening the yen.


• Although falling modestly today, the moderately overbought EUR/USD is still close to the late-April high of 1.3677, which is now important resistance. If the 1.37 resistance was broken, it would be bullish for the pair. However, Bernanke will likely sound hawkish tomorrow; thus, possibly pressuring the pair.

Financial and Economic News and Comments

US & Canada

• No major economic data on the US and Canada today.

Europe

• UK output prices rose a less-than-expected 0.2% m/m and 2.4% y/y in June after increasing 0.4% m/m in May, the Office for National Statistics said.


• German industrial output rose 1.9% m/m the most in six months and 4.6% y/y in May, the Economy and Technology Ministry said.

Asia-Pacific

• Japanese Vice Finance Minister Hideto Fujii said “currencies should reflect economic fundamentals and Japan’s economy is solid.”


• Japan’s machinery orders rose a stronger-than-expected 5.9% m/m in May, the Cabinet Office said.


• The Economy Watchers’ Survey index for current conditions in Japan fell to 46.0 in June from 46.8 in May, staying below the key 50 level for the third consecutive month, the Cabinet Office said.

FX Strategy Update