EUR/USD (1,4240)
My target remains 1,4500, where a clear break of 1,4250 is a crucial step towards the target. Still it’s no new trend, but more that it feels more natural to trade within the range 1,40 – 1,45. One good argument for a higher EUR/USD is that the market is not prepared for a surge.
Like during several months do we need to watch the equity market to explain the currency moves. But as mentioned last time, I argue that fundamental economic data is growing in importance when it comes to the greenback. The market is talking about global economic improvement, but so far it is just expectations. When it comes to real data it’s hard to see any true improvement, more correct is, that the downturn is less steep than earlier. This fact might surprise some market participants, as some kept their greenbacks for better times. I haven’t seen anybody who are short Dollar, so if 1,4250 is a natural level, then the autumn brings us a test of 1,5000.
The European politicians are surely around with their comments when 1,4500 trades.
Since last the last update I have been right on EUR/USD. But as particularly capital flows and growing risk appetite dominates to some extend, it helped my EUR/USD view but I lost on equities – so still some correlation.
Concerning USD I look out for all the numbers showing indications of improvement in real growth and labour market data, though it won’t happen soon. The housing market as well, but the housing data is difficult to judge because we come from a low level and many foreclosures are part of the statistic.
Not much hope for Europe but Japanese real money managers constantly increase their investments in Euro assets pressuring EUR crosses higher. What I wait for is bad news on debt, like from Latvia/Baltics, other Central European countries and the Euro Zone area. Take some time but it will come – don’t worry.
The number to watch near term, is the US second quarter GDP Friday 31st July.
Target: 1,4500.

EUR/GBP (0,8630) – GBP/USD (1,6500)
Just as the FX market started to become more bullish on Sterling (like myself) the second quarter GDP growth numbers were released and the nasty reality was clear again. Before GBP was sold back, it was interesting to observe the official UK comments, saying they don’t want Sterling being too strong. Should be noticed, but they would never intervene as the rest of Europe would punish UK for such an action.
I still like some of the signs out of UK. No numbers in the coming days to give any clue about any improvement. But I know that continental European based investors and some from outside Europe have bought commercial properties in UK, which is a true bet. Remarkably is Bank of China’s move in the mortgage market. Normally the bank focus on the Chinese community in UK, but BoC now offers financing to private households in general, even at lower rates than the competitors. Small signs, but it shows that some are now willing to take more risk on UK.
I keep the targets.

Targets: EUR/GBP range 0,8250 – 0,8750 GBP/USD range 1,6050 – 1,6550 .
EUR/JPY (135,50) – USD/JPY (95,15)
Like in the last comments – Japan is simply getting more interesting. The JPY related capital flow comments are mentioned under EUR/USD, and these are still the most important.
I watch the company results coming out these days, to see if they are willing to invest more in Japan or upgrade the production output – is the unemployment topping out ?
This week we get truck loads of economic data, one more important than the other. Wednesday retail trade and business conditions for small businesses, Thursday the preliminary June industrial production – pretty important and Friday it is labour market data, CPI and housing starts. These are basically all market movers.
Since the last update USD/JPY reached the 93,00 target on the downside and even traded lower. I know that JPY is getting sold these days but I keep the range in EUR/JPY and go for another test of 93,00 in USD/JPY.
Targets: EUR/JPY range 133,00 / 138,00 USD/JPY target 93,00

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