USD/JPY bounces from monthly low

EUR

Last week, the activity on the euro against the greenback remained low until Thursday. Fortunately the market surged and gained roughly 300 pips in the afternoon and traded above 1.33 for a couple of minutes before pulling back to the 1.32 area. On Friday, the NFP data sent the pair to a daily low of 1.3191 due to a dollar surge but the move was only temporary.

This week, markets wait for a major decision to be taken in Germany that could be crucial for the euro zone economic future. Indeed, Tuesday and Wednesday: Germany's constitutional court will decide on whether Germany can participate in the ECB's OMT program. If the outcome is that Germany can't support the OMT, then we could see a new round of EU solvency anxiety that even overrides QE tapering concerns.

Except that major event on the economic calendar, we will watch closely the Consumer Price Index to be released on Friday at 11.00am (CET).

USD

The US dollar lost against most of its peers last week. The US economy gained 175,000 jobs in May, exceeding analysts' expectations of an addition of 163,000 jobs, following a series of weak readings. Furthermore, this was the third straight month that payrolls increased less than 200,000, indicating the US job market is not yet strong enough, especially in light of the government's austerity measures weighing on the economy. This enabled only a partial recovery of the US dollar after its recent drop.

This week, we expect some important figures to be released that will drive the dollar. On Wednesday 8pm (CET) the monthly budget statement for the month of May will be released, on Thursday, the initial jobless claims and retail sales will be watched closely and finally at the end of the week, industrial production data and the Michigan Consumer Sentiment index.

GBP

GBP trended higher last week and reached a weekly high of 1.5683 on Thursday before pulling back slightly on profit taking. On Friday, the pair rebounded after making a daily low of 1.5488 and already retested these levels twice since that day forming a support zone around these levels.

The most awaited macro data for the British economy will be the Claimant Count Change that is to be released on Wednesday at 10.30 am (CET) and is expected to improve by 5.0K according to Bloomberg survey.

JPY

Last week, we have seen a lot of volatility on the yen which recovered a lot since its recent losses sending the USD/JPY to a monthly low of 94.98 before skyrocketing from this point to close the week at 98.36.

At the time of writing the pair keeps rising and was trading at 98.93 ahead of the interest's rate decision on Tuesday following the monthly two day meeting of the Bank of Japan. After the improvement in the economy for the first quarter 2013 for which Japan's GDP rose 4.1%, we expect the interest rates to remain unchanged.

CAD

USD/CAD kept falling following the previous week's move. From a technical point of view, we can draw an oblique down trending line that acts as a support for the pair.

The activity on the pair should remain low as the upcoming economic calendar will be light for this week.

 AUD

The Aussie looks under pressure, despite its surge against the dollar in the beginning of the week to a weekly high of 0.9792 that looked encouraging for a recovery. The move was not solid enough and the pair headed south again. On Thursday, we saw the pair spiking from 0.9434 to a daily high of 0.9659 after the release of the employment figures in the US but again the move was only temporary and the pair dropped again to end the week at 0.9501.

At the start of the week, the pair opened with a bearish gap and was dragged lower because of worse than expected imports data coming from China.

The most awaited economic data of the week for the Aussie will be the employment figures that are to be released on Thursday.

NZD

The Kiwi followed a similar path to its neighbour against the dollar. NZD/USD unsurprisingly headed south last week. However it looks like the pair is gaining some strength early in the week filling the opening down gap and trading slightly higher around 0.7904.