USD/JPY closed at 158.90 yesterday, a record daily high that surpassed the previous record 158.33 from April 26th. The highest intraday mark for the pair was set on April 29th at 160.03. The JPY has weakened 2.86% vs. the USD since the June low of 154.53 and is firmly back in intervention territory, levels where the BoJ defended the JPY in late April.
Swiss central bank SNB delivered a surprise quarter point rate cut yesterday, taking its overnight rate from 1.50% to 1.25%. The probability of a cut was 67.3% so caught the majority traders off guard. This was the third cut by a major central bank this month. USD/CHF is +0.95% since Wednesday’s close.
The dollar index reached 105.882 overnight, a near two-month high (May 1st). Congestion from mid-April may slow the dollar’s progress but the real test of resistance is at 106.25.
The dollar is higher vs. all G10 pairs, the primary gains coming against the CHF (+0.24%), JPY (+0.21%), GBP (+0.17%), and EUR (+0.13%).
Retail Sales for Canada were 0.7% for April, matching the 0.7% estimate. Excluding automobile purchases Retail Sales were 1.8%, significantly higher than the 0.6% estimate. The probability of a quarter point cut at the Bank of Canada’s next policy meeting on July 24th is now 62.1%.
Today’s Manufacturing and Services PMI were higher than expected. Preliminary June Manufacturing PMI was 51.7 vs. the 51.0 estimate. And Services PMI was 55.1, 54.0 estimate. Existing Home Sales for May was also reported stronger than expected, 4.11m vs. the 4.10m estimate. And MoM Home Sales were -0.7%, beating the -1.0% estimate.
