Daily Outlook – Monday 12th June
What Happened to close off last week > Top 3?
>ECB Meeting dragged EURUSD back down to 1.12
>UK Election Result a hung parliament, GBP resets much lower
>Gold & Oil traded much lower
Outlook
+Huge week of central bank action from US FOMC, BOE, BOJ & SNB.
+Volatility (VIX Index) is still quite low 10.70 but Asian session should see consolidation after wild end to the week
+Traders are looking to the US FOMC rate hike and then press conference for forward guidance.
Data & Event Risk? :
1) (GBP) UK CPI on the London Market Open Tuesday.
USDX: 97.18
USD Index reset mildly higher last week, back above the 97 handle after briefly flirting with 97.50.
US Retail sales & US CPI data this week before the much-anticipated rate hike will certainly see a new possible range for USD Index.
USDJPY: 110.20
Dollar-Yen bounced back nicely to close off the week from lows around 109.10 last week.
In fact, it traded back to 110.80 which could be viewed as a nasty short squeeze or simply profit taking from last week’s swift slide under 110.
Dollar-Yen has loved the trading range 110-113 and again we sit in that trading band, likely to hold at least until key US data midweek.
EURUSD: 1.1200
The Euro had a very muted move despite ECB press conference & meeting last week.
The issue of Brexit is no clearer for the Sterling after the UK Elections, but Euro traded quite resilient late last week after a quiet dip lower.
Will it make a run for 1.1150 or grind back to 1.1250? That is a question that should be answered midweek when the key US data hits the wires.
With a lack of EU data this week, the USD will be driving this pair leading into FOMC super Thursday.
GBPUSD: 1.2740
Sterling dumped lower against the greenback on Theresa Mays underwhelming election result, casting further question marks on Brexit negotiations and in fact the future of UK government leadership.
The initial knee jerk moves lower did reverse from 1.2630 back to where we are now around 1.2750 to kick off this week. We get UK CPI this week but the USD likely to be in the driver’s seat as no change is likely from Bank Of England this week.
AUDUSD: 0.7535
RBA held rates for Australia last week, as widely expected by FX dealers. The Aussie was quite resilient and seems intent on holding onto the 7500 handle.
AUD will have a big Thursday as we have the US FOMC rate as well as the Aussie Jobs data in the Asian dealing session.
The risk sentiment has held up quite nicely throughout last week’s long list of risk events.
NZDUSD: 0.7207
The kiwi traded to a 3-month high last week to 7200 and has held firm since.
Much like the Aussie the NZDUSD grinded higher slowly and hasn’t looked like turning back. The kiwi may trade into the 7250 area this week but more likely to range trade until midweek.
USDCAD: 1.3445
USDCAD had a wild week last week after correlated moves against the Oil selloff last week.
USDCAD booted higher to 1.3540 and has since turned back sharply, now Offered to 1.3445.
The 1.3400 handle proving to hold for now.
VIX:10.70
Volatility Index is treading water, grabbing a small tick up last week from a very low base.
Naturally we can see Volatility jumping back up this week with a lot of action from central banks to offer forward guidance.
GOLD: $1,268.96
Gold was looking for a reason to sell off last week, and Gold didn’t disappoint.
Slamming back from just about 1300 as the markets essentially shrugged off the US Comey Testimony.
USD yields will be in focus this week so we can Gold having another wild week ahead.
Oil (WTI) : $46.15
Oil was offered quite fiercely last week breaking down form the $48 level to see lows under $45.20.
It has only just recovered back to $46 and will certainly see an interesting direction this week on Oil Inventories data out on Wednesday US session open.
Macro Themes in Play
- Markets are looking to the key working in the US FOMC press conference to provide markets with forward guidance on USD outlook, but in the meantime, we still have Geopolitics dominating risk themes for the UK.
