Daily Outlook

Daily Outlook – Tuesday 20^h June

What Happened on Monday > Top 3?

>Fed Speaker (FOMC Voting Member) Dudley supports the Rate Hike path, USD Bid up.

>Gold moves $10 lower on USD rally, Oil hovers around $44.50

>Volatility still low, USDJPY took off higher to 111.65.

Outlook

+Australia’s RBA meeting minutes out to start Asian Session.

+BREXIT negotiations still keenly watched, BOE gov. Carney speaks on London open.

+FOMC Speakers spread out across this week – Fed Fischer tonight

+Dairy Prices & RBNZ midweek for Kiwi, US Jobless Claims & CAD data end of week.

Data & Event Risk Today? :

• (AUD) RBA Meeting Minutes – 11.30am Sydney
• (GBP) Bank of England Gov. Carney Speaks – 5.30pm Sydney
• (USD+) FOMC Member Fischer Speaks – 10pm Sydney
• (NZD) Dairy Numbers very early Wednesday
• (USD+) FOMC Member Kaplan speaks – 5am Wednesday, Sydney time.

USDX: 97.25

USD Index traded lower until FOMC speaker and voting member Dudley took the microphone and took the USD bulls by the horns.

His theme was to point out that US labour market and the thinning unemployment rate was a great boost to overall economic optimism, and that recent soft inflation reading is not the be all and end all.

Markets took that as a strong supporter of continued Fed rate hikes and USD Bid up accordingly.

USDJPY: 111.85

Dollar-Yen took off higher on Bullish FOMC speaker comments supporting Janet Yellen’s view to shrug off recent inflation softness.

Dollar-yen came too off from around the 111.40 level towards 111.85 currently also on the back of softer trade data out of Japan yesterday.

We are in the middle of a familiar trading range of 110 – 113 once again, but looking like the 112.00 handle will be in play in the Asian session today.

USDJPY can move in large chunks so best to watch that trend.

EURUSD: 1.1145

The Euro had another day of being driven by the USD sentiment after starting off strongly, trading above 1.1205 in the commencement of the London trading session.

Recent lows of 1.1130 held as a base, with yesterday’s lows around 1.1140 leading into FOMC speaker in the US Session open.

The Euro seems intent on holding this 1.1150 level looking for further clues from more FOMC speakers tonight, before Fridays Euro data (PMI).

GBPUSD: 1.2730

The Cable traded to 1.2800 yesterday early in the London dealing session and looked like pushing higher.

A sharp pullback drove GBPUSD down to lows around 1.2733 as FOMC bullish comments drove USD sharply higher. I know that I am repeating myself, but the move in Cable was driven by USD strength not sterling weakness leading into tonight’s Gov. Carney speech on London open.

Brexit negotiations officially kick off this week but nothing of great significance is expected to be revealed straight away, as this will be a long process most likely favouring a softer Brexit than originally sought after by PM Theresa May.

AUDUSD: 0.7595

The Aussie banks were downgraded yesterday by Moody’s on Housing Market concerns, jawboning the AUDUSD from 0.7630 to 0.7580, but it didn’t last long.

AUDUSD is hovering around 0.7590 leading into this morning’s RBA meeting minutes.

The potential for downside this week in AUD led by dovish remarks from last month’s RBA meeting, seem quite high.

For the first time last month the RBA comments included concerns about the Sydney & Melbourne housing & debt levels so again the RBA have the ability to drag on the AUD level to the downside if we hear more of the same today.

The Moody’s downgrade is too fresh to feature in RBA minutes, however will prove pivotal to risk concerns over the coming months ahead for the Aussie.

NZDUSD: 0.7225

NZDUSD had an interesting Monday which displays the strength behind this pair, only derailed by hawkish FOMC comments as per the above.

The kiwi sees important Dairy Auction numbers out midweek before the RBNZ rates announcement on Thursday morning, early in the Asian dealing session.

RBNZ commonly talk down the Kiwi Dollar and with the rally we saw last week, I expect them to do the same. We saw highs on NZDUSD last week around 7320 before retreat back to 7265 to finish up on Friday.

I am looking to see low 7200 handle levels maintain later this week on the RBNZ release.

USDCAD: 1.3225

USDCAD traded in a quiet trading range Monday, moving from around 1.3250 to 1.3220.

Oil inventories data lands on Wednesday night this week, in the US trading session and will be another market mover for USDCAD.

More importantly will be the key Retail Sales & CPI data out on Thursday & Friday respectively.

USDCAD may be the trade of the week for those looking to play the rate hike speculation trade for the Canadian Dollar, driving USDCAD lower again.

VIX:10.37

Volatility Index is almost unchanged, literally moving just 1 tick lower from 10.38 to 10.37 overnight.

Typically this points to tight trading ranges but the FOMC voting member speakers this week can certainly change that.

As I called yesterday I expect EURUSD & USDJPY to be the biggest movers in response to FOMC commentary flowing from various voting members this week, scattered throughout our Event & Data risk calendar.

GOLD: $1,243.65

Gold was crunched lower yesterday as the USD found Bidders.

Gold basically moved from 1253 to 1243 in an inverse move to the USD Bid.

Where next? The 4-Hour chart looks to me to show a LOT of downside potential.

Oil (WTI) : $44.57

Oil price action flirted with $45.25 before turning south again.

The $44.50 area seems a price magnet until we see Inventories data again this Thursday.

Macro Themes in Play

Volatility still Low

• USD Bid Higher as the Fed shows their market moving power once again.

FOMC Speakers supporting Janet Yellen’s views for rate hikes is absolutely dominating the market sentiment currently.