Wednesday Market Update

Daily Outlook – Wednesday 21^st  June

What Happened on Tuesday > Top 3?

>Bank Of England (BOE) Gov. Carney says “Nowhere near raising rates”, GBP Crunched.

> Oil sells off 2% to $43.50.

>Volatility picks up, USD Mixed after Fed Speakers.

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? :

• (GBP) Monetary Policy Committee member speaker Haldane – 9pm Sydney.
• (OIL) Crude Oil Inventories – 12.30am Sydney.
• (NZD) RBNZ Rate statement & Interest Rates – 7am Sydney.

USDX: 97.40

USD Index traded to 97.50 before a minor pullback to 97.35 as a reflection of the mixed FOMC speaker messages.

Yesterday we heard from FOMC speakers Kaplan, Fischer & Evans.

We heard the word “nervous” about inflation data of late, but we also heard comments pointing out that the US policymakers cannot afford to wait until their key data overshoots their targets before moving on the next rate hike.

This mixture of commentary from the FOMC leads me to keep a “Data Dependant” view on what the Fed will do next.

USDJPY: 111.35

Dollar-Yen saw profit taking moves yesterday, drifting back from 111.75 to 111.35.

The uptrend should likely resume towards the 112.00 handle as we have just seen the BOJ meeting minutes and no real response at all. I note that the Trade Balance data on Monday was soft for the Yen, and all it will take is tomorrow’s US data (Jobless claims) to see the USD rally again.

Traders need to stay nimble now as the US data is more important as ever.

EURUSD: 1.1135

The Euro traded softly yesterday, grinding through the key 1.1130 key level, breaking June 15^th lows around 1.1118.

Not a great deal of EUR data driving this pair, so the USD is in control again.

We may stay rangebound in the 1.1100 – 1.1200 trading band for the end of this trading week unless surprises hit from the US Jobless data tomorrow night in the US trading session.

I still favour the US FOMC to disappoint and Euro to snap back higher, much higher, but that move remains to be seen.

GBPUSD: 1.2730

We saw GBPUSD dive 75 pips yesterday as BOE Gov. Carney threw water all over the idea that the Bank Of England are looking to move rates.

His speech on the London Open yesterday saw dips under 1.2700 then a continuation all the way to lows of 1.2602.

Here are the 2 main points regarding GBPUSD from my Reuters terminal:

• Brexit uncertainty
  • Now not the time to raise UK rates, despite rising inflation, 5-3 rate vote

AUDUSD: 0.7565

The Aussie banks drifted lower to finish the day overnight and has opened softly this morning in the Asian session too.

After this week’s Moody’s downgrade of the big 4 Aussie banks, there should be pain in store for the AUDUSD.

The 0.7520 level looks imminent in the near-term on the charts, but as always that is USD data dependant at the moment.

NZDUSD: 0.7230

NZDUSD is holding familiar ranges around the 7220-7250 levels.

RBNZ commonly talk down the Kiwi Dollar and with the rally we saw last week, I expect them to do the same.

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

USDCAD: 1.3280

USDCAD bounced beautifully yesterday as Oil took a 2% tumble lower.

This move looks like it may have a long run potential, as the Headlines regarding Libyan oil production support lower lows in the Oil price.

That coupled with USDCAD sell off from 1.3500 may signal good opportunities for a key reversal higher in UASDCAD over the coming weeks.

VIX:10.86

Volatility Index is up overnight, coming alive approaching 11.

Oil and the bank Of England speech certainly seem the most pivotal influences to a amove up in the VIX.

This is good for traders as we will see bigger trading ranges across a number of asset classes.

GOLD: $1,245.40

Gold bounced slightly yesterday by about $2 as the USD reversed across the Asian & London sessions.

The key Jobless data for the USD tomorrow night will be key to directional momentum in Gold.

Oil (WTI) : $43.50

Oil price sold down yesterday as headlines of production levels hit headlines again.

The oil inventories data hits just after midnight tonight, Sydney time and this may be the catalyst the market needs to make a run under $43.

Macro Themes in Play

Cable hammered, Carney nowhere near hiking rates
CAD lower with oil

AUD pulls back with metals

Gold on key support ($1242), break could give USD a boost
**Crude trade hits panic button, longs established after November OPEC deal now all underwater, revisit to 2016 lows a growing possibility, market laughs at OPEC claim that members over-complying on production cuts