Trader Talk – Friday June 23rd

Trader Talk – Friday 23^rd  June

What Happened on Thursday > Top 3?

>FX Very quiet except – Canadian Retail Sales Data hits the wires, USDCAD crunched lower.

>Oil rebounds slightly, Gold holding steady.

>Brexit negotiations sullied by Theresa May’s low support levels

Outlook

+EUR Zone PMI data in the London session.

+BREXIT negotiations still keenly watched. Theresa May not looking to have much support.

+CAD Inflation data will be critical for USDCAD on the New York open.

Data & Event Risk Today?:

• (EUR) French/German/Euro PMI Data – 5.30 & 6pm Sydney
• (CAD) Inflation data– 10.30pm Sydney.

USDX: 97.30

USD Index traded in a tight trading range reflecting the quiet day that we saw across all trading session yesterday.

USDJPY: 111.35

Dollar-Yen remained subdued in a trading range 30 pips either side around the 111 handle.

FOMC member Powell set to speak late in the Friday dealing session, which may move the USDJP outside recent tight trading bands, but unlikely as Volatility is still low so the daily trading ranges aren’t expected to be enormous to end the trading week.

This is a good indication of the lack of US data and generally quiet trading day yesterday for the most part of the Asian session.

EURUSD: 1.1145

The Euro traded in extremely tight trading ranges yesterday as markets were asleep across most FX pairs.

EURUSD will fire up on the London open tonight as the Eurozone PMI data gets released.

Moves back towards 1.1200 favoured from what I can see, but a driftwood day likely again today across the Asian session, with 1.1150 the likely price level.

GBPUSD: 1.2680

Sterling has settled down a lot since the market moving spike higher on the back of MPC member Haldane’s comments on Wednesday.

I feel that the Brexit negotiations headlines are increasingly looking soured by Theresa May’s slipping support. This can only put downside pressure on GBPUSD currently drifting around the 1.2680 level.

I think we will see 1.2600 again before we see 1.2700. Watching Brexit headlines closely for knee-jerk moves lower likely.

AUDUSD: 0.7560

The Aussie was trading 15 pips either side of 7550 for all of yesterday’s sessions.

Here is an interesting quote from today’s Financial Review but not sure that these local headlines will save the AUDUSD from a slide back towards 7400 handle shortly.:

“Overall, the picture shows that China’s appetite for imported iron ore remains strong, meaning the price decline so far this year isn’t driven by weakening demand.”

“Chinese domestic iron ore futures have fared some better, with Dalian Commodity Exchange contracts slipping 8.1 percent so far this year to Wednesday’s close of 426 yuan ($US62.37) a tonne and down 33 percent from their February 21 peak.”

NZDUSD: 0.7255

NZDUSD saw wild whipsaws on the RBNZ holding interest rates but has since settled at the 7250 level quietly trading in a narrow range.

The kiwi will likely look to the USD from here for a move back sub-7200 or a run at 7300 once again.

Next week more likely to be the catalyst for a breakout of the current quiet trading range, as no market moving calendar US data scheduled to close off the week.

USDCAD: 1.3230

USDCAD was the BIG mover yesterday on the back of Retail Sales data for the CAD.

Core Retail Sales hit the wires’ on the US open as per our alert to clients and it was a big beat of expectations, propelling fuel on the Cad rally, thus spiralling USD-CAD to give up all of Wednesdays Oil-led gains.

Tonight, we have Canadian Inflation data and on the back of that, I expect USDCAD to possibly turn back higher towards the 1.3300 level again.

VIX:10.48

Volatility Index was only mildly lower overnight which reflects the extremely quiet FX market dealing ranges seen yesterday, across the board.

Brexit negotiations heating up maybe the catalyst for a turn higher in the Volatility Index, in my strong view.

GOLD: $1,251.45

Gold was Bid slightly higher steadily yesterday across all three key trading sessions.

The $1250 level was a magnet for price action to close off the US session after last week’s lows on renewed USD optimism.

Last night’s US Jobless data was not resounding in the impact to USD sentiment, so Gold had a quiet day too.

Oil (WTI) : $42.90

Oil price clawed it’s way back higher towards $43 yesterday in a mild turnaround but not sure this will last.

Oil is still able to derail the global risk sentiment if it runs lower towards that psychological $40-mark next week…

Macro Themes in Play

+Cable holding firm in early Brexit negotiations

+CAD Spikes higher on Retail Sales and mild Oil rebound.

+USD Majors drifting, very quietly