Daily Outlook

Daily Outlook – Monday 19^th June

What Happened on Friday > Top 3?

>Bank Of Japan maintains policy.

>US Building Data soft, helping USD finish the week broadly lower.

>Volatility still low.

Outlook

+BREXIT negotiations officially kick off this week.

+FOMC Speakers spread out across this week

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

Data & Event Risk Today? :

• (USD) FOMC Member speaks  – 10pm Sydney

USDX: 96.90

USD Index traded lower on Friday after the Building permits & housing starts data was underwhelming.

The market will continue to be very sensitive to US data points after Janet Yellen’s disclaimers in the press conference last week.

Dollar index is holding firmly around the 97 level.

USDJPY: 111.00

Dollar-Yen took off higher on Friday, surging all the way to 111.42 on the back of the BOJ holding it’s monetary policy.

The softer US building/housing data was a good excuse in the US session on Friday USD profit taking.

Dollar-yen came back to close around 110.85 on Friday and has opened the Asian session trading higher, once again crawling above the 111 handle.

We are in the middle of a familiar trading range of 110 – 113 once again.

EURUSD: 1.1195

The Euro had another day of being driven by the USD sentiment on Friday.

Firstly, EURUSD was soft most of Friday in Asia & London, getting down to 1.1132 before reversing back to 1.1200 to finish the week.

The 1.1200 level seems to be a magnet for the moment until perhaps the FOMC speaker is on the news wires tonight in the US session.

GBPUSD: 1.2775

Sterling is clearly trading quite sideways now on the 4-hourly chart after some volatility last week over the US CPI data release & rate hike out of the US.

The Cable traded in a tight trading range limited on the upside with resistance holding firm at the 1.2800 level.

Brexit negotiations officially kick off this week but nothing of great significance is expected to be revealed straight away, as this may be a drawn out process for the UK & EU.

AUDUSD: 0.7620

The Aussie has held onto last week’s gain, holding above the 7600 handle for the first time in a while.

AUDJPY long was a great trade on Friday as it grinded out gains towards the 85.00 level but the Aussie has seen a huge resistance at 7630 against the Greenback.

The RBA policy meeting minutes are released at 11.30am tomorrow and will provide further clues as to what the RBA’s stance is with comments about China plus our local housing market always worth watching closely for AUDUSD sentiment & direction.

For the first time last month the RBA comments with concern regarding the Sydney & Melbourne housing & debt levels so again the RBA have the ability to drag on the AUD level to the downside.

NZDUSD: 0.7270

The kiwi is in for an interesting week with 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: 1.3215

USDCAD traded to 1.3300 midweek last week then drifted back into its downtrend to wrap up on Friday.

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:10.38

Volatility Index down slightly again on Friday, still content on holding below 11.

This is historically low and may breakout into higher trading bands on the FOMC speaker’s this week.

Still EURUSD & USDJPY have been the biggest movers in response to US data points but I expect Volatility to pick up this week, again on FOMC speakers driving USD sentiment.

GOLD: $1,254.30

Gold had a quiet trading day Friday with a tight trading range around the 1253 price level.

Markets are still Bid on the USD causing Gold to slide back to the familiar 1250 level, which should hold until US Jobless data (on Thursday) & FOMC speakers create some ripples in the USD sentiment this week.

Oil (WTI) : $44.90

Oil saw a continued slide last week on the back of headlines of Production levels outweighing demand level increases, as projected into 2018.

$45 seems a key barrier that is holding very firm. Oil Inventories data again this Thursday will be the market mover for WTI prices and perhaps another slide back to $44.

Macro Themes in Play

Volatility still Low

• USD falls back a little on Friday to end the week on soft building/housing data, which signals to the market just how sensitive USD data will be on key pairs such as USDJPY & EURUSD.

+ This is the key theme dominating FX dealing currently as traders try to decipher if the US fed will be able to follow through with last week’s rate hikes, again later this Sept or December.