Daily Outlook – Thursday 22nd June

What Happened on Wednesday > Top 3? 2

>Bank Of England (BOE) Voting member Haldane talks of rate hike, GBP spikes higher.

>Oil sells off again, finding new lows, Gold Recovers as USD mixed.

>RBNZ Holds Rates.

Outlook

+US Jobless claims will be key tonight.

+BREXIT negotiations still keenly watched. Theresa May advisor John Godfrey quits.

+CAD Retail Sales & Inflation data to finish the week.

Data & Event Risk Today?:

• (CAD) Retail Sales – 10.30pm Sydney.
• (USD) US Jobless Claims – 10.30pm Sydney.
• (USD+) FOMC Member Powell Speaks – 12am Sydney.

USDX: 97.20

USD Index traded back from 97.40 yesterday in a broadly softer day for USD.

Dollar index has struggled recently to surpass the 97.50 level amidst this week’s flurry of FOMC voting member speakers. Member Powell speaks at Midnight tonight but US Jobless claims data on the open of US trade may move the market beforehand.

USDJPY: 111.30

Dollar-Yen had a wandering day yesterday first lifting to 111.70 before retreating to 111.30.

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.

Oil was a big drag on risk sentiment yesterday and I would attribute the US session decline in USDJPY to a small risk adverse move from Oil finding new monthly lows.

Volatility is still low so the daily trading ranges aren’t expected to be enormous to end the trading week.

EURUSD: 1.1170

The Euro traded slightly higher yesterday in a quiet trading range of around 35 pips.

EURUSD seems intent on crawling back towards the 1.1200 handle leading into tomorrow PMI data out of the Eurozone.

We haven’t seen big moves in EURUSD since the soft US CPI last week before the US rate hike, instead it’s been meandering in a familiar sub 1.1200 range.

GBPUSD: 1.2675

Sterling had a wild day yesterday.

On the London open it broke down under 1.2600 a few times and looked like heading to 1.2500. Then Monetary Policy Voting Member Haldane spoke at 9pm (as per our caution to clients), and he talked of voting for a rate hike.

Cable took off 1 big figure higher to above 1.2700 before settling back to 1.2675 now.

This commentary from member Haldane was a direct contradiction to the night before when BOE gov. Carney’s speech highlighted to grave concerns about Brexit negotiations causing no timing at all for a rate hike.

Fundamentally the GBP saw solid Inflation data last week so it is a keen debate on what their next chess move will be. Short term pain likely but what will the Pound do if PM May is forced to resign? Sell off on uncertainty, or rally on a new chapter with cleaner path through the Brexit negotiations?

AUDUSD: 0.7560

The Aussie was dragged lower slowly most of yesterday, accelerated by a mild risk off theme caused by Oil price slide lower.

Copper hit a 6-week low yesterday and Iron Ore is having a drag effect on the Aussie too, so when you add in the Moody’s downgrade citing concerns of the housing market it paints a downward pressure picture for AUD.

Technically though, we haven’t seen a breakdown of 7520 to the downside, so the Aussie is being quite resilient.

NZDUSD: 0.7250

NZDUSD saw wild whipsaws on the RBNZ holding interest rates.

The Kiwi took on highs around 7270, but also dipped down to 7195 before getting back to 7250.

The RBNZ essentially took the verbal lead from the RBNZ statement where they commented that the higher NZD dollar level will help to rebalance growth. Normally we expect the opposite commentary and for the RBNZ to jawbone the kiwi lower, so it has held up nicely on this change of theme.

USDCAD: 1.3325

USDCAD bounced as I called yesterday, getting from 1.3270 to highs yesterday in the US session around 1.3347.

The Oil price slide had a profound effect, as it pulls the CAD lower, driving USDCAD Bid towards 1.3350/1.3400 area.

I can see more pain in store for the Oil price which means that this move higher in USDCAD may not be done yet.

VIX:10.75

Volatility Index was only mildly lower overnight which is quite surprising

GOLD: $1,250.30

Gold was Bid 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.

Next moves from here will become much clearer once the US Jobless data lands plus the US FOMC speaker commentary again tonight for the USD sentiment.

Oil (WTI) : $42.60

Oil price sold down again yesterday despite the Oil Inventories pointing to less inventory supply.

This is a great indicator to me that we are heading towards that key $40 on Oil.

Macro Themes in Play

+Cable sees a spike higher on Haldane speaking of Rate Hite

+CAD lower with oil, seeing USDCAD jump up above 1.33

+AUD pulls back with metals, but only slightly. More to come?

+Gold back to $1,250.

+USD Majors drifting a little