Lots of FX Action – Trader Talk

Daily Trader Talk – Thursday 29^th June.

What Happened on Wednesday > Top 3?

>Sterling was the big story as BOE Carney reaffirms Hawkish possibilities – GBPUSD aiming at 1.3000 ?

>Euro has a wild swing on commentary, then resumes Uptrend

>BOJ Kuroda stamps continued soft tone for the Yen

Outlook

+ USD Index dragged Lower on Treasury yields & FOMC Speakers.

+ ECB Commentary strange but Strong Bid higher for EUR & EUR Crosses.

+ USDCAD Certainly in play as Selloff caused by CAD Strength.

Data & Event Risk Today?:

• (USD) US GDP – 10.30pm Sydney.
• (USD) US Unemployment Claims – 10.30pm Sydney.

USDX: 95.75

The Dollar Index was significantly lower as markets start to doubt the Feds ability to consider rate hikes earlier than December.

No doubts more downside pressure is possible for the USD, but the Treasury markets had an interesting night. Tonight’s US GDP data will be pivotal.

USDJPY: 112.30

BOJ Kuroda has reinforced the soft tone for the Yen and USDJPY traded mildly higher in overnight dealing.

I feel that the USDJPY has some catching up to do with the Nikkei having a strong end to trade to finish yesterday.

We need to see a break on the upside above 112.50/112.80 before Buy orders trigger potential breakouts north of 113.

EURUSD: 1.1380

The Euro had a strange day, mostly Bid up all of yesterday’s Asian session until commentary suggested that markets have “misinterpreted Draghi’s hawkish bias” sent EURUSD down about 95 pips in minutes.

Naturally, the buyers stepped in from 1.1290 after this spike down and pushed EURUSD back to 1.1380 where it started.

We may likely see this run (higher) continue in EURUSD & EURJPY over the coming weeks after a break through the key 1.1400 level in tonight’s US session.

GBPUSD: 1.2940

BOE Carney commented with Hawkish tones sending a huge rally through the GBPUSD and GBP cross pairs.

The Cable got up to 1.2970 before only settling back slightly, which indicates to me that much more upside is possible, particularly if the US data is soft tonight and we break above 1.3000.

Also, more optimism came out of EU and UK Brexit negotiations so I love the Buy side of GBPJPY at the moment.

AUDUSD: 0.7645

The Aussie benefitted greatly last night from a risk-on market theme as Stocks rallied as well as Oil recovering towards the $45 marker.

The upside seems capped at 7700 for now but the Aussie crawling higher and higher against the because of the combination of risk on market sentiment coupled with USD Fed futures pricing out rate hikes on the back of the Fed Inflation cautiousness this week from Janet Yellen.

A move yesterday from 7600 to 7640 is still a quiet trading range but we have seen this in the past before a big slip lower. A stock market correction would be a likely catalyst for a corrective move in risk currencies so watch this space.

NZDUSD: 0.7305

NZDUSD hung around the 7260 level yesterday until the risk theme took a spin higher, taking the Kiwi with it.

The recent highs around 7350 remain but may be tested today if the risk theme remains.

USDCAD: 1.3035

USDCAD was a big mover yesterday as the twin forces of softer USD, Better Oil recovery to $45 continued plus the Cads hawkish bias coming through from BOC speaker.

The inflation targets of 2% were reaffirmed in the press yesterday so the upside for the CAD and thus the downside for USDCAD is very heavy.

The 1.3000 bottom is holding for now and a small bounce is possible, but a breakdown of that level is what I can see.

VIX: 10.03

Volatility Index slid down again as Stocks rallied back after a mixed Wednesday.

Key US data tonight may open the door for lower VIX, higher stocks again.

US GDP data is set to be on par and the Unemployment claims data is closely watched for USD sentiment, with ripple effects immediately across into other markets affecting the fear index.

GOLD: $1,249.85

Gold held very firmly the 1250 level in yesterday’s trading sessions.

It is battling a little with 1250 as stocks were back in flavour but a move higher in Gold seems very likely if US data disappoints in the US session this evening.

Oil (WTI) : $44.90

Oil price continued the rebound yesterday on the back off Oil inventories data.

$45 seems a barrier in the near term but a continued grind higher seems the likely move as the headlines surrounding production cuts have fallen away.

Macro Themes in Play

+GBP Bid much higher towards 1.3000 as Brexit sees light and BOE Carney Hawkish U-turn.

+EUR back up after a wild swing lower on commentary surrounding ECB Draghi’s speech.

+EUR the biggest story now benefitting greatly from the Carry Trade & funding currency status

+AUD moves to 7650 as the risk on theme kicks into gear.