Risk aversion was pared in NY trading and this saw the buck take it on the chin. Stocks closed the day pretty well flat but the fact that the initial test below the 200-day SMA on the S&P was rejected should provide some short-term solace for the bulls. The flight from safety was evident in the bond market where 10-year Treasuries were sold and the yield jumped to 3.69% as a result. Commodities rallied 0.4% as the weekly oil inventory report showed a much larger than anticipated -3.9 million draw in stockpiles.
Economic data were decidedly dollar negative as well. The US current account for 1Q came in at a downright scary -$101.5 billion while the 4Q number was revised down to $154.9 billion as well. US consumer prices were weaker, with the headline rising 0.1% versus a forecast for a more aggressive 0.3% jump. This threw some cold water on the notion that the Fed will raise rates later this year. Canadian leading indicators also printed a -0.1% drop in May and this was well above the expectations for a steeper -0.6% decline.
It was a reversal of fortunes for a USD that was better bid out of the gate in early NY. EUR/USD eventually ended the session more than 100 pips higher near 1.3940. Trendline resistance and the 21-day SMA lurk by 1.4000/10 now and we would expect decent resistance here overnight. USD/JPY was weaker despite the generally less risk averse environment and the pair sank -60 pips to 95.70/80, highlighting dollar weakness. EUR/JPY managed to eke out a modest 20 pip gain to 133.50 as well. The resource-based currencies were better bid on the back of the commodity rally. USD/CAD sank -90 points to 1.1310/20 while AUD/USD rose about 50 pips into the 0.7940/50 zone.
Upcoming Economic Data Releases (Asia Session) prior expected
- 6/18 1:00 GMT AU Westpac-ACCI 2Q Survey of Industrial Trends
