The NY session saw some classic directionless trading on the back of the upcoming holiday in the United States. Equities were better bid and broadly eked out a 0.9% gain despite a flat performance for the better part of the session. The bullish tone to risk assets saw the USD come under modest pressure as has been the case for the entire year thus far. Commodities were one of the big stories as oil jumped more than 3% to back above the $71 level on new attacks by Nigerian militants. The fundamentals remain oil bearish and the IEA just cut its forecast for crude demand for the next five years. This should weigh on the currencies of the resource-based economies like Canada and Australia. Interestingly, oil prices have had little in the way of impact on the US dollar in the month of June, after witnessing an excellent negative correlation in May. So the strength in oil might not see commensurate weakness in the buck.
The price action in FX was lackluster to say the least and the majors were pretty well range-bound. EUR/USD remains well supported into 1.4040 and we would expect a test through there could see a relatively quick spill into 1.4000 initially – especially if markets are thin due to the holiday week. 1.4080 looks like the pivot in the short-term and it feels better offered into the 1.4100/10 zone. The USD/JPY focus remains the Ichimoku cloud bottom which sits at 96.04 and a close above there would open up potential for more gains ahead. The top of the cloud comes in by 97.50 for reference. Cable was also extremely choppy and was sitting by 1.6560/70 ahead of the NY close. The pair continues to be supported into 1.6510/00 and we would expect good resistance by the 1.6600 level. Expect these ranges to hold if the holiday lull persists throughout the week. The price action in risk remains the focus overnight.
Upcoming Economic Data Releases (Asia Session) prior expected
- 6/29 23:01 GMT UK GfK Consumer Confidence Survey JUN -27 -25
- 6/29 23:15 GMT JN Nomura/JMMA Manufacturing PMI JUN 46.6 - -
- 6/29 23:30 GMT JN Jobless Rate MAY 5.00% 5.20%
- 6/29 23:30 GMT JN Household Spending (YoY) MAY -1.30% -1.50%
- 6/30 1:00 GMT AU HIA New Home Sales (MoM) MAY 0.50% - -
- 6/30 1:30 GMT AU Private Sector Credit MoM% MAY 0.10% 0.20%
- 6/30 3:00 GMT NZ NBNZ Business Confidence JUN 1.9 - -
- 6/30 5:00 GMT JN Small Business Confidence JUN 34.1 - -
- 6/30 5:00 GMT JN Housing Starts (YoY) MAY -32.40% -27.80%
