Forex today: dollar bounces back and yields rally digesting hawkish FOMC tone
|Forex today was about yields recovering to make fresh highs for the month of June, albeit still somewhat under water; The DXY managed a score back above the 97 handle with a high of 97.55. The data today was supportive of a recovery in the dollar as well.
The markets digested the FOMC outcome yesterday and it has been taken as a positive for risk, on the whole. It has been supportive of US markets and stocks that started off on the backfoot (techs such as Apple, Amazon weigh on the S&P 500) picked up throughout the day into a partial reversal of yesterday's tumble.
Elsewhere, the main story was with the BoE. The MPC's surprise 5-3 vote lifted the pound vs the previous outcome as just 7-1 to hold rates steady. McCafferty & Saunders joined Forbes looking to hike. However, the price action was mixed as the majority of the market can't imagine the BoE hiking rates during the negotiations and uncertainties around Brexit at this stage. Such concerns are limiting cable's recovery above the 20 dma at 1.2831. In other crosses, EUR/GBP dropped on the BoE to 0.8722, GBP/JPY rallied to 141.58 from 139.20 area.
USD/JPY was attacking the upside all the way to fall 2 pips shy of the 111 handle. EUR consolidated around 111.50. AUD/USD bounced 20 pips later in the session to 0.7580's while the Kiwi followed in a similar fashion, battling back against the dollar onto the 0.72 handle. WTI and commodities, in general, were under water with broad-based dollar strength and for oil, fundamental and supply factors weigh, extending WTI down to $44.26. Gold struggles to hold $1,254 with a low of $1,251.
Day ahead in Asia
NZ Business PMI (Jun) and BoJ are the highlights.
Keynotes from US session
- Oil prices weighed down by supply - AmpGFX
- BoE: Policy unchanged, but there is dissent - ING
- BoE Reaction: Risk-reward doesn't favour chasing near-term GBP upside - ING
- Fed was more hawkish than many expected - BBH
- Tories talks with DUP have led to broad agreement on principles - RTRS
- US: Weekly initial claims was 237,000, a decrease of 8,000 from the previous week
- US: Import prices fall 0.3% in May, led by lower fuel prices; export prices decline 0.7%
- Canada: Manufacturing sales rose 1.1% to a record high $54.4 billion in April
- US: Industrial production was unchanged in May following a large increase in April
- IMF's Lagarde: IMF agreement with euro zone now helps avoid crisis for Greece in mid-July
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