In FX – Risk On, Dollar Off

Boris Schlossberg BKTraders and Prop Traders Edge

Market Drivers June 4, 2018
EURUSD near last week highs
UK Data beats
Nikkei 1.37% Dax 0.26%
Oil $65/bbl
Gold $1293/oz.
Bitcoin $7600

Europe and Asia:
AUD Retail Sales 0.3% vs. 0.4%
GBP UK PMI Construction 52.5 vs. 52.0
EUR EZ PPI 0.0% vs. 0.3%

North America:
USD Factory Orders 8:30

The dollar was weaker at the start of week’s trade as short covering flows and better risk appetite helped push all the majors higher in Asian and European session.

Aussie was the star of the show today rising by more than 1% on the day as it smashed resistance at .7600 and traded towards .7650 by mid-morning London dealing. The pair got a boost from good data today as Company Profits, Retail Sales, and Inventories all beat across the board.

Aussie Retail Sales printed at 0.4% versus 0.3% with food retailing and household goods leading the way. The jump in Retail Sales is a positive piece of news for Aussie bulls and may jolt the RBA out of its neutral slumber when it meets tonight for its monthly meeting. If the statement offers even a hint of a more hawkish bias, the pair could challenge the .7700 figure by midweek.

Meanwhile, in the UK the data was also better as UK Construction PMI came in at 52.5 versus 52.0 eyed. This was the second PMI to beat expectations and now sets up the stage for a possible beat of PMI Services which is the most important of the PMIs. Cable climbed steadily towards 1.3400 as the day progressed and could easily take out 1.3500 if tomorrow’s data beats and the market begins to price in the prospect of rate hike from BoE once again.

Euro was also higher taking out last week’s highs as the anti-dollar flows were universal in today’s trade. The fact that today’s rally comes after a strong US NFP report on Friday is a testament to just how oversold most of the majors were. With little US data on the docket, the short covering rally should continue as the day proceeds and yen crosses should push higher in a full reversal of last week anti-risk.

Author

Boris Schlossberg

BKTraders and Prop Traders Edge

Boris Schlossberg was key speaker at the FXstreet.com International Traders Conferences 2010. Mr. Boris Schlossberg is a leading foreign exchange expert with more than 20 years of financial market experience.

EUR/USD hits two-day highs near 1.1820

EUR/USD picks up pace and reaches two-day tops around 1.1820 at the end of the week. The pair’s move higher comes on the back of renewed weakness in the US Dollar amid growing talk that the Fed could deliver an interest rate cut as early as March. On the docket, the flash US Consumer Sentiment improves to 57.3 in February.

GBP/USD reclaims 1.3600 and above

GBP/USD reverses two straight days of losses, surpassing the key 1.3600 yardstick on Friday. Cable’s rebound comes as the Greenback slips away from two-week highs in response to some profit-taking mood and speculation of Fed rate cuts. In addition, hawkish comments from the BoE’s Pill are also collaborating with the quid’s improvement.

Gold climbs further, focus is back to 45,000

Gold regains upside traction and surpasses the $4,900 mark per troy ounce at the end of the week, shifting its attention to the critical $5,000 region. The move reflects a shift in risk sentiment, driving flows back towards traditional safe haven assets and supporting the yellow metal.

Crypto Today: Bitcoin, Ethereum, XRP rebound amid risk-off, $2.6 billion liquidation wave

Bitcoin edges up above $65,000 at the time of writing on Friday, as dust from the recent macro-triggered sell-off settles. The leading altcoin, Ethereum, hovers above $1,900, but resistance at $2,000 caps the upside. Meanwhile, Ripple has recorded the largest intraday jump among the three assets, up over 10% to $1.35.

Three scenarios for Japanese Yen ahead of snap election

The latest polls point to a dominant win for the ruling bloc at the upcoming Japanese snap election. The larger Sanae Takaichi’s mandate, the more investors fear faster implementation of tax cuts and spending plans.

XRP rally extends as modest ETF inflows support recovery

Ripple is accelerating its recovery, trading above $1.36 at the time of writing on Friday, as investors adjust their positions following a turbulent week in the broader crypto market. The remittance token is up over 21% from its intraday low of $1.12.