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Daily Market Outlook, June 25, 2021
Overnight Headlines
- U.S. infrastructure deal includes $6 billion sale from oil reserve -document • Democrats' two-step infrastructure plan draws Republican ire • St. Louis Fed Bullard – Supply chains will be under pressure for quite a while • Richmond Fed Barkin – U.S. not at full employment, inflation rise temporary • U.S. house votes to repeal ‘true lender’ banking rule issued under Trump • Banks clear Fed stress test, paving way to boost buybacks, dividends • U.S. House committee due to consider sweeping China bill next week • Foreign CB US debt holdings +$1.774 bln to $3.540 tln Jun 23 week • Treasuries +$522 mln to $3.099 tln, agencies +$1.631 bln to $352.180 bln • Near-term global bond market correction likely – strategists • Tokyo Jun core CPI YY unch, -0.1% f'cast, -0.2% prev; overall CPI unch • First COVID-19 case could have emerged in China in Oct 2019 – study • China's ban forces some bitcoin miners to flee overseas, others sell out • NZ May Trade Balance, 469.0 mln, 388.0 mln prev, 414.0 mln revised • UK consumer sentiment holds at post-COVID high • Downtown Sydney, Bondi head for lockdown as Delta infections spike
- Looking Ahead – Economic Data (GMT) • 08:00 EZ May Money-M3 Annual Grwth, 8.5% f'cast, 9.2% prev • 10:00 GB Jun CBI Distributive Trades, 14 f'cast, 18 prev
- Looking Ahead – Events, Auctions, Other Releases (GMT) • N/A ECB Christine Lagarde participates in Euro Summit • 10:30 BoS Gov Cos speaks in Santander
G10 FX Options Expiries for 10AM New York Cut
(Hedging effect can often draw spot toward strikes pre expiry if nearby)
EUR/USD 1.1895-00 (565M), 1.1915-20 (500M), 1.1950-60 (1.1BLN)
1.2000 (545M), 1.2085 (540M), 1.2111 (470M)
USD/JPY 110.00 (843M), 110.25 (310M), 110.50 (834M)
111.00 (1.3BLN), 111.15 (300M)
EUR/JPY 131.66 (200M), 131.75 (200M)
GBP/USD 1.4050 (356M). EUR/GBP 0.85 (1.13BLN), 0.8600 (200M)
USD/CHF 0.89 (1.0BLN), 0.91 (600M). EUR/CHF 1.1050 (245M)
AUD/USD 0.7500-05 (600M), NZD/USD 0.7000 (200M)
Technical & Trade Views
EURUSD Bias: Bearish below 1.21 Bullish above
tad better bid in Asia but upside very limited • EUR/USD 1.1928-45 EBS in Asia, tad better bid but upside very limited • Offers eyed on rallies towards 1.2000, dovish ECB weighs • Support on dips, 1.1925-34 hourly Ichi cloud cushion, 55-HMA 1.1934 too • Large option expiries in area, helps contain action, large Monday too • Today 1.1895-1.1930 total E1.6 bln, 1.1950-85 total E1.6 bln • EUR/GBP 0.8570-81, flows few and far between • Massive E1.1 bln 0.8500 option expiries today, underlying support • EUR/JPY steady, quiet, Asia 132.35-45, E653 mln expiries 131.65-95
GBPUSD Bias: Bearish below 1.4080 Bullish above.
Key resistance held, but sterling shows resilience • Trades +0.1%, at the top of a 1.3914-1.3933 range with modest flow • British consumer sentiment holds at post-COVID high of -9 • UK to publish plans to lift travel curbs for fully vaccinated • Charts; daily momentum studies conflict, 10 & 21 daily moving averages fall • 21 day Bollinger bands slip – net bearish setup, but progress needed soon • 10 DMA capped Wednesday and Thursday, now at 1.3959 – pivotal resistance • Longer term target is a test of 1.3756, 61.8% of the 2021 fall • NY 1.3888 low and London 1.3985 high are first real support and resistance.
USDJPY Bias: Bullish above 108 targeting 112
Bid into Gotobi Tokyo fix, eases back later • USD/JPY bid up to 110.99 into today's Gotobi Tokyo fix, off later • Downside limited to 110.85 however with market risk on, US yields firm • Yield on Treasury 10s @1.496%, steady to firm, Nikkei +0.75% @29,093 • USD/JPY currently holding around 110.87 55-HMA, hourly cloud 110.66-95 • Massive, $1.3 bln option expiries at 111.00 help cap, 111.15-50 $809 mln • Expiries below today too, 110.50 $834 mln, Monday $1.2 bln • JPY crosses mostly buoyant, supportive USD/JPY
AUDUSD Bias: Bearish below .7790 bullish above
Trades at key resistance, close pivotal for next move • +0.1% with risk at the top of a 0.7580-0.7595 range with moderate interest • Positive markets support, E-mini S&P +0.1%, Nikkei +0.85% and AsiaxJP +0.9 • Charts, 21 day Bollinger bands, 10 & 21 daily moving averages fall • Negative setup remains while closes below well tested 0.7588 10 DMA • Close above 10 DMA would suggest a period of range trading next week • NY 0.7569 low and 0.7566 Asian base Thursday is initial support • This week's 0.7599 high and 0.7635, 38.2% May-June fall first resistance
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Patrick has been involved in the financial markets for well over a decade as a self-educated professional trader and money manager. Flitting between the roles of market commentator, analyst and mentor, Patrick has improved the technical skills and psychological stance of literally hundreds of traders – coaching them to become savvy market operators!