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Daily Market Outlook, June 30, 2021
Overnight Headlines
- Fed Gov Waller –2022 rate hike possible, wants MBS taper first • Japan's May factory output posts biggest monthly drop in a year • JP May Industrial O/P MM SA -5.9%, -2.4% f'cast, 2.9% prev; but June eyed at +9.1% • Japan tax revenues likely rose to record high Y60 trln+ in FY2020/21 – sources • China manufacturing slows as supply shortages roil Asia industry • CN June NBS Mfg PMI, 50.9, 50.8 f'cast, 51.0 prev; Non-Mfg PMI, 53.5, 55.2 prev • China Huarong says cannot determine when it will publish 2020 earnings • Australia c.bank seen adopting 'flexible' QE, rate hikes seen in 2023- Reuters poll • AU May Private Sector Credit, 0.4%, 0.2% prev; Housing Credit, 0.6%, 0.5% prev • Lockdown measures extended in Australia amid COVID-19 outbreak • UK shop prices fall faster but inflation pressures mount – BRC • UK inflation expectations broadly unchanged in June: Citi/YouGov
- Looking Ahead – Economic Data (GMT) • 09:00 EZ June HICP Flash YY, 1.9% f'cast, 2.0% prev; HICP-X F&E Flash YY, 0.9% f'cast, 0.9% prev
- Looking Ahead – Events, Auctions, Other Releases (GMT) • 08:30 Spain EconMin Calviño at European Summit • 09:00 ECB Centeno parliamentary testimony • 11:00 BoE Andy Haldane speaks in London on monetary, FS policy
G10 FX Options Expiries for 10AM New York Cut
(Hedging effect can often draw spot toward strikes pre expiry if nearby)
EUR/USD 1.1850 (293M), 1.1900 (272M), 1.2010-20 (650M),
1.2065 (522M)
USD/JPY 109.45-50 (1.6BLN), 110.20-25 (1.6BLN), 110.50 (1.9BLN),
110.70-75 (1.5BLN), 110.95-00 (750M), 111.50 (415M)
EUR/GBP (500M), 0.8600-10 (355M)
AUD/USD 0.7450 (360M), 0.7505 (670M)
Technical & Trade Views
EURUSD Bias: Bearish below 1.21 Bullish above
Pivots around 1.1900 in quiet Asian session • EUR/USD opened 0.20% lower after USD and JPY firmed during US session • It edged higher in early Asia and traded to 1.1909 before sellers capped • The low was 1.1893 and it was just below 1.1900 into the afternoon • EUR/USD ready to resume trending lower after failing last week below 1.2000 • FX reflecting concerns over spread of Delta variant and impact on growth • USD poised to move higher is US jobs data alters Fed expectations • EUR/USD suppist is at the double-bottom at 1.1845/50 • Resistance is at the 10-day MA at 1.1914
GBPUSD Bias: Bearish below 1.4080 Bullish above.
Gently bid, but risk remains on the downside • +0.05% in a 1.3838-1.3860 range – flow early then quiet month end in Asia • COVID fraud set to cost UK taxpayers tens of billions pounds • Always mistakes in fresh major stimulus, but UK numbers are eye watering • Charts; daily momentum studies, 5, 10 & 21 daily moving averages fall • 21 day Bollinger bands slide – bearish setup suggests further losses • 10 DMA capped repeatedly, currently at 1.3892 and pivotal resistance • Downtrend targets a test of 1.3756, 61.8% of the 2021 rise • NY 1.3814 low and Asian 1.3860 high initial support and resistance
USDJPY Bias: Bullish above 108 targeting 112
steady, most JPY crosses heavy at month-end • Month, quarter, calendar half-year ends see little JPY action in Asia • USD/JPY steady between 110.44-66 EBS, quiet, flows few, far between • Gravitational pull from massive, $1.9 bln 110.50 option expiries • More above and below – 110.20-25 $1.6 bln, 110.70-75 $1.5 bln • USD/JPY holding just above 110.41 daily Ichi tenkan, near 110.56 200-HMA • Soggy US yields weigh, Treasury 10s @1.478%, Nikkei unch on day @28,815 • JPY crosses mostly heavy after renewed weakness this week, risk not on • MXN/JPY the exception, just off recent highs, Asia indicated 5.5703-5.5815
AUDUSD Bias: Bearish below .7790 bullish above
Edges higher as buoyant equity markets underpin • AUD/USD opened 0.7513 after sliding 0.70% as USD rose versus risk currencies • After trading at 0.7510, the AUD/USD drifted higher with buoyant equities • AUD/USD traded to 0.7523 and is settling around 0.7520 • There was no reaction to China PMI, which was slightly better than expected • Resistance is at 10-day MA at 0.7547 and close above would ease the pressure • Support is at the double-bottom at 0.7478 with buyers ahead of 0.7500 • AUD/USD will struggle to rally while COVID lockdowns persist
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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!