The dollar continues to strengthen under optimistic signs
Hawkish talk from NY Fed President William Dudley lifted US Treasury yields and the Dollar. Dudley said that inflation would pick up as the labour market improves and wages rise. The Dollar Index (USD/DXY) climbed back to close at 97.45 (97.14 yesterday).
Wall streets stocks rallied with the S&P 500 up 0.8% to record highs as risk appetite returned.
Brent Crude Oil prices fell to close at US$46.85 (US$ 47.33), fresh one month lows. Libyan oil output was boosted to the most in 4 years.
EUR/USD – dropped to close at 1.1148 (1.1202 yesterday). While President Macron won by a landslide in the French parliamentary elections, voter turnout was low.
USD/JPY – rallied to close up 0.65% to 111.52 (110.87 yesterday) on higher US bond yields.
GBP/USD – closed mildly lower at 1.2737 from 1.2777 yesterday.
AUD/USD – slipped to 0.7590 from 0.7617.
The confidence in the US expansion by the Fed’s Dudley saw yields rise, a strong pillar for the Dollar. Ten Year Treasury yields finished up at 2.19%, up four basis points. In contrast, ten year yields in Rival currency countries were mostly flat. Germany 10 year bund yields were flat (0.28%). Japanese 10 year JGB yields were lower to 0.04% from 0.05% yesterday. This will continue to be a driver for the Dollar, which is likely forming a base.
Remarks from other central bank and various Federal Reserve heads will be closely watched.
EUR/USD – Immediate resistance now lies at 1.1220. There is good support around 1.1140 (overnight low was 1.1143). The Macron party’s landslide win in the French parliamentary elections was widely expected and the voter turnout was low. We highlighted the fact the market positioning in the Euro is extreme. Net speculative Euro longs were at the highest in over 6 years. (CFTC/Reuters report for the week ended June 13). Look to sell rallies in the Single Currency.
USD/JPY – The differential between the US and Japanese 10 year bond yields is the strongest driver in this currency pair. This started to widen yesterday. The Dollar climbed 0.66% against the Yen to end at 3 week highs. Immediate resistance lies at 111.70 and then at 112.00. Initial support comes in at 111.20 and then at 110.80. A week ago we were trading at the low 109.00 area. Now we are back near the top end of the recent range between 108.50-113.50. It’s wise to keep this in perspective given that the speculators are short in Yen. It would take a further widening in the yield differentials to see the topside resistance in USD/JPY break.
GBP/USD – has struggled to gain above 1.2800 on the uncertainty of Brexit. There is immediate support at 1.2705. Resistance lies at 1.2770. Broad-based US strength combined with the uncertainty of Brexit will pressurise the Pound and we could see a grind lower. Initial discussions on Brexit appear to have gone well. The loss of PM May’s party in the election initially raised the possibility of “soft” Brexit. However, the uncertainty alone will weigh on Sterling. No currency like uncertainty. Likely range 1.2690-1.2760.
AUD/USD – In true Aussie fashion, grinds lower. The Australian Dollar lost ground after failing to break through strong resistance at 0.7630. Today, there is support at 0.7580 and then at 0.7560. Immediate resistance has come lower to 0.7610. Yesterday Moody’s cut ratings on Australia’s big banks on housing concerns. The RBA releases it’s May Monetary Policy Meeting minutes later on today. Likely range 0.7565-0.7615. Prefer to sell rallies in this environment.
Now is your chance to make a profit!
Open an account here!
***Information contained in this news letter are gathered from third parties and should not be regarded in any way as trade advice or recommendations by CM Trading. CM Trading does not recommend or advise traders or investors in their decision making, but merely provides information from the market for its clients as additional information being made available as per the events occurring in the financial markets.
HIGH RISK WARNING:
Trading Foreign Exchange (Forex) and Contracts for Differences (CFD’s) is highly speculative, carries a high level of risk and may not be suitable for all investors. You may sustain a loss of some or all of your invested capital, therefore, you should not speculate with capital that you cannot afford to lose. You should be aware of all the risks associated with trading on margin.
© Copyright 2015 – CM Trading – All rights reserved