The Turkish lira is falling despite Erdogan’s victory and concerns about the stability of the lira
Global trade concerns remain the dominant theme although trading conditions are generally slow. European equity markets follow their Asian counterparts and push lower at the open with mining and auto sectors underperforming with the NASDAQ futures also consistently offered.
The USDJPY holds near the session low of 109.38, with the USDCNH breaking above the 6.55 after the PBOC cut their RRR. The TRY was the best performer after Erdogan won the Turkish elections, however, it was immediately offered as investors saw more turbulence ahead with Erdogan at the helm.
USTs were quiet in the European hours with the bund curve mildly flatter as the opening gap higher is slowly fading. The BTPs pushed lower again with some focus on League’s strong showing in local elections.
Brent crude gaps lower Asian open after the bearish Saudi comments before gradually trimming losses in the late European morning session.
In the key headlines for the European session yesterday :
- U.S. Treasury Department is planning to heighten scrutiny of Chinese investments in sensitive U.S. industries as Trump threatens “more than reciprocity” to trade barriers.
- People Bank of China cuts RRR for some banks by 0.50%, freeing about 700 Billion Yuan of Cash
- German June IFO Business Climate at 101.8 vs 101.8 estimates. Expectations at 98.6 vs 98.0 estimates. Current Assessment at 105.1 vs 105.6 estimate
- ECB’s Vasiliauskas: could discuss further policy steps in Autumn of 2019.
- Turkey: Erdogan wins presidential vote, as he gains parliament majority with allies
- OPEC+ real output increase should be closer to 1 million barrels per day.
The European session is taken over by the U.S. market as a boring Monday is waiting for the investors. With no speakers to be heard and relatively unimportant economic data during this session, markets are more than likely going to continue in the previous session’s trend as they look for news on the ongoing trade spat between the U.S. and China.
Major currencies started the week on a rather quiet note with the dollar wedged in a tight range amid ongoing trade concerns that buoyed the yen. The euro was little changed as the overstretched short positioning drew some support from reported dovish comments by ECB’s Praet, while an EU summit later this week is now in focus amid migration issues. Treasuries gained, and euro-area bonds traded mixed, while the Turkish lira rallied after Erdogan’s election victory. Stocks traded in the red with U.S. futures pointing to a weak opening.
EUR/USD – Pair rebound meets 21-DMA resistance, as expected; rise above the ECB-day high of 1.1851 would suggest a move to 1.2200 is in the making on double-bottom confirmation; euro still to signal it’s out of the woods.
GBP/USD – Mean reverts as rebound tries to extend; June 21 low pivotal for short-term direction.
USD/JPY – Fails to build on the bullish momentum as trendline since December caps to maintain a lower highs pattern; Fibonacci resistance caps once more; bulls need 55-DMA to hold.
AUD/USD – Minor bearish reversal may be in the making as a Tweezer Top forms on the daily, resistance ~0.7450 holds.
EUR/CHF – Largely consolidates; 21-DMA resistance remains a strong hurdle for bulls, at bar 8 on daily DeMark buy setup.
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