Daily Market Outlook, July 2, 2021
Overnight Headlines
- Dollar's near-term outlook bright, but to fade in a year- Reuters poll • U.S. labor market recovery gaining steam; worker shortages an obstacle • U.S. employment likely accelerated in June as companies boost perks for workers • Vaccinations aiding jobs recovery in food, hotel sector: Fed study • U.S. House approves $715 bln infrastructure bill • U.S. CBO doubles growth forecast to 7.4%; sees slight drop in federal deficit • IMF raises U.S. 2021 growth forecast to 7%, assumes Biden spending plans pass • Foreign CB US debt holdings -$17.637 bln to $3.522 tln Jun 30 week • Treasuries -$17.402 bln to $3.081 tln, agencies -226 mln to $351.954 bln • 30 countries back global minimum corporate tax of 15% • China shares slip after Party's party, others firm ahead of U.S. jobs data • OPEC+ delays meeting to Friday as UAE objects to new oil deal • Australia to halve arrivals from overseas, offers COVID-19 exit roadmap • In boost to Starmer, Labour wins election reprieve in north England
- Looking Ahead – Economic Data (GMT) • 09:00 EZ May Producer Prices MM, 1.2% f'cast, 1.0% prev; YY, 9.5% f'cast, 7.6% prev
- Looking Ahead – Events, Auctions, Other Releases (GMT) • N/A Greece FM Christos Staikouras at Delphi economic conference • 07:00 BoS Gov Cos at Climate conference • 09:00 ECB Andrea Enria at MEF lecture • 12:30 ECB Lagarde in panel discussion • 16:10 Irish CB DepGov Donnery speaks in online event
G10 FX Options Expiries for 10AM New York Cut
(Hedging effect can often draw spot toward strikes pre expiry if nearby)
EUR/USD 1.1750 (1.12BLN), 1.1800-05 (730M), 1.1820-25 (1.8BLN). 1.1850-55 (2.7BLN), 1.1865 (1.0BLN), 1.1875 (413M), 1.1885 (500M), 1.1890-00 (2.36BLN), 1.1915 (1.1BLN), 1.1940 1.2BLN), 1.1950 (2.5BLN)
USD/JPY 110.75-80 (1.6BLN), 111.00 (2.0BLN), 111.40-50 (1.78BLN), 111.75 (1.9BLN), 112.00 (478M)
AUD/USD 0.7400 (755M), 0.7500 (463M), 0.7540 (328M), 0.7600 (365M), 0.7625 (500M)
EUR/JPY 132.20 (420M)
NZD/USD 0.7000-10 (700M)
AUD/NZD 1.0700 (300M)
GBP/USD 1.3750 (364M)
Technical & Trade Views
EURUSD Bias: Bearish below 1.21 Bullish above
Consolidates at lows heading into US jobs • EUR/USD opened at 1.1850 and traded in a 1.1840/52 range in Asia • Market is looking ahead to US payrolls later today for next lead • EUR/USD havering above the 76.4 of the 1.1704/1.2266 move at 1.1836 • A break below 1.1835 targets the 21021 low at 1.1704 • Market is positioned for a strong US non-farm payroll result • There is a risk that USD longs may pare back unless data beats estimates • EUR/USD trending lower with resistance at 10-day MA at 1.1902
GBPUSD Bias: Bearish below 1.4080 Bullish above.
USD belief firms, but key support holds into US jobs • +0.05% in a 1.3752-1.3774 range with plenty of interest in Asia • Economists optimistic on USD short term, but bearish later • Positive USD sentiment, with the market not yet long likely caps cable • Charts; daily momentum studies, 5, 10 & 21 daily moving averages fall • 21 day Bollinger bands slide – a strong bearish trending setup • 10 DMA capped repeatedly, and pivotal is resistance, currently at 1.3871 • 1.3756, 61.8% of the 2021 rise is proving resilient – held in Asia • Downtrend targets a test of 1.3669 double bottom in March and April
USDJPY Bias: Bullish above 108 targeting 112
Consolidates more gains, quiet pre-US NFP • USD/JPY does little in Asia, 111.54-66 EBS, consolidate o/n gains again • Little interest ahead of key US NFP/jobs report tonight, +690K eyed (median) • Massive nearby option expiries again help contain action • 111.00 strike $2 bln, 111.40-50 total $1.8 bln, 111.75 $1.9 bln • Bull coming out of hibernation again, eye 111.71 March '20 high test soon • Break projects test of 112.00, 112.23 February '20 high • JPY crosses steady too with risk more on than off, Nikkei +0.3% @28,791
AUDUSD Bias: Bearish below .7790 bullish above
Retains heavy tone ahead of US payrolls • AUD/USD opened 0.37% lower at 0.7471 after USD moved broadly higher • In a quiet Asian session it slipped down to 0.7461 at one stage • Heading into the afternoon it is trading around 0.7465 • There isn't any support until the 61.8 of the 0.6990/0.8007 move at 0.7378 • Resistance is at the 10-day MA at 0.7536 and break would ease the pressure • AUD/USD likely to remain heavy until the US non-farm payrolls later today
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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!