Daily Market Outlook, June 18, 2021
Overnight Headlines
- As Fed wakes sleeping dollar, jolted bears may bolster gains • Senators cobbling together bipartisan U.S. infrastructure proposal • White House considering talks between Biden and China's Xi • Chinese apps could face subpoenas or bans under Biden order -sources • Republican congressional committee will start accepting cryptocurrency donations • Fed reverse repo volume soars to another record after rate adjustment • Foreign CB US debt holdings -$9.181 bln to $3.538 tln Jun 16 week • Treasuries -$9.394 bln to $3.098 tln, agencies -$59 mln to $350.549 bln • Investment grade funds see US$3.994 bln inflow week-ended June 16-Lipper • BOJ unveils plan to launch new scheme on climate change, keeps policy steady • Japan's core consumer prices rise for first time in over a year • JP May CPI Core YY 0.1%, 0.1% f'cast, -0.1% prev; Overall -0.1%, -0.4% prev • Bank of England to look through temporary inflation rise – Reuters poll • Gold ticks up but eyes worst week since March 2020 after hawkish Fed • Global COVID-19 death toll exceeds 4 mln – Reuters tally
- Looking Ahead – Economic Data (GMT) •EZ Apr Current Account NSA EUR, 31 bln prev; SA EUR, 17.8 bln prev
- Looking Ahead – Events, Other Releases (GMT) • N/A Luxembourg EcoFin meeting, ECB de Guindos to attend • 07:00 Spain EconMin Calviño speaks at Cercle d'Economia conference • 12:00 BOE Copple in London Central Banking Summer Meetings panel discussion • 15:00 BoS Gov Cos chairs Barcelona Graduate School of Economics ceremony • 15:45 Spain EconMin Calviño speaks at Spanish-Italian forum in Madrid
G10 FX Options Expiries for 10AM New York Cut
(Hedging effect can often draw spot toward strikes pre expiry if nearby)
EUR/USD: 1.1900 (686M), 1.1940-50 (1.7BLN), 1.1975-80(720M), 1.2000 (620M),
1.2065-70 (1.2BLN), 1.2100-10 (4.0BLN)
USD/CHF: 0.9200 (500M)
GBP/USD: 1.3960-80 (406M)
AUD/USD: 0.7680 (549M), 0.7700 (546M). NZD/USD: 0.7270 (376M)
USD/CAD: 1.2160 (1.6BLN), 1.2200 (1.6BLN), 1.2225 (1.1BLN)
USD/JPY: 109.50 (625M), 110.00 (1.45BLN), 110.50 (250M)
EUR/JPY: 134.10 (395M). AUD/JPY: 84.15-20 (1.3BLN)
Technical & Trade Views
EURUSD Bias: Bearish below 1.21 Bullish above
Overnight trade: on hold in Asia after plunges overnight • EUR/USD and EUR/JPY do little in Asia after plunging overnight • USD broadly stronger and talk of massive moves out of cross longs • EUR/USD 1.2006 to 1.1890 EBS o/n, Asia 1.1905-20, consolidating losses • Support eyed around 1.1880 – multiple lows in area April 7-13 • Large option expiries nearby to help contain action? • Today 1.1900 E686 mln, 1.1940-50 E1.7 bln, large in area Monday too • EUR/JPY 132.86 to 131.03 EBS o/n, Asia 131.25-41 • Fall in cross cushioned by 130.56-131.56 ascending daily Ichi cloud • EUR/GBP heavy too, yesterday 0.8575 to 0.8542 • Paring of massive, built-up EUR spec longs maybe not quite over yet
GBPUSD Bias: Bearish below 1.4080 Bullish above.
Overnight trade: Sustains Thursday's fall, as downtrend remains strong • Steady in a 1.3920-1.3944 range – decent interest once Asia fully opened • POLL-Bank of England to look through temporary inflation rise • Economists less comfortable that growth, inflation pressures will subside • Charts; daily momentum studies 5, 10 & 21 daily moving averages fall • 21 day Bollinger bands expand – signals support a strong downtrend • 1.3963 lower 21 day Bollinger band indicates cable is oversold short term • 1.3891 61.8% April June rise held – close below bearish for next week • 1.3960-85 456M strikes then Thursday's 1.4009 Asian high first resistance
USDJPY Bias: Bullish above 108 targeting 112
Overnight trade: heavy, CPI/BoJ shrugged off, support pre-110.00 • USD/JPY heavy in Asia, 110.16-33, weak CPI, BoJ on hold shrugged off • Heaviness on retracement down in US yields, JPY cross long liquidation • Support/bids still eyed pre-109.00 however, low overnight 110.17 too • Massive option expiries today at 110.00 strike, $1.45 bln • Other expiries in area too, between 110.10-50 total $934 mln, to anchor? • US yields remain soggy in Asia, Treasury 10s @1.515% • Of the JPY crosses, EUR/JPY especially weak, Asia 131.25-42
AUDUSD Bias: Bearish below .7790 bullish above
Overnight trade: close key for next week • +0.1% in a tight 0.7549-0.7561 range with consistent flow in Asia • Stable to firmer markets, E-mini S&P +0.2%, Nikkei +0.15%, AsiaxJP flat • Charts; momentum studies, 5, 10 & 21 DMAs track south – bearish setup • 21 day Bolli's expand, trending signal, 0.7585 lower band, so oversold here • 0.7553 200 daily moving average under pressure, traded above since June 2020 • 0.7532 is the 2021 base – close below 0.7530 would be a major negative • Strong close would leave a major potential 0.7530/50 range base • NY 0.7540-0.7590 range is initial support and 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!