Daily Market Outlook, June 28, 2021
Overnight Headlines
- Republicans Senate negotiators ready to move forward on infrastructure after Biden walkback • Fed's Rosengren says U.S. can't afford housing market 'boom and bust' – FT • Speculators decrease short USD bet in latest week – CFTC/Reuters • BOJ was confident in June meeting of recovery as vaccination proceeds • China's industrial profit growth slows amid high raw material prices; May, YY, 36.40%, 57.00% prev • China’s bond market issuances hit CNY4.4 tln in May – Xinhua • Sydney and Darwin in lockdown as COVID-19 cases pop up across Australia • Australia says pandemic will hit gov't budget, population over next 40 years • Britain could face food shortages due to lorry driver crisis • Britain bans Binance's UK ops in latest cryptocurrency crackdown • Macron rolls out red carpet to JPMorgan, global CEOs in post-Brexit push • French far-right falls short in regional elections ahead of presidential vote
- Looking Ahead – Events, Auctions, Other Releases (GMT) • N/A ECB Fabio Panetta, De Guindos speak at EURO Finance Summit • 09:00 Bank of Greece releases monetary policy report • 10:30 SNB Maechler, ECB Holzmann speak at Zurich conference • 12:00 BOE Haldane gives Policy Exchange public lecture
- Week Ahead-U.S. spending bill and OPEC meeting in focus The focus this week will be on the progress through Congress of a U.S. infrastructure spending agreement and a meeting of the Organization of the Petroleum Exporting Countries, Russia and allies. Markets received a boost last week when a bipartisan U.S. committee reached an agreement on a preliminary infrastructure spending bill backed by President Joe Biden. The bill will likely face some stiff opposition from both Republicans and Democrats before a final agreement can be reached . The progress of the bill will be closely monitored by markets in the weeks ahead. OPEC+ meets on July 1 at a time when oil is trading at its highest level since 2018 . Reports indicate OPEC and its allies will discuss increasing output by 500,00 barrels per day for August and similar increases in following months . The output increases are likely priced in by the market – so any variation to expectations could cause some volatility.
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 (447M), 1.1920-25 (825M), 1.1945-50 (1.13BLN), 1.1965 (316M), 1.2000 (1.23BLN), 1.2100 (308M)
USD/JPY 109.50 (431M), 110.00 (485M), 110.50 (1.38BLN), 111.00 (385M), 111.75 (500M), 112.00-05 (900M)
EUR/GBP 0.8500 (710M)
AUD/USD 0.7485-90 (500M)
NZD/USD 0.6980 (315M)
EUR/CHF 1.1050 (250M)
USD/CAD 1.2360 (250M)
AUD/JPY 84.65 (240M)
Technical & Trade Views
EURUSD Bias: Bearish below 1.21 Bullish above
A quiet opening saw the market slowly rise through the 1.1940 before the Tokyo fix sent it back into the 1.1930’s and after a brief pause continue through to the 1.1920 level for the low and hold around the area for the grey hour, Light downside bids through the 1.1900 level and weak stops on a dip through to open another run through to the mid 1.18 levels and stronger bids below the 1.1820 level, Topside offers into the 1.1960 area and increasing on any push to the 1.1980-1.2020 area before stronger stops appear opening another push higher.
GBPUSD Bias: Bearish below 1.4080 Bullish above.
Opening a touch higher and quickly filling the gap only to range in the 1.3880-90 through into the Tokyo session before running through the 1.3895 highs in early Tokyo, a few hours in the market dipped through to the lows just above the 1.3875 level and a slow rise for the grey hour to the opening levels again, Weak sellers to the topside through the 1.3900 level and then only really increasing in resistance on a move towards the 1.4000 level with weak stops through the level and increasing offers then into the sentimental levels through to the 1.4200 level before stronger offers really appear, downside bids light through to the 1.3850 level and then increasing support through to the 1.3800 level, weak stops on a break of the level and stronger bids thereafter.
USDJPY Bias: Bullish above 108 targeting 112
Unchanged opening with a limited rise towards the 110.85 level before fixing supply saw the USDJPY dip through to the 110.70 area with later selling slowly pushing towards the 110.60 area for the move into the grey hour, topside strong offers on any move towards the 111.20 level before stops appear however, stronger offers around the 111.50 level likely to limit the first move higher. Downside bids light through to the 109.00 and congestion all the way through, a push through the 108.80 level will likely see weak stops appearing and the market then seeing light congestion to the 108.50 and stronger bids from there on.
AUDUSD Bias: Bearish below .7790 bullish above
A little choppy throughout the Asian session with the market moving off the opening just above the 0.7575 area to test through to the 0.7598 area and define the range with the market bouncing back and forth between the limited range to the grey hour holding around the 0.7585 area, Light offers through to the 0.7620 area with weak stops then appearing for a test into the 0.7750 area however, the area is likely to start to see stronger offers beginning to move in and building through to the 0.7800 area, Downside light bids into the 0.7500 area with stronger congestion just through the area and likely to continue from that point to stronger bids again into the 0.7450 area and repeating through the sentimental levels from there.
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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!