• AUD/USD dropped to its lowest level since early April on Thursday.
  • US Dollar Index stays within a touching distance of 92.00.
  • Market participants largely ignored uninspiring data releases from US.

The AUD/USD pair extended its slide after posting heavy losses on Wednesday and dropped to its lowest level since April 1 at 0.7539 on Thursday before going into a consolidation phase. As of writing, the pair was trading at 0.7557, losing 0.7% on a daily basis.

DXY climbs to multi-month highs

The unabated USD strength remained the main market theme following the hawkish shift seen in the FOMC’s updated Summary of Projection, the so-called dot plot. The publication revealed that the number of policymakers who see a lift-off in the fed funds rate from zero in 2023 rose to 13 from seven in March. 

Following Wednesday’s 1% jump, the US Dollar Index (DXY) preserved its bullish momentum and advanced to its strongest level in more than two months at 92.00 during the American trading hours on Thursday. As of writing, the DXY was up 0.5% on the day at 91.84.

Meanwhile, the data from the US revealed that the Initial Jobless Claims rose to 412,000 from 375,000 and the Philadelphia Fed’s Manufacturing Index edged lower to 30.7 in June from 31.5 in May. Nevertheless, these figures had little to no impact on the greenback’s performance against its rivals.

On the other hand, the Australian Bureau of Statistics announced earlier in the day that the Employment Change in Australia jumped to +115,200 in May, surpassing the market expectation of +30,00 by a wide margin. However, AUD/USD’s positive reaction to this data remained short-lived with investors staying focused on the USD’s valuation.

Technical levels to watch for

 

  • GBP/USD bears seeking a break of the 1.3890 for 1.36 area targets.
  • US dollar is not letting up on hawkish Fed hold.
  • All eyes will turn to the BOE next week following the UK CPI print this week.

GBP/USD is currently trading at 1.3924 and down around 0.4% in the afternoon New York session attempting to correct the steep bearish decline. 

Cable has traded between a high of 1.4008 and a low of 1.3895 on the day so far, reeling in the wake of US dollar strength. 

GBP took back a little ground vs the G10s earlier in the week on the release of the stronger than expected UK Consumer Price Index data with sufficient strength in the release to spark a little more interest in the Bank of England’s next policy meeting on June 24.  

However, that was before the Federal Reserve came along and took the markets by surprise with a hawkish hold.

The hawkish tone from yesterday’s meeting and dot plot that now shows a faster-than-expected pace of tightening weighed on risk sentiment and sent US yields and the greenback higher.  

Fed Chair Powell described this week’s meeting as the ‘talking about talking about’ meeting.

Markets took this as a sign that members are now seeking a plan to reduce the pace of QE while they’re bringing forward their projections from flat to +50bp in rate hikes by end-2023.

The combination has continued to percolate through markets with knee jerk reactions in the dollar extending into today’s trade despite the bullish data overnight from New Zealand and Australia. 

The DXY has powered ahead is trading at the highest since April 13, taking on the 92 level with a high after easily breaking above the 200-day moving average near 91.538.  

Bulls now have sights on a test of the March 31 high near 93.437.  

However, is the Fed really that close to hiking and has the market overshot?

The market has been building US dollar shorts for a considerable time and the volatility on forex has been at its lowest in over a year for just as long. 

There is a lot of pent up demand in the markets and traders are seeking to survive on more than just the carry.

In the opinion of analysts at Brown Brothers Harriman, the Fed is not close to hiking, ”but it is moving closer.”

”Of note, there was no language in the official statement about tapering.  In terms of updated forecasts, Fed sees core PCE at 3.0% this year vs. 2.2% back in March, 2.1% in 2022 vs. 2.0% in March, and 2.1% in 2023 vs. 2.1% in March. 

Lastly, the Fed raised the IOER by 5 bp to 0.15% but this was a purely technical move to help move effective Fed Funds off the zero bound in the face of ultra-abundant liquidity.”

”Powell noted that the Fed will continue to assess progress towards its dual mandate in coming meetings but that it’s “still a ways off.”  If his outlook is to be believed, that time is not as far off as the market thought,” the analysts also explained. 

Importantly, the analysts also noted that the 10-year breakeven inflation rates are down 6 bp on the hawkish hold.  

”That is, the market has even more confidence that the Fed won’t let inflation get out of hand.  With the 10-year yield up 7 bp, the real yield has risen 14 bp to -0.76%, the highest since April 19.  

This is dollar-positive and we think there’s room to go even higher.”

All eyes on the BoE

Meanwhile, as for the pound, market participants appear to be comfortable in the view that much of the inflation experienced this year in the UK will have a transient nature.

However, there is significant uncertainty around the length of time current supply bottlenecks will take to dissipate, analysts at Rabobank said. 

”This uncertainty has given way to the debate as to whether inflation expectations will be impacted and whether price pressures in the forthcoming economic cycle could be higher than in recent history.”

”In the UK, the inflationary argument is made all the more interesting by reports that Labour supply could be diminished as a consequence of the confluence of Brexit and the pandemic.”

The analysts argued that could have the potential to impact wage inflation in the UK. 

Following the CPI print, this makes for the next labour market report and BoE meeting an important set of events, especially given the shift the Fed for which policymakers will be paying close attention. 

At the end of last month, the MPC’s Vlieghe did suggest that a rate hike was possible in the first half of next year if the job markets bounce backs.  

GBP bulls will be looking for any less dovish takeaways from the Bank next week.

On the other hand, ”we see current headwinds for the pound in the shape of the delayed re-opening of England’s economy and potentially as a result of tensions with the EU over the Northern Ireland protocol which have raised the threat of a trade war,” the analysts at Rabobank warned. 

GBP/USD technical analysis

Techcnailly, analysts BBH said that sterling needs to break below $1.3890 to set up a test of the April 12 low near $1.3670. 

 

 

  • WTI sufre fuertes pérdidas por segundo día consecutivo el jueves.
  • La fortaleza del USD de base amplia parece estar arrastrando los precios del crudo a la baja.
  • La falta de progreso en las conversaciones nucleares de Irán pesa aún más sobre el WTI.

Después de alcanzar su nivel más alto desde octubre de 2018 a 72.96$ el miércoles, el barril de West Texas Intermediate (WTI) dio un giro brusco y rompió una racha ganadora de cuatro días, perdiendo más del 1%.

Aunque el WTI se mantuvo relativamente tranquilo en torno a los 72$ durante el horario comercial europeo, se vio sometido a una renovada presión bajista y cayó a su nivel más bajo en casi una semana a 69.75$ antes de rebotar modestamente. Al momento de escribir, WTI cotiza al 1.72% en el día a 70.45$

El rally DXY permanece intacto

La fortaleza generalizada del USD tras el cambio radical observado en el Resumen de proyecciones del FOMC parece ser el tema principal del mercado en la segunda mitad de la semana. Actualmente, el índice del dólar estadounidense (DXY) cotiza a su nivel más alto en más de dos meses en 91.90, aumentando un 0.55% en el día.

Mientras tanto, los inversores siguen siendo cautelosos ante la posibilidad de que Irán y Estados Unidos lleguen a un acuerdo sobre conversaciones nucleares que podrían llevar al levantamiento de las sanciones a las exportaciones de petróleo antes de las próximas elecciones en Irán el viernes.

Niveles técnicos 

                         

En una entrevista con el diario alemán Handelsblatt, Jens Weidmann, miembro del Consejo de Gobierno del Banco Central Europeo (BCE) y presidente del Bundesbank, pidió al BCE que ponga fin al Programa de Compras de Emergencia Pandémica (PEPP) para que termine pronto, según Reuters.

Declaraciones destacadas 

“La condición para una normalización de la política monetaria es una sólida recuperación económica, fin de las principales medidas para poner fin a la pandemia”.

“Creo que esto sucederá en 2022”.

“La inflación en Alemania es sólo temporal”.

“No hay indicios de aumentos salariales excesivos en Alemania”.

Reacción del mercado

Estos comentarios no ayudaron a la moneda compartida a encontrar demanda. Al momento de escribir, el par EUR/USD bajó un 0.73% en el día a 1.1906.

  • WTI suffers heavy losses for the second straight day on Thursday.
  • Broad-based USD strength seems to be dragging crude oil prices lower.
  • Lack of progress in Iran nuclear talks further weighs on WTI.

After reaching its highest level since October 2018 at $72.96 on Wednesday, the barrel of West Texas Intermediate (WTI) made a sharp U-turn and snapped a four-day winning streak, losing more than 1%.

Although WTI stayed relatively quiet around $72 during the European trading hours, it came under renewed bearish pressure and dropped to its lowest level in nearly a week at $69.75 before rebounding modestly. As of writing, WTI is trading at 1.72% on the day at $70.45

DXY rally remains intact

The broad-based USD strength following the hawkish shift witnessed in the FOMC’s Summary of Projections seems to be the main market theme in the second half of the week. Currently, the US Dollar Index (DXY) is trading at its highest level in more than two months at 91.90, rising 0.55% on a daily basis.

Meanwhile, investors remain cautious about Iran and the US coming to an agreement on nuclear talks that could lead to the lifting of sanctions on oil exports ahead of the upcoming election in Iran on Friday.

Technical levels to watch for

 

  • El euro sigue bajo presión frente al dólar estadounidense, DXY apunta a 92.00.
  • El dólar amplía las ganancias incluso en medio de la bajada de los rendimientos de EE.UU.

Después de una breve pausa de consolidación, el par EUR/USD reanudó la caída y rompió por debajo de 1.900, cayendo a 1.1890, el nuevo mínimo de dos meses. El par ahora ha caído casi trescientos pips desde el nivel que tenía hace una semana.

USD, la estrella brillante pase lo que pase

El dólar estadounidense registró nuevos máximos frente a la mayoría de las monedas del G10. En ese grupo, el yen es el mejor del jueves, pero el dólar sigue siendo el mejor de la semana.

El nuevo máximo del dólar estadounidense se produjo incluso cuando los rendimientos estadounidenses cayeron bruscamente. El rendimiento a 10 años está cayendo más del 6.35%, ahora por debajo del 1.48%, e incluso por debajo del nivel que tenía antes de la publicación de la declaración del FOMC que desencadenó el repunte del dólar.

Los precios de las acciones son en su mayoría más bajos en los EE.UU. El Dow Jones cae un 0,93%, el S&P 500 cae un 0.38% mientras que el Nasdaq gana un 0.38%. La cautela aún prevalece entre los inversores que impulsan la demanda del dólar estadounidense.

El par EUR/USD está en camino hacia el cierre diario más bajo desde el 7 de abril, el primero por debajo del promedio móvil de 200 días en dos meses. A pesar de las lecturas de sobreventa en los indicadores técnicos, el impulso sigue siendo marcadamente negativo, con el tono negativo intacto. En el lado negativo, el próximo soporte podría verse alrededor de 1.1870/75.

Niveles técnicos

                         

  • El peso mexicano recupera algo de terreno perdido frente al dólar estadounidense luego de caer al mínimo desde marzo.
  • El USD/MXN plano el jueves después de un retroceso desde 20.62.

El USD/MXN alcanzó su punto máximo el jueves en 20,62, el nivel intradiario más alto desde finales de marzo. Luego retrocedió en medio de la bajada de los rendimientos de EE.UU. y a pesar de la aversión al riesgo. El par volvió a caer por debajo de 20.50, y ronda los 20.35, modestamente más bajo para el día a punto de publicar el primer cierre negativo desde el jueves pasado.

La perspectiva ahora apunta al alza, pero el repunte del USD/MXN requiere cierta precaución. Mientras que por debajo de 20.50, las probabilidades de más ganancias parecen limitadas. Un cierre por encima del nivel mencionado expondría la próxima resistencia vista en 20.60, seguida de 20.80/85.

El RSI diario se acerca a la zona de los 70, lo que sugiere cierta consolidación antes de otro tramo potencial al alza. El USD/MXN podría negociarse entre el promedio móvil de 100 días en 20.25 y 20.55. Una caída por debajo de 19.95 anularía cualquier sesgo alcista, favoreciendo más pérdidas en el futuro.

Gráfico diario USD/MXN

Niveles técnicos 

                                       

 

In an interview with Germany’s Handelsblatt daily, Jens Weidmann, European Central Bank (ECB) Governing Council member and Bundesbank President, called for the ECB to end the Pandemic Emergency Purchase Programme (PEPP) to end soon, per Reuters.

Additional takeaways

“Condition for a normalisation of monetary policy is a robust economic recovery, end of main measures to end the pandemic.”

“I believe this will happen in 2022.”

“Inflation in Germany is only temporary.”

“No indication of excess wage hikes in Germany.”

Market reaction

These comments failed to help the shared currency find demand. As of writing, the EUR/USD pair was down 0.73% on the day at 1.1906.

  • Euro remains under pressure versus US Dollar, DXY eyes 92.00.
  • Greenback extends gains even amid lower US yields.

After a brief consolidation pause, the EUR/USD resumed the downside and broke under 1.900, falling to 1.1890, the fresh two-month low. The pair has now fallen almost three hundred pips from the level it had a week ago.

USD, the shinning start no matter what

The US dollar printed fresh highs against most G10 currencies. In that group the yen is the outperformer on Thursday, still the greenback is the best of the week.

The fresh high of the US dollar took place even as US yields decline sharply. The 10-year is falling more than 6.35%, now under 1.48%, and even below the level it had prior to the release of the FOMC statement that triggered the rally of the greenback.

Equity prices are mostly lower in the US. The Dow Jones drops 0.93%, the S&P 500 falls by 0.38% while the Nasdaq gains 0.38%. Caution still prevails among investors driving demand for the US dollar.

The EUR/USD is on its way to the lowest daily close since April 7, the first one under the 200-day moving average in two months. Despite oversold readings in technical indicators, the momentum is still sharply negative, with the negative tone intact. On the downside, the next support might be seen around 1.1870/75.

Technical levels