Livesquawk reports excerpts from the US President Trump’s interview with Fox News, with the key headlines found below.

USD80 Bln agriculture purchase commitment from China was not enough.

He thinks North Korean leader Kim Jong Un will “absolutely be coming to the white house at the right time.

The US will not be doing war games as long as ‘we’re negotiating in good faith’ with North Korea.

WTO practically built China.

Iran deal a worse deal than North Atlantic Trade Agreement (NAFTA).

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RBA Governor speech overview

Reserve Bank of Australia (RBA) Governor Philip Lowe will be speaking at 02:00 GMT today at an Australian Industry Group event in Melbourne. Lowe’s speech is titled “Productivity, Wages, and Prosperity”, and while it isn’t clear if the RBA governor will be talking about monetary policy directly at the event, he will be addressing macroeconomic conditions within Australia while at the event.

How could it affect the AUD/USD?

The Aussie finds itself on weaker footing this week, and despite a recent turnaround in data figures for the Australian economy, the slump continues, and as FXStreet’s own Valeria Bednarik pointed out for the AUD/USD’s technical outlook: “the pair, however, was unable to extend its gains beyond the current 0.7610/20 region, where it has been meeting selling interest ever since the week started. Ahead of US inflation data, the pair is mild bullish in the short term, above a bearish 20 SMA and with technical indicators aiming higher above their midlines, although with limited strength. The pair would need to advance clearly beyond the 0.7625 level to be able to extend its gains up to 0.7660,  a major Fibonacci resistance.”

Support levels: 0.7565 0.7505 0.7470

Resistance levels: 0.7625 0.7660 0.7700  

Key notes

AUD underperforms as investors square positions ahead of FED rate announcement

About the RBA Governor’s speech

Philip Lowe replaced Glenn Stevens as governor of Australia’s central bank. Lowe was the Deputy Governor of the Reserve Bank of Australia, a position he held since February 2012.

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Analysts at Rabobank explained that today is all about the Fed and when/if we start to see the protection that it has offered pulled back a little further. 

Key Quotes:

“If so, it’s EMs that will be at the front of the line for volatility once again. The expectation today is of course that we get another 25bp rate hike. However, it will be the dot plot and Fed comments that will be of most significance: how many more hikes are we going to see pencilled in for this year, and for 2019?

Before that action we get a warm-up in the form of UK CPI (seen 2.3% y-o-y headline and 2.1% core) and US PPI (seen 0.3% m-o-m and 2.8% y-o-y for final demand).”

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Traders await the FOMC, the quiet before the storm.
USD/JPY well based above the 200-D SMA, hawkish expectations fro the FOMC statement and presser.

USD/JPY has stuck to a tight range in the Tokyo open, unfazed by all the noise ahead of the major event in the FOMC, as well as the BoJ and ECB’s all just around the corner.  Currently, USD/JPY is trading at 110.47 with a high of 110.54 and a from a low of 110.36.

The pair is above the 200-D SMA at 110.20, mostly trading sideways inside 110.10-110.50 overnight and rose only fractionally on the WSJ headlines. There is some sentiment that Federal Reserve Chairman Jerome Powell is ‘considering’ holding a press conference after every policy meeting rather than every other meeting. 

This sent the DXY to the higher end of the 93 handle and sets up the notion that the Fed is about to get very hawkish. However, this could all just be hot air, and whether Powell really sees it worth his while doing a presser after each meeting is another matter entirely.  

Meanwhile, as for US data, the U.S CPI was up a tic to 2.8% y/y enough to keep UST yields and USD supported ahead of Wed’s FOMC:

FOMC Preview: hike on the table… too little too late?

USD/JPY levels

Bulls will look for a rally from above the 200-D SMA  on the FOMC towards May’s 111.39 peaks on a hawkish outcome. this is where the prior 111.50 option barrier plated its defensive role, lying just above the 111.39 May high in a congested area where the 161.8% of May low & 76.4% of May drop is located. On the wide, the 112.30’s, (Fibos at 112.22/33) remain key upside target. On the other hand, a break below the Tenkan prop at 109.19, bears can look to the  55-DMA & daily cloud top around 108.60. 108.05, (100-D SMA), guards a run towards the mid-107.00s with the  2018 low at 104.56 in focus on the downside.

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Dollar extends recovery against the Yen as rising channel continues.
Wednesday will have traders looking towards the upcoming Fed meeting.
A boost for the Greenback here would send the pair back significantly into early 2018 levels.

USD/JPY Chart, 1/-Hour

110.45
Relative change: 0.09%
High: 110.54
Low: 110.33

Trend: Bullish

Support 1: 110.15 (50-hour EMA)
Support 2: 109.97 (previous day low; major psychological level)
Support 3: 109.28 (current week low)

Resistance 1: 110.54 (current week high)
Resistance 2: 111.39 (one-month high)
Resistance 3:110.78 (R1 1-Month pivot)

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Analysts at Nomura offered their model’s projection for today’s fix in USD/CNY.

Key Quotes:

“Our model1 projects the fix to be 44 pips higher than the previous fix (6.4165 from 6.4121) and 124 pips higher than the previous official spot USD/CNY close of 6.4041. The basket implied change is 159 pips higher than the previous official spot USD/CNY close (6.4200 from 6.4041).”

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Jeffrey Gundlach, the head of DoubleLine Capital, is hitting the wires today with his outlook on the US economy and his expectations for commodities looking forward.

Key highlights

Global growth is certainly slowing, but doesn’t see signs of a recession.

Rising deficits combined with rising rates is a “suicide mission”.

Expects oil to lift into the $80-90 range despite rising supplies.

Is also bullish on specifically Gold, but on commodities in general.

 “I think it is excellent time – if you haven’t been in emerging market bonds or high-yield bonds – to contemplate at least a partial shift based upon the level of the dollar and valuation.”

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