Oil continues to fall and the GBP is recovering slightly after contradictory statements!!
Sterling rose in volatile trade after BOE Chief Economist Andy Haldane said he will vote to increase rates. This came a day after BOE Governor Mark Carney’s remarks that now is not the time to hike UK interest rates. The Dollar Index (USD/DXY) slipped off its highs to finish down 0.2% at 97.56 (97.75).
Oil prices extended their fall on growing fears of oversupply. Brent Crude Oil prices closed down 2.6% at US$ 44.85.
Global stocks were mostly lower. The US DOW ended down 0.27%.
Treasuries were quiet. The benchmark Ten Year bond yield finished flat at 2.16%.
EUR/USD – ended up at 1.1166 from 1.1133 yesterday.
GBP/USD – closed at 1.2673 (1.2627 yesterday). Overall range for the Pound was 1.2588-1.2710.
USD/JPY – finished at 111.38 from 111.48 yesterday.
AUD/USD – closed at 0.7555 (0.7575 yesterday).
US Initial Jobless Claims are due later on today (GMT 12.30 pm, June 22/Local Time 10.30 pm, June 22). Forecasts are for an increase of 240-241K for the week from the previous 237K. A print under 240K could put a bid under the US Dollar.
BOE MPC member Kristin Forbes is speaking to the London Business School (GMT 6 pm, June 22/Local Time 4 am, June 23). Forbes was one of the three MPC members who voted for a 0.25% increase in interest rates in last week’s BOE meeting.
EUR/USD – held supports at 1.1120/30, and managed to close near its highs at 1.1167. There is resistance at 1.1170/80 today. Trading in the Single currency was quiet and featureless and it rose on the back of generally weaker US Dollar. Likely trading range today 1.1130-1.1180. Market positioning is still long to an extreme. Preference is to sell rallies.
GBP/USD – Central bank speak is dominating trade, creating choppy conditions. This will continue with MPC member Forbes due to deliver a speech later on. There is immediate support at 1.2620. Strong support lies at 1.2580. The resistance level is between1.2700-10. Given that Forbes voted for a rate hike in the BOE meeting last week, the topside could be seen first. Likely range 1.2620-1.2720. Look to play a contrarian strategy on GBP/USD. Sell when it’s bid and buy when it’s offered using the support and resistance levels.
USD/JPY – Resistance lies at 111.80 (the overnight high was 111.74). There is strong resistance at 112.00 and this will be difficult to break unless we see the US ten year yield back to 2.2%. The slump in oil prices could derail the equity markets and see risk aversion set in. USD/JPY should then trade lower but the uptrend remains intact. Support lies at 111.00 and 110.80. Likely range 110.90-111.70.
AUD/USD – closed lower at 0.7555 from 0.7575 yesterday. The Aussie looks like it may grind lower within a range given the weaker tone of resource currencies (like the CAD and NZD). Immediate support lies at 0.7540 and 0.7520, which should hold. There is short term resistance at 0.7570/80. Likely range today 0.7525/75.
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