FOREX: Asia FX Wrap - The USD Trades Poorly
The BBDXY has had a range of 1191.55 - 1193.53 in the Asia-Pac session, it is currently trading around 1192, -0.10%. The USD again slipped lower overnight, and this time in the face of US yields moving higher. The market is much more comfortable selling USD’s, while below 1220 rallies should continue to find supply. The price action for the USD is really beginning to stink and you can see why most of the market wants to express a short. There is lots of event risk coming up next week and we are heading into month-end so caution is warranted.
- EUR/USD - Asian range 1.1762 - 1.1780, Asia is currently trading 1.1775. The pair bounced off its first support around the 1.1600 area. The price still looks a little stretched in the short term, but the USD is trading extremely poorly and the EUR will continue to be the main beneficiary.
- GBP/USD - Asian range 1.3571 - 1.3589, Asia is currently dealing around 1.3580. The support around 1.3350/1.3400 has proved to be solid first up. The pair has cleared its resistance around 1.3550 and focus will now turn back to the 1.3650 area and beyond. While the support holds the market will be encouraged to continue to play from the long side.
- USD/CNH - Asian range 7.1441 - 7.1524, the USD/CNY fix printed 7.1385, Asia is currently dealing around 7.1480. Sellers should be around on bounces while price holds below the 7.2000 area and the PBOC manages the fix lower. Above 7.2000 and we could see a test of the USD Shorts.
- Cross asset : SPX +0.05%, Gold $3382, US 10-Year 4.39%, BBDXY 1192, Crude oil $65.56
- Data/Events : France Business & Manufacturing Confidence/HCOB PMI’s, EZ HCOB PMI’s & ECB Decision, Germany GfK Consumer Confidence & HCOB PMI’s
Fig 1: GBP/USD Spot 120min Chart
Source: MNI - Market News/Bloomberg Finance L.P
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FOREX: Asia FX Wrap - Market Very Quick To Resell The USD
The BBDXY has had a range of 1203.92 - 1207.36 in the Asia-Pac session, it is currently trading around 1204. The BBDXY has extended lower again in early Asian trading after President Trump's announcement of a ceasefire, BBDXY -0.30%. The price action overnight was very revealing and points to a market that is very quick to reinstate USD shorts with conviction high for a move lower. (Bloomberg) - The PBOC set the strongest yuan fixing since November, but it also signaled a reluctance to allow strong gains. The fixing also came in slightly above the estimate for the first time since June 13. This adds to the view that China is acceding to a sustained, gradual appreciation in its currency, as well as emphasizing the broader theme of USD weakness.”
- EUR/USD - Asian range 1.1575 - 1.1610, Asia is currently trading 1.1605. EUR support back towards 1.1450 proved solid once more and the swift turnaround in the USD has seen the EUR going into the London session above 1.1600. While the USD remains on the back foot the EUR will continue to find demand on dips.
- GBP/USD - Asian range 1.3506 - 1.3566, Asia is currently dealing around 1.3560. The GBP again found solid demand around its 1.3400 support and is now back to testing its previous highs back towards 1.3600 looking for the momentum to carry it through its weekly pivot.
- USD/CNH - Asian range 7.1704 - 7.1797, the USD/CNY fix printed 7.1656. Asia is currently dealing around 7.1780. Sellers should be around on bounces while price holds below the 7.2500 area and the PBOC manages the fix lower.
- Cross asset : SPX +0.55%, Gold $3350, US 10-Year 4.34%, BBDXY 1204, Crude oil $66.65
- Data/Events : Ger IFO
Fig 1: GBP/USD Spot Weekly Chart
Source: MNI - Market News/Bloomberg Finance L.P
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NZD: Asia Wrap - NZD Back Above 0.6000
The NZD/USD had a range of 0.5963 - 0.6014 in the Asia-Pac session, going into the London open trading around 0.6005. The NZD has remained well supported all through the Asian session, +0.50%. With the USD back under pressure the NZD very quickly finds itself back on a 0.6000 handle, looking to build momentum for a test of the 0.6100 area.
- "NZ TREASURY: MAINTAINING ECONOMY MOMENTUM MAY BE CHALLENGING" - BBG
- “Among Group-of-10 commodity currencies, the Kiwi “is the only energy importer and most vulnerable if Middle East oil supply is impacted more severely,” wrote Bank of America.”
- A huge bounce from sub 0.5900 and we are again breaking back above the 0.6000 area this morning.
- Technically while the support around 0.5850 holds in NZD/USD it is still in an uptrend, this held perfectly overnight and should risk build on from this then focus will turn once gain back to 0.6050/0.6100.
- Options : Closest significant option expiries for NY cut, based on DTCC data: none. Upcoming Close Strikes : 0.5690(NZD621m June 25)
- CFTC Data showed Asset managers paring back their shorts slightly once more over the week, the leverage community did likewise.
- AUD/NZD range for the session has been 1.0798 - 1.0817, currently trading 1.0805. The cross is struggling to get any momentum back above 1.0800 for now, it needs to hold above here and start extending higher to put a higher low in place. The longer it fails to extend the higher the chances it begins to drift lower again, a break sub 1.0750 will see downward momentum return.
Fig 1: NZD/USD Spot Daily Chart
Source: MNI - Market News/Bloomberg Finance L.P
