FOREX: Dollar Erodes Trump-Powell Induced Selloff, AUD Underperforms
Jul-17 09:28
- The US dollar is on the front foot again Thursday, having eroded the majority of the sharp selloff induced by the Trump-Powell headlines late yesterday. The USD index trades 0.3% in the green but highs overnight remained just shy of the recovery highs posted at 98.91. The narrative around the potential firing of Federal Reserve Chair Jerome Powell has reintroduced a key bearish catalyst for the dollar, although Trump’s pushback has provided short-term stability.
- The primary driver for AUD (-0.86%) underperformance overnight has been the weaker-than-expected jobs report and the notable uptick in the unemployment rate, which have bolstered RBA easing expectations. For AUDUSD, today’s move below the 50-day EMA (intersects at 0.6490) appears meaningful, and a daily close below this average would be the first in over three months, highlighting a stronger reversal. The initial target for the move would be 0.6435 (Fib retracement) before 0.6373, the Jun 23 low and technical bear trigger.
- Elsewhere, the broad based usd strength has been notable against the Japanese yen, with USDJPY bouncing over 1% from yesterday’s lows. Yesterday’s highs at 149.17 will remain the short-term reference point above as markets await trade discussions between US/Japan officials and this weekend’s upper house election.
- The next focus will be on 149.38, the 50.0% retracement of the Jan 10 - Apr 22 bear leg, and 150.49, the Apr 2 high.
- GBP moderately outperforms on the back of this morning’s labour market data, which was a little firmer-than-expected on net and reduced any residual odds of sequential BoE cuts at this stage. With that said, GBPUSD remains around the 1.3400 mark, within close proximity of the recent lows at 1.3365.
- Later today, US retail sales, Philly Fed manufacturing and import prices highlight the calendar, alongside various Fed speakers.
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US: Trump on Iran Peace Talks
Jun-17 09:21
Donald J. Trump
@realDonaldTrump
I have not reached out to Iran for “Peace Talks” in any way, shape, or form. This is just more HIGHLY FABRICATED, FAKE NEWS! If they want to talk, they know how to reach me. They should have taken the deal that was on the table - Would have saved a lot of lives!!!
EQUITIES: Credit Agricole Option Vol Trade
Jun-17 09:20
Credit Agricole longer Dated Vol Trade:
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FOREX: NZDUSD Uptrend Strengthening, Q1 GDP Due Thursday
Jun-17 09:19
- The USD’s inability to bounce given the geopolitical backdrop has been notable, and the subsequent resilient price action for NZD appears to be strengthening an underlying bullish theme. NZDUSD dips to 0.60 have been well supported across June, and moving average studies are firmly in a bull-mode position.
- The pair registered fresh 8-month highs on Monday, and momentum may build as shorts further reduce positioning. CFTC Data showed asset managers paring back their shorts slightly over the week, the leverage community did likewise. The primary target for the move is 0.6168, the 76.4% retracement of the September ’24 – April ’25 bear leg.
- In the crosses, NZDJPY is threatening to break above 87.95, which would be the highest close since January, placing the focus on the year’s highs at 89.71. For AUDNZD, spot has been consolidating in a 1.0750/1.0800 range, however MA studies do highlight bearish momentum. A sustained break above 1.0825 would be required to alter this trend.
- It’s a busy data calendar in NZ this week, with Westpac consumer confidence & Q1 C/A balance figures Wednesday, before Q1 GDP on Thursday. Bloomberg consensus is forecasting another 0.7% q/q increase in production-based GDP, driven by the primary and manufacturing sectors, leaving the annual rate still down 0.8% y/y but up from Q4's -1.1% y/y.
- Thus, expenditure-based GDP should see a significant contribution from agricultural and also services (tourism) exports. This is stronger than the RBNZ's May forecast of a 0.4% q/q rise.
Source: Bloomberg Finance L.P. / MNI
