LATAM: Summary – July 12
Jul-12 10:46
- Mexico industrial production is due on Friday, with growth expected to slow to 1.1% y/y in May. Elsewhere, Brazil IBGE service volume figures will cross, while Argentina CPI inflation data for June will also be released later today. In the US, yesterday's softer-than-expected CPI print will be weighing on market's minds ahead of the PPI release later today. Fed rates pricing continues to eye the September meeting as the most likely turning point for interest rates.
- EUR/JPY – After yesterday's suspected official intervention in the JPY, markets were volatile again overnight, with supposed rate checks from the BoJ in EUR/JPY keeping markets on edge. The cross printed a new pullback low of 171.52 on the rate check, however prices have recovered well across Friday morning trade.
- Global news:
- US – President Biden vowed he would remain in the 2024 presidential race, but two critical mistakes in the span of two hours deepened concerns about his mental acuity that threaten his campaign. The president drew gasps when he mistakenly introduced Zelenskiy as Russian President Vladimir Putin at an event in the late afternoon. Then, at the opening of the press conference, he fumbled a question about Vice President Kamala Harris by saying he “wouldn’t have picked Vice President Trump to be vice president” if he did not have confidence in her.
- US (MNI) – Vice President Kamala Harris has once again overtaken President Biden in political betting markets with regards to who will be the Democratic party's presidential nominee come November, following Biden's latest verbal gaffes. The latest figures from Election Betting Odds, which collates data from Predictit, Polymarket, Smarkets and Betfair, gives Harris a 43.3% implied probability of becoming the Democratic party nominee, up 7.3% to 24 hours ago.
- JAPAN (MNI) – BoJ officials are “rate-checking” against the euro in FX markets, meaning the BoJ stands ready to conduct forex interventions, the Nikkei reported. The BoJ is known for “rate-checking” before intervening, with the Ministry of Finance acting as final decision maker. Japanese authorities conducted yen-buying interventions against the U.S. dollar early on Friday, local media reported.
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OUTLOOK: CEEMEA FX Price Signal Summary - EURPLN Bull Cycle Remains In Play
Jun-12 10:46
- EURHUF started the week on a bullish note and the cross is holding on to its latest gains. The recent rally reinforces a bullish theme and also confirms a clear break of an important hurdle at 390.86, trendline resistance drawn from the Mar 12 high. This signals scope for an extension towards 395.73, 76.4% of the Mar 12 - May 28 bear leg. A breach of this level would open 398.05, the Mar 22 high. Key short-term support has been defined at 388.62.
- EURPLN has recently recovered from its latest lows and the cross has also traded higher this week. 4.3431, 76.4% of the Apr 16 - May 28 bear leg, has been breached. The continuation higher paves the way for a climb towards 4.3728, the Apr 16 high. To reinstate a recent bearish theme, the cross needs to trade through support at 4.2727, the Jun 6 low.
FOREX: FX Exchange traded roll update.
Jun-12 10:42
FX Exchange traded roll is active today ahead of the US main events today.
- EUR: 48%.
- GBP: 33%.
- CHF: 38%.
- CAD: 44%.
- JPY: 41%.
- AUD: 53%.
- NZD: 46%.
US TSYS: May CPI Inflation Data, FOMC Rate Announcement
Jun-12 10:42
- Treasuries are holding mildly higher, inside narrow overnight ranges ahead of this morning's May CPI inflation data at 0830ET followed by this afternoon's FOMC rate announcement at 1400ET and Chairman Powell's press conference at 1430ET.
- Headline CPI is expected to pull back fairly sharply to 0.1% (median; 0.12% average unrounded) vs 0.31% in April, owing largely to a drop in energy/gasoline prices on a seasonally-adjusted basis.
- The Fed is expected to keep rates steady today, market focus on what they may signal for potential easing later this year. The new Dot Plot is likely to show a shift in the Fed funds median to 2 cuts in 2024, versus 3 in the prior two editions, alongside a nudge higher in the inflation forecasts.
- Sep'24 10Y Treasury futures are currently trading +0.5 at 109-18. Initial technical resistance at 109-27 (50% of of the June 7-10 sell-off) followed by 110-21 (June 7 high).
- Cash yields are running mildly lower: 5s -.0054 at 4.4129, 10s -.0059 at 4.3981%, 30s -.0048 at 4.5318%, while curves remain mixed: 2s10s -0.787 at -43.999, 5s30s +0.061 at 11.708.
- Following today's data/event risk, focus turns to May PPI and weekly claims Thursday morning.
