FOREX: USD Off Highs, NZD & SEK Modest Outperformers Amid Equity Recovery
Jun-08 16:54
- Major equity benchmarks have been edging higher on Monday, recovering from the sharp declines following last week’s US employment report and ensuing risk off. This dynamic has placed the USD under modest pressure to start the week, and the higher beta plays such as NZD (+0.36%) and SEK (+0.32%) are the best performers across the G10 FX space.
- Overall, the USD index is holding close to 100 and is within close range of the year’s best levels just above the 100.50. Greenback optimism reflects the market digesting the plethora of firmer US data in recent weeks, while uncertainty surrounding the ceasefire negotiations in the Middle East continue to keep energy prices elevated.
- Downside EURUSD momentum stalled at 1.1500 today and spot has recovered to the 1.1540 region ahead of the APAC crossover. Overall, the recent close below 1.16 and extension of weakness has confirmed the recent underlying bearish trend. The pair has spent the majority of the session trading below the bear channel base, which intersects at 1.1541. The downside focus now turns to 1.1411 which remains the key support, the March 13 and 16 lows.
- Today’s GBPUSD low print came within 3 pips of the next key support at 1.3303, the May 18 low. Clearance of this price point would strengthen a bearish threat and pave the way for an extension towards initial targets of 1.3212 and 1.3159. June 18 remains a pivotal data for GBP, given it is the BOE meeting and the Makerfield by-election and the associated potential to stoke political and fiscal uncertainty in the UK.
- Elsewhere, overnight highs in USDJPY of 160.39 mean the pair has further narrowed the gap to key resistance of 160.72, the pre-intervention highs reached on April 30. Spot has subsequently drifted back to 160 as intervention worries remain present.
- China trade, German IP and US trade balance and existing home sales highlight the tier-two releases on Tuesday, before Wednesday’s US CPI release and BOC decision.
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