OIL: Venezuela Oil Output Resilient in June and July

FULL REPORT HERE (incl. a rough transcript of the post-announcement press conference Q&A)

Executive Summary:

• SNB cut its policy rate by 25bp, meeting market and analyst consensus
• The updated conditional inflation forecast, opening remarks and press conference all had a hawkish tilt to them in our view
• Market pricing through the next, September, meeting was initially aggressive but has since then paired back to OIS-implied odds of around 20% for a further cut into negative territory

• Greenback rally is holding here despite the more benign market backdrop in response to the US strikes on Iran. The move higher in the USD doesn't look directly headline driven, but participation is decent on the EUR/USD sell-off as the pair tests overnight lows. Headlines on repeated Israeli targeting of the Fordow nuclear site will be pressing for this direction of travel, however.
• It's USD/JPY and GBP/USD that stand out here, however. GBP/USD is through last week's 1.3383 and a close at current or lower levels today would mark the first close below the 50-dma since October last year.
• This price actions plays into the signals of a short-term base of the USD here - and a possible buy-on-dips pattern forming. We noted last week the importance of the USD Index showing above the downtrendline that's defined dollar weakness across Trump's term so far - and noted that even de-escalation headlines were proving insufficient to trigger any material weakness in the USD. This leaves 100.481 - 100.569 area as the next upside target and plausible resistance for a short-term bounce.

• While AUD and NZD have also been bearing the brunt of G10 FX declines alongside the Japanese Yen on Monday, the relative outperformance for the likes of EUR and especially CHF are providing notable boosts for some of the yen crosses.
• EURUSD’s resilience around the 1.15 region has allowed EURJPY to extend its rally this month to 3.7%. Price action has been exacerbated by the notable climb back above 168.00 to trade at 11-month highs for the cross, narrowing the gap substantially to 170.00 and 170.47, a key Fibonacci retracement point. It is worth highlighting that the cross is overbought, and a pullback would unwind this condition.
• In similar vein, CHFJPY gains total 3% in June, with recent strength underpinned by the pair reaching an all-time high above the psychological 180.00 mark. Last week’s comparatively hawkish SNB may be providing an additional tailwind here (review here).
• Additionally, the current trajectory highlights how the Franc may be the preferred option in times of geopolitical turmoil, while JPY is seen as a more rate-sensitive haven. A further deterioration of middle east conditions in the form of extensive Iranian retaliation could thus provide further upside potential here. On the upside, projection levels of note from the Apr 25 - May 13 - May 23 price swing are 181.35 and 182.32.