AUG CRUDE OIL DAILY
Euro/dollar is trading very quietly this morning as NY trade gets underway. Chart support in the 1.1350s continues to hold after Bullard's comments yesterday saw traders push the market lower into the level. We cant say we were all that surprised given the markets inability to regain the 1.14 handle and golds failure to regain the 1440s heading into the London close. The Feds Bullard said the current situation doesnt call for a 50 basis point rate cut in July, and while weve seen the July Fed fund futures adjust accordingly since those remarks, a quick look at the US treasury curve and the Eurodollar interest rate curve this morning suggests interest rate traders have not been overly swayed that the Fed will have to cut quickly and aggressively later this year. German bunds yields are trading steady at -0.32% this morning and the spread for Italian BTPs over bunds sits at +245bp versus last weeks lows in the +231bp area. We think todays action in EURUSD may be choppy, as over 3.5blnEUR in options expire between the 1.1370 and 1.1390 strikes.
AUG GOLD DAILY
Sterling found some buyers at chart support in the 1.2660s this morning as Bank of England governor Mark Carney took the mic in UK parliament, but sellers have been back on the prowl after GBPUSD failed to get back above chart resistance at the 1.2710 area. More here from Reuters on Mark Carneys speech. Yesterdays bearish outside reversal candle on the daily GBPUSD chart, made worse by way of the Bullard/Powell inspired intra-day USD rally, seems to be casting a shadow over traders this morning. Pound futures traders liquidated 1,459 contracts in yesterdays trade. We think the technical outlook for GBPUSD has turned decidedly more choppy here in the near term. The EURGBP cross managed to venture back above the 0.8940-50s yesterday and recent buyers appear to have so far survived a downside test of this level in London trade today. We think a push in this cross towards the 90 handle (which is doable now in our opinion), could pressure GBP more broadly. Is there perhaps some negative Brexit news on the horizon?
The Australian dollar is enjoying a mild breakout higher above the 0.6960s today. This comes on the heels of continued buying in NZDUSD, after the Reserve Bank of New Zealand decided to leave interest rates on hold at 1.50% (which was a bit of a disappointment to those in the OIS market who were pricing in a 20% chance of a 25bp cut last night). The statement from the central bank was rather dovish though, citing a slowdown in the global economic outlook. Money markets are now pricing a 63% chance that rates fall by 25bp at the next RBNZ meeting on August 7. More here from the Guardian. Adding to the fuel for AUDUSD this morning was the re-hashed were 90% there story from CNBC regarding US/China trade talks. While we believe this AUDUSD break-out is technically positive for the market and could ultimately lead to a move into the 0.7000s, were a bit concerned that the Australian dollar isnt benefiting more from todays positive headlines and we would note that the off-shore Chinese yuan and July copper prices have already completely reversed the CNBC headline as we head into NY trade.
Dollar/yen is extending its gains this morning, after some less dovish than expected comments from Bullard and Powell prompted some bond traders to reduce exposure yesterday afternoon. The CNBC Mnuchin headline earlier today provided the impetus for the next leg higher through 107.50 and into chart resistance at the 107.75 level. The USDJPY market desperately needed to bounce yesterday to prevent a cascade of selling in our opinion as theres literally no chart support below the 106.80-90 level we mentioned yesterday (the Jan 3rd flash crash range).
DEC 3-MONTH EURODOLLARS DAILY
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