AUD shines, COT report sees further sell off of USD
Summary: the Dollar dived again, spread his weakness who followed a disappointing us Payroll report at Friday. Markets have settled familiar trading ranges. the Dollar Index (USD / DXY) who measures the greenback value against one basket of 6 major currencies, relaxed at 89.95 (90.12 yesterday). Ahead of Thursday’it is important ECB meeting, the euro kept stable, lifting modestly to 1.2192 of 1.2165. Sterling also recorded small gains, up 0.24% at 1.4180 (1.4155). the Australian dollar outperformed, extending its advanced finish at 0.7758, new 6 day highs. Against the Japanese yen, the Dollar slipped to 109.25 (109.52 yesterday). USD / CAD changed little, last seen at 1.2075 (1.2078 yesterday). the USD / CNH pair (US dollar – Chinese offshore yuan) installed moderately inferior at 6.3865 of 6.3900 yesterday and 6.3995 Friday. With Fed policy likely to remain easy, speculators increased their US dollar shorts against 10 IMM futures in the week ended June 1, according to the last Merchant engagement report.
US bond yields bordered higher. the reference 10-year cash flow yielded 1.57% at NY close (1.55% Friday). Two-year U.S. bond yields increased by one basis point for 0.15%. Competing global bond yields were stable. The German Bund at 10 years adjusted with its output at –0.20% (-0.21% yesterday).
Wall Street stocks mixed finish. the DOW relaxed 0.34% in moderate to trade 34,627 (34,747). the S&P 500 finished flat at 4.227.
Data published yesterday seen ANZ Jobs in Australia climb 7.9% in May, of 4.7% of April. China’s trade balance in May posted a surplus of +296 billion CNY against + CNY 277 billion in April. In USD terms, the Surplus passed to +$ 45.5 billion from a precedent + $ 42.9 billion. Both exports and imports have been lower. Japan’s leading economic indicator (April) corresponds to the forecast at 103.0. The unemployment rate in Switzerland remained unchanged at 3%. April factory orders in Germany fell to -0.2%, from a previous 3.9%, missing forecast at 0.4%. Eurozone Sentix investor confidence index in May went to 28.1 of 21.0 (April), beat the estimates at 25.5. Consumer credit in the United States in May was unchanged from April, at $ 18.6 billion, but missing the expectations of $ 19.5 billion.
- EUR / USD – stabilized to end slightly higher at 1.2192 from 1.2165 yesterday. The euro traded in a familiar range between 1.21448 and 1.22017. Ahead of the ECB’s import monetary policy meeting and this week’s rate announcement, the shared currency is in no rush to go anywhere meaningful.
- AUD / USD – The Battler finished leading a major performance against the greenback as the market continues to view any Fed action as tempered after Friday’s US jobs figure. The generally positive risk sentiment in stable markets helped the Aussie.
- USD / JPY – eased despite the modest rebound in US 10-year bond yields. After failing to hold above the 110 level following Friday’s disappointing US jobs report, the USD / JPY continued to decline. USD / JPY closed at 109.25, a new 12-day low.
- USD / CHN – After hitting a high of 6.4009 on Friday night before the US NFP report was released, USD / CNH extended its decline to finish at 6.3865 at the end of New York. The greenback was mostly down against Asian and emerging market currencies.
On the lookout: This week’s big event and important economic data will take place on Thursday. The ECB has its policy meeting, its decision on interest rates, its policy announcement and its press conference. A few minutes later, the United States publishes its Headline and Core CPI report (May). Today the spotlight is on Japan with a plethora of primary economic publications. Japan’s average cash gains (y / y) start today’s data (f / c 0.8% vs. 0.2%). Japanese bank loans (a / a) (f / c 5.6% from 4.8%), current account (April) (f / c JPY1500.6 bio to JPY2650.1 bio – Finlogix), GDP Q1 Price Index (f / c – 0.2% from -0.2%, GDP Q1 (f / c -1.2% from -1.3%). Finally, Japan publishes its Economic Watchers Sentiment ( f / c 33.9 against 39.1). Europe starts with German industrial production (April) (f / c 0.7% against 2.5%). Germany also publishes its economic sentiment index ZEW of June (f / c 85.3.0 against 84.4 – Finlogx). The euro zone publishes its Sentix Investor Sentiment Index (f / c 85.5 against 84.0) The GDP of the euro zone Q1 (t / t) ( f / c -0.6% vs. -0.7%) follows. North American data starts with Canada’s trade balance (April) (f / c deficit of CAD -0.8 billion vs. CAD 1.14 billion previously – Finlogix). Finally, the United States publishes its April trade balance (f / c deficit of -69 billion USD against -74.4 billion USD – ACY Finlogix). accelerating today, most are secondary and should not push the US dollar out of recent familiar ranges. There can be some data surprises, however, and it is always a good idea to keep an eye on them.
Trading outlook: As the dollar ended up weaker, expect trade to remain reasonably tight and within familiar ranges today. June marks the start of summer vacation in the Northern Hemisphere, preventing the slow “summer” vacation trade. That said, Thursday should not be ignored and it will be an important day for FX. In the meantime, we watch the latest Merchant Engagement Report (week ended June 1) to better understand the current market positioning. Net shorts in USD Hit a 12 weeks high, against 10 IMM currencies, totaling -USD 17.7 billion. Speculatorits continued to buy Euros (+ 5.3k prizes, the largest of the currencies), Japanese Yen and Canadian dollars. In the Pound sterling, specifications have reduced their long bets in GBP. The results of the latest COT report will keep traders cautious against the greenback falling too sharply against its rivals.
- EUR / USD – The split currency extended its bull run to finish at 1.2192, up 0.26%. The overall weakness of the USD following Friday’s lukewarm US jobs report helped the equity currency. Ahead of this week’s ECB meeting, the euro will remain stable but any further gain from here will be hard earned, given the current market positioning (long bets on the euro). Immediate resistance is at 1.2200 followed by 1.2230. Immediate support can be found at 1.2170 and 1.2130. Look to trade a likely range today of 1.2160 to 1.2220. I prefer to sell rallies today given the current market positioning.
- AUD / USD – The Aussie climbed higher against the greenback in typical Battler style, closing at 0.7758, near 6-day highs, the best performing major. AUD / USD has immediate resistance at 0.7770 (overnight high at 0.77656) and 0.7800. Support is found at 0.7730 and 0.7710. Expect the Aussie to consolidate in a likely range of 0.7720 to 0.7770 today. Just swap the range shag on this puppy for today.
- USD / JPY – Slipping away, the dollar eased 0.20% against the yen to close at 109.25 after it failed to stay above the 110 level. The yield on US bonds fell to 10 years at 1.55% Friday against 1.62% was the main driver of this currency pair. USD / JPY traded overnight low at 109.189 overnight. Immediate support can be found at 109.20 followed by 108.90. Immediate resistance is at 109.60 (overnight high at 109.638) and 109.80. Today sees a data dump of Japanese economic figures. The COT report saw net purchases of yen during the week ending June 1. Before that, it was always about net sales of yen. Look to trade a probable range of 109.10 to 109.80 today. Prefer to buy dips.
- USD / CAD – The dollar edged down against the Canadian loonie, ending at 1.2075 from 1.2078 yesterday. Despite the even more disappointing Canadian wage report, the USD / CAD pair kept its offered tone. The latest COT report says speculators continue to buy Canadian dollars against the greenback. Be cautious of these lower USD / CAD levels. Immediate support is at 1.2055 (overnight low at 1.20570) and 1.2035. Immediate resistance can be found at 1.2090 and 1.2120. Look for a probable range today of 1.2165-1.2115. Prefer to buy dips. The USD / CAD cannot hold these lower levels for too long.
Happy Tuesday and exchange everything