Next 24 hours: Euro retreats on neutral Lagarde
Today’s report: Investors not happy about good data
In recent sessions, there have been more calls for the Fed to scale back on its rate hike timeline. And this of course has been well received by the market, with stocks rallying out from recent lows as a consequence.
Wake-up call
- ECB speak
- hike expectations
- BOJ Policy
- Macro outlook
- Oil recovery
- aggressive RBNZ
- Stocks vulnerable
- Dealers report
Peformance chart: 30 Day Performance vs. US dollar (%)
Suggested reading
- Michael Burry's 'Bullwhip' Tweet Deserves Serious Attention, J. Dillian, Bloomberg (June 27, 2022)
- Scrutiny of the Carbon Offset Market is Growing, S. Mundy, Financial Times (June 26, 2022)
Chart talk: Technical & fundamental highlights
Choose pair:
EURUSD – technical overview
The market has come under intense pressure in recent weeks, with setbacks accelerating to retest the multi-year low from 2017. A clear break below 1.0300 now sets up the next downside extension towards parity. At the same time, technical studies have been in the process of unwinding from oversold. But back above 1.1000 would be required at a minimum to take the immediate pressure off the downside.EURUSD – fundamental overview
The Euro has been trading with more of a bid tone lately, mostly on the back of broad USD selling. Key standouts on today’s calendar come from a wave of ECB speak highlighted by a Lagarde appearance, US trade, Case Shiller, the house price index, consumer confidence, and Richmond Fed manufacturing.EURUSD - Technical charts in detail
GBPUSD – technical overview
The market continues to be exceptionally well supported on dips down into the 1.2000 area, with the latest setback once again holding up around the barrier. Overall, the daily trend remains bearish, though there are signs of the market wanting to put in a meaningful bottom ahead of the next major upside extension. Look for a clear break back above 1.2700 to strengthen this outlook. A monthly close below 1.2000 would force a rethink of the outlook.GBPUSD – fundamental overview
The Pound has edged a little higher as BOE rate hike expectations ramp up. The market now sees 164 bps of BOE hikes by year end, up from 162 bps on Friday. Key standouts on today’s calendar come from a wave of ECB speak highlighted by a Lagarde appearance, US trade, Case Shiller, the house price index, consumer confidence, and Richmond Fed manufacturing.USDJPY – technical overview
The market has rocketed higher to its highest levels since 1998 after breaking through the 2002 high. Technical studies are however looking stretched, with scope for a sizable consolidation and correction in the weeks ahead. Look for additional upside from here to be well capped ahead of 140.00. A break back below 130.00 would take the immediate pressure off the topside.USDJPY – fundamental overview
The BOJ is clearly still committed to easy policy despite what's going on with other major central banks. Key standouts on today’s calendar come from a wave of ECB speak highlighted by a Lagarde appearance, US trade, Case Shiller, the house price index, consumer confidence, and Richmond Fed manufacturing.AUDUSD – technical overview
Overall pressure remains on the downside and conditions remain quite choppy. A break back above 0.7900 would be required to force a shift in the structure and suggest we are seeing a more significant bullish reversal. Until then, scope exists for a retest and break of the yearly low.AUDUSD – fundamental overview
Growing concerns over the global macro outlook have kept the Australian Dollar well offered into rallies. Meanwhile, Australian Treasurer Chalmers sees inflation problem 'worsening' before getting better. Key standouts on today’s calendar come from a wave of ECB speak highlighted by a Lagarde appearance, US trade, Case Shiller, the house price index, consumer confidence, and Richmond Fed manufacturing.USDCAD – technical overview
A recent surge back above 1.3000 signals an end to a period of bearish consolidation and suggests the market is in the process of carving out a more significant longer-term base. Next key resistance now comes in up into the 1.3500 area. Setbacks should be very well supported down into the 1.2500 area.USDCAD – fundamental overview
The Canadian Dollar has been benefitting from a recovery in risk sentiment and rebound in the price of oil. Key standouts on today’s calendar come from a wave of ECB speak highlighted by a Lagarde appearance, US trade, Case Shiller, the house price index, consumer confidence, and Richmond Fed manufacturing.NZDUSD – technical overview
Overall pressure remains on the downside and conditions remain quite choppy. A break back above 0.6600 would be required to force a shift in the structure and suggest we are seeing a more significant bullish reversal. Until then, scope exists for fresh yearly lows and a retest of the 2015 low down towards 0.6100.NZDUSD – fundamental overview
Not much activity in the New Zealand Dollar thus far this week, though the currency has been holding steady as odds build for a 75 bp hike at the RBNZ. Key standouts on today’s calendar come from a wave of ECB speak highlighted by a Lagarde appearance, US trade, Case Shiller, the house price index, consumer confidence, and Richmond Fed manufacturing.US SPX 500 – technical overview
Longer-term technical studies are in the process of unwinding from extended readings off record highs. Look for rallies to be well capped in favor of lower tops and lower lows. Back above 4,206 will be required at a minimum to take the immediate pressure off the downside. Next major support comes in around 3,400.US SPX 500 – fundamental overview
With so little room for additional central bank accommodation, given an already depressed interest rate environment, the prospect for sustainable runs to the topside on easy money policy incentives and government stimulus, should no longer be as enticing to investors. Meanwhile, ongoing worry associated with rising inflation and slower growth should continue to weigh more heavily on investor sentiment in 2022.GOLD (SPOT) – technical overview
The 2019 breakout above the 2016 high at 1375 was a significant development, opening the door for fresh record highs. Setbacks should now be well supported above 1700.GOLD (SPOT) – fundamental overview
The yellow metal continues to be well supported on dips with solid demand from medium and longer-term accounts. These players are more concerned about exhausted monetary policy, extended global equities, and inflation risk. All of this should keep the commodity well supported, with many market participants also fleeing to the hard asset as the grand dichotomy of record high equities and record low yields comes to an unnerving climax.