The US$ is steady, oil prices slip, equity markets are up, while US yields are mixed as risk sentiment remains positive. The US$ Index has dropped 2% in June, global equities having for their best week since March, oil prices are set to a snap two-week losing streak on the Fed pause, increasing expectations on China stimulus and exuberance surrounding artificial intelligence firms. The prospect that the Fed will soon end its tightening cycle helped boost risk sentiment, while expectations are growing that China's government will boost spending in Q3 which has helped provide a boost to commodity pricing. The ECB raised rates as expected on Thursday and ECB President Lagarde described a further hike in July as "very likely". In Japan its central bank kept its negative interest rate and yield control program unchanged. Today US Michigan Consumer Sentiment Index, Fed Waller Speech & CAD Wholesale sales will help provide some direction to currency markets today.
In other news. US Secretary of State Blinken is set to visit Beijing in his first trip to China under the Biden administration. Corporate insolvencies jump 40% in England & Wales. US Chipmaker Intel to build $4.6bn plant in Poland. US Senators launch bill to seize and transfer Russian assets to Ukraine. UK regulator clears Amazon's planned purchase of iRobot. Euro zone May inflation confirmed at 6.1% y/y sharply decreasing from 7% in April. World shares reach 14-month highs as investors shrug off the Fed-Reuters. China takes next step in currency globalization, with some HK stocks priced in yuan. Sweden braces for fallout from property slump. Explosions rock Kyiv as African peace mission visits Ukraine.
In currency news. JPY slips to fresh 15-year low against Euro as BOJ keeps rates unchanged. Turkish Lira stalls near all-time-highs as VP says Turkey could gradually abandon lira protection scheme. The US$ Index drops 2% in June, down 1.3% year today. AUD stalls at 4-month highs after rallying near 6% in June vs US$. CNY edges up 0.1%, while Asian currencies are flat on average vs US$. Trading currencies are mixed with JPY falling 0.5%, NOK & MXN weaken 0.25%, SEK slips 0.1%, while NZD & CHF are flat, AUD gains 0.2% vs US$.
Oil prices slip in early trading, but overall oil prices look set to snap a two-week loosing streak on increasing China demand optimism. C$ holds near its 9-month highs (1.3213) on the combination of the Fed pause and anticipation of China stimulus providing support to commodity prices and improving overall risk-on sentiment. Domestically Canadian home sales rise 5.1% in May, extending the market's recovery following a year-long slump. Intraday the US Michigan Consumer Sentiment Index will be the primary focus for markets today. We anticipate currency markets will likely consolidate today after a volatile week and heading in the US long weekend.
EURCAD holds steady in early trading after the Euro gained over 100 bps this week on the back of the ECB hike and anticipation that the ECB will hike again in July.
EUR steadies at weekly highs ahead of key US data release. Euro appears to be capped at 1.0950 after a volatile trading week with the FED & ECB rate hikes and increasing anticipation of further China stimulus. Investors appear to be sidelined amid a steadying US$ ahead of the key US Michigan Consumer Sentiment Index and Fed Waller speech. Euro tested its highest levels since mid-May at 1.0962 as risk sentiment improved and continuing hawkish ECB comments. Intraday if US data comes in within expectations we anticipate markets will consolidate and take stock heading in to the US long weekend.
EURGBP edges higher vs euro retesting 10-month highs as markets focus on the expected BoE interest rate hike on June 22nd.
GBP consolidates gains near 1.2800 as shift focuses on US data today. The pound extends gains to 1.2800 just off its highest level 14-months vs US$ as investors anticipate further BoE interest rate hikes. Domestically Tesco chief sees signs that inflationary pressure easing, Britain's biggest supermarket chain reports 8% increase in quarterly sales. UK company insolvencies jumped 40% for lates quarter amid rising costs. Focus will be on the Bank of England on June 22nd interest rate decision and more importantly the BoE Governor's statement. Intraday focus will be on key US data release to provide intraday direction to currency markets.
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