Market Roundup
- US Fed keeps rate steady, cuts ’15 GDP growth forecast, sees FF rate at 0.625% YE ’15, lowered ’16/’17 FF target by 25bps, risks to economy/labor market remain nearly balanced
- Canada Apr wholesale trade mm increase to +1.9 % (fcast 0.3 %) vs prev 0.8 %
- Brazil w/e foreign exchange flows decrease to -0.647 bln vs prev 0.382 bln
- Fed’s Yellen beginning hikes too early risks derailing recovery, waiting too long risks overshooting target
- BOE’s Forbes latest wage data shows date when rates go up is coming closer
- Greece’s Varoufakis does not believe a deal can be reached at Eurogroup meeting Thursday
- Greek negotiator Tsakalotos confirms Athens does not have money to make IMF payment on June 30 without deal with creditors
- Greece can only accept deal that is “economically viable” – Tsakalotos
- Eurogroup’s Dijsselbloem we want a credible Greece deal but preparing for all eventualities
- ECB raises emergency funding for Greek banks by EUR 1.1 bln to EUR 84.1 bln
Economic Data Ahead
- (1845 ET/ 2245 GMT) NewZealand GDP Production Q/Q Q1 (consensus 0.6%, previous 0.8%)
- (1845 ET/ 2245 GMT) NewZealand GDP – Annl-Avg, Prod-Bas Q1 (consensus 3.3%, previous 3.3%)
- (1845 ET/ 2245 GMT) NewZealand GDP – Annual Q1 (consensus 3%, previous 3.5%)
- (1845 ET/ 2245 GMT) NewZealand GDP Expenditure QQ Q1 (consensus 0.5%, previous 1.1%)
- (1930 ET/ 2330 GMT) Japan Reuters Tankan DI Jun (previous 13)
- (1930 ET/ 2330 GMT) Japan Foreign Bond Investment w/e (previous -385.2b)
- (1950 ET/ 2350 GMT) Japan Foreign Invest JP Stock w/e (previous 255.3b)
Key Events Ahead
- –:– JP Bank of Japan Monetary Policy Meeting (to June 19)
FX Recap
EUR/USD is accelerating its daily upside, sending EUR/USD to test fresh intraday tops in the vicinity of 1.1340. The pair gained further ground following Yellen’s press conference. As of writing the pair is up 0.65% at 1.1321 with the next resistance at 1.1337 (high Jun 17) ahead of 1.1386 (high Jun 10) and finally 1.1400 (psychological level). On the flip side, a breakdown of 1.1206 (low Jun 17) would open the door to 1.1189 (low Jun 15) and then 1.1151 (low Jun 12). Option expiries for Thursday 18 June: 1.1100 (774M), 1.1125 (505M), 1.1150-60 (1.2BLN), 1.1200 (455M), 1.1275 (381M), 1.1300 (788M), 1.1400 (462M)
USD/CHF: Greenback weakened sharply after the Fed decision to leave rates unchanged and following Janet Yellen initial remarks that pointed out that current economic conditions do not warrant yet a rate hike. The pair dropped from 0.9270 to 0.9207, hitting the lowest level in a month. According to FOMC projections the Fed is on its way to raise rates by a half points this year and to a lower growth than previously estimated. Important support level located around 0.9230/40. A consolidation below could open the doors for a test of May lows that lie at 0.9060/70. On the upside, greenback could remover bearish pressure if it manages to raise above the key 0.9230/40 short-term level.
USD/JPY: Earlier in the day USD/JPY hit the strongest level in a week at 124.44. The pair reversed dramatically after the FOMC statement and during Janet Yellen press conference erasing gains and dropped more than a hundred pips in less than an hour. Currently the pair trades around 123.30 marginally below the level it closed yesterday and under bearish pressure. Immediate supports are seen at 123.06, 122.76 and then 122.45. Resistances are at 123.58, 123.89 and 124.20. Option expiries for Thursday 18 June: 122.00 (1.2BLN), 123.00 (465M), 124.00 (932M), 124.50 (410M), 125.00 (600M)
GBP/USD: Cable was initially offered on a strong dollar when the FOMC statement was released, but when looking further in to the facts and through the bullishness around economic projections, what it boils down to are the rates of interest rate increases coming in less than previously projected in March. GBP/USD is currently trading on the bid at 1.5825 with a high of 1.5831 and a low of 1.5624 as Yellen takes the stage with a dovish rhetoric. Option expiries for Thursday 18 June: 1.5400 (1BLN), 1.5500 (211M), 1.5550 (218M)
USD/CAD scored a fresh 1-week low as the dollar weakened broadly across the board following Fed decision to keep interest rates unchanged and the subsequent Yellen press conference. The pair fell more than 120 pips in a matter of minutes and hit a low of 1.2220. USD/CAD is currently trading at 1.2230, recording a 0.48% loss on the day. Immediate supports are seen at 1.2220 (Jun 17 low), 1.2201/00 (Jun 10 low/psychological level) and then 1.2172 (May 22 low ). On the flipside resistances are seen at 1.2345 (Jun 17 high), 1.2360 (Jun 15 high) and 1.2400 (psychological level). Option expiries for Thursday 18 June: 1.2200 (491M), 1.2225 (255M)
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