Daily Market Outlook, June 8, 2021
Overnight Headlines
- U.S. Republicans vow to oppose Yellen's G7 tax deal, casting doubt on its future • G7 prepares to write Taiwan Strait into Summit statement – Nikkei • Blinken signals possible resumption of U.S.-Taiwan trade, investment talks • U.S. report concluded COVID-19 may have leaked from Wuhan lab – WSJ • Wall Street body proposes new rules on short positions, stock loans • U.S. seizes $2.3 mln in bitcoin paid to Colonial Pipeline hackers • U.S. Apr consumer credit $18.61 bln, $22.00 bln eyed • Japan upgrades Q1 GDP on smaller hit to domestic demand • JP Q1 GDP Rev annualised -3.9%, -4.8% f'cast, -5.1% prev • JP Q1 GDP Capex Rev QQ -1.2%, -1.2% f'cast, -1.4% prev • Japan Apr current account surplus Y1.3218 trln, Y1.5006 trln eyed • Japan's bank lending growth slows sharply as pandemic hit subsides, May +2.9% y/y • Japan's April real wages post largest monthly gain since 2010, +2.1% y/y, total earnings +1.6% • Australia business activity climbs to fresh highs in May-survey • UK retailers report strong May sales after lockdown ends • More Chinese companies could fall under Biden's broader investment ban – Reuters analysis • Asia's ESG bond issuances hit record $69 bln this year, no let-up seen
- Looking Ahead – Economic Data (GMT) 09:00 DE Jun ZEW Econ Sentiment 86 f'cast, 84.4 prev; Curr Conditions -27.8 f'cast, -40.1 prev • 09:00 EZ Q1 GDP Revised QQ, -0.6% f'cast, -0.6% prev; YY, -1.8% f'cast, -1.8% prev • 09:00 EZ Q1 Employment Final YY, -2.1% f'cast, -2.1% prev; QQ -0.3% f'cast, -0.3% prev
- Looking Ahead – Events, Other Releases (GMT) 09:00 Spain EconMin Calvino at Madrid sustainable digitalization event • 11:00 ECB Fernandez-Bollo at 2021 European Financials Virtual Conference • 13:00 BOE Haldane participates in University of Glasgow Inequality workshop • 14:00 German FinMin Scholz speaks on budget policy to German Foreign Press Association
G10 FX Options Expiries for 10AM New York Cut
(Hedging effect can often draw spot toward strikes pre expiry if nearby)
EUR/USD: 1.2065-70 (440M), 1.2175-85 (825M), 1.2200 (1BLN)
1.2225-35 (620M), 1.2250-65 (882M), 1.2300 (1.1BLN)
USD/CHF: 0.8880 (390M), 0.9075-95 (380M)
AUD/USD: 0.7700-10 (811M), 0.7725 (400M), 0.7745-50 (911M)
NZD/USD: 0.7150 (450M), 0.7260 (1.2BLN)
USD/JPY: 108.45-65 (1.7BLN), 109.00-05 (855M), 109.50 (1BLN)
Technical & Trade Views
EURUSD Bias: Bearish below 1.2150 bullish above
Overnight trade: Drifts lower in quiet Asian session • EUR/USD opened 0.19% higher at 1.2190 after USD broadly eased in US session • After trading at 1.2194 early, the EUR/USD came under gentle pressure • Talk of sell orders just above 1.2200 discouraged attempts higher • EUR/USD dipped to 1.2178 – and is at session low into the afternoon • Support is at 1.2179 and close below shifts pressure to downside • Resistance is at 1.2189 and yesterday's 1.2202 high • EUR/USD may move sideways ahead of US CPI and ECB meeting on Thursday
Flow reports topside offers congested through to the 1.2220 area before weak stops appear and the market opens for a renewed push to the 1.2300 level with weak stops limited through the 1.2320 area and long term trend line around the 1.2345 area likely to see strong offers before weak stops opening the topside to further gains through the 1.2400 level. Downside bids into the 1.2140-60 level likely to be light and then increasing through the 1.2120 level to 1.2080 before weak stops appear and open up a deeper move through to the 1.2000 level with very little congestion until that point
GBPUSD Bias: Bullish above 1.41 bearish below.
Overnight trade: Offered as the USD firms – commodities, stocks ease • -0.1%, trading at the base of a tight, quiet 1.4163-1.4182 range – USD led • UK's June 21 lockdown to extend by fortnight – The Times • UK retailers report strong May sales after lockdown ends • Sales a major indication that the economic recovery should be vigorous • 1.4080-1.4250 range in place since mid May looks set to extend • Major resistance above 1.4300, 1,4302 50% 2014-2020 fall & 1.4377 2018 top • 1.4082 June low and 1.4058 21 day lower Bollinger band key support zone
Flow reports suggest topside offers light through the 1.4250 area with some congestion increasing on any move to the 1.4300 and stronger offers in the area, a break above the 1.4310 area will likely see weak stops and breakout stops coinciding and the topside open to a quick squeeze through the 1.4350 level and an attempt on the possibly weak 1.4400 area and stronger stops again through the level. Downside bids likely to increase on a move through to the 1.4100 with a couple of weeks of congestion building up in the area with weak stops on a break through the 1.4090-80 area and opening to the 1.4000 level with very little support other than limited sentimental bids, however, the move through will then start to see stronger bids into the 1.3950-1.3900 area limiting any further loses.
USDJPY Bias: Bullish above 108 targeting 112
Overnight trade: gets leg up from usual suspects, Tokyo fix demand • USD/JPY gets leg up into the Tokyo fix, 109.20 to 109.44 EBS • Head fake lower first before push up, Japanese importers on buy-side • Talk some investment demand too and specs bargain-hunting • JPY crosses supportive, demand noted in a number of pairs too • US yields still soggy however, weighs, Treasury 10s @1.565% • Option expiries today help contain action, 109.00 $705 mln, 109.50 $1.1 bln • Eyes still on US CPI data due Thursday, could give USD/JPY another leg up
Flow reports suggest downside light through the 109.20-00 with increasing bids into the 108.50 this opens the market to a new test of the 108.00 level, stronger bids into the 107.80 however, a break through the level is likely to see weak stops and breakout stops appearing and the market free to quickly test 107.50 and an old trendline then nothing until closer to the 107.00 area where stronger bids start to appear but the downside opening to Feb levels, topside offers through to the 110.00 level with light congestion through the figure level and weak stops possibly limited and stronger offers likely increasing on a move higher towards the 111.00.
AUDUSD Bias: Bearish below .7790 bullish above
Overnight trade: edges lower as USD claws back Monday's modest gain • AUD/USD opened +0.18% at 0.7756 after USD weakened during the US session • It traded to 0.7763 on small AUD/JPY buying in early Asia • Broad USD buying later in the morning sent the AUD/USD down to 0.7745 • Option related buying underpinned with maturities at 0.7745/50 • It is just above the session low heading into the afternoon • Sellers are tipped around 0.7780 and just ahead of 0.7800 • Support is at 0.7733 and break would shift pressure lower| • Resistance is at the 61.8 of the 0.7891/0.7646 move at 0.7797
Flow reports topside offers into the 0.7800 area with weak stops through the 0.7820 before opening for a new run higher and strong offers likely through the 0.7840-60 area to build for the 79-cent level. Downside bids into the 0.7700 level with weak stops on a move through the 0.7680 area however, stronger bids then start to show through into the 0.7650 and ultimately the 0.7600 area and likely to continue in that fashion through to the 0.7550 area.
Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.
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Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.
Past performance is not indicative of future results.
High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% and 75% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
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Patrick has been involved in the financial markets for well over a decade as a self-educated professional trader and money manager. Flitting between the roles of market commentator, analyst and mentor, Patrick has improved the technical skills and psychological stance of literally hundreds of traders – coaching them to become savvy market operators!