Thu, Jun 01, 2023 @ 02:19 GMT
HomeAction InsightMarket OverviewSelling Focus Turns to EUR and GBP; USD, JPY and CHF Firm

Selling Focus Turns to EUR and GBP; USD, JPY and CHF Firm

Overall risk sentiment is mixed today with mild recovery in European stocks, even though US futures still point to lower open. Major global benchmark treasury yields are turning softer. Dollar, Swiss Franc and Yen are staying as the strongest ones. Selling focus, however, has turned to Sterling in Euro. Commodity currencies turned mixed for now, with recovery seen in Gold and oil price too.

Technically, Yen pairs, except USD/JPY, are generally trading lower today. Even CAD/JPY is accelerating after failing to recover back above 4 hour 55 MEA. Current fall from 102.93 is seen as corrective whole rise from 89.21. Deeper decline should be seen to 38.2% retracement of 89.21 to 102.93 at 97.68. Such development would be reflected in deeper decline in both AUD/JPY and NZD/JPY too.

In Europe, at the time of writing, FTSE is up 0.79%. DAX is up 0.69%. CAC is up 0.88%. Germany 10-year yield is down -0.153 at 0.819. Earlier in Asia, Nikkei rose 0.41%. Hong Kong HSI rose 0.33%. China Shanghai SSE dropped -1.44%. Singapore Strait Times dropped -0.53%. Japan 10-year JGB yield dropped -0.0038 to 0.251.

US durable goods orders rose 0.8% mom in Mar, ex-transport orders up 1.1% mom

US durable goods orders rose 0.8% mom to USD 275.0B in March, below expectation of 1.0% mom. Ex-transport orders rose 1.1% mom, above expectation of 0.5% mom. Ex-defense orders rose 1.2% mom. Computers and electronic products, up two of the last three months, led the increase, USD0.7B or 2.6% to USD 26.3B.

ECB Kazaks: Rate hike in July is possible and reasonable

ECB Governing Council member Martins Kazaks said “a rate rise in July is possible and reasonable” and “ending the Asset Purchases Programme in early July is appropriate,”

“Markets are pricing two or three 25 basis point steps by the end of the year. I have no reason to object to this, it’s quite a reasonable view to take,” he said. “Whether it happens in July or September is not dramatically different, but I think July would be a better option.”

Japan unemployment rate dropped to 2.6% in Mar, lowest in 2 years

Japan unemployment rate dropped from 2.7% to 2.6% in March, better than expectation of 2.7%. That;s also the lowest rate since April 2020. Number of workers rose 180k while unemployed dropped -90k. Job-to-applicant ratio rose 0.01 pts to 1.22.

“The drop in unemployment rate indicates signs of recovery” in the labour market, a government official told a media briefing. “But the impact of the pandemic appears to be lingering and requires close attention.”

GBP/USD Mid-Day Outlook

Daily Pivots: (S1) 1.2679; (P) 1.2762; (R1) 1.2826; More

GBP/USD’s decline continues today and intraday bias stays on the downside for 100% projection of 1.3641 to 1.2999 from 1.3297 at 1.2655. Sustained break there will target 161.8% projection at 1.2258. On the upside, above 1.2771 minor resistance will turn intraday bias neutral and bring consolidation first, before staging another decline.

In the bigger picture, rise from 1.1409 (2020 low) has completed at 1.4248, ahead 1.4376 long term resistance (2018 high). Decline from 1.4248 could still be a corrective move, or it could be the start of a long term down trend. In either case, deeper decline would be seen back to 61.8% retracement of 2.1161 to 1.1409 at 1.2493. In any case, break of 1.3158 support turned resistance is needed to be the first sign of medium term bottoming. Otherwise, outlook will stay bearish in case of rebound.

Economic Indicators Update

GMT Ccy Events Actual Forecast Previous Revised
23:30 JPY Unemployment Rate Mar 2.60% 2.70% 2.70%
06:00 CHF Trade Balance (CHF) Mar 2.99B 6.23B 5.95B 5.88B
06:00 GBP Public Sector Net Borrowing (GBP) Mar 17.3B 14.2B 12.3B 9.9B
12:30 USD Durable Goods Orders Mar 0.80% 1.00% -2.10%
12:30 USD Durable Goods Orders ex Transportation Mar 1.10% 0.50% -0.60%
13:00 USD S&P/Case-Shiller Home Price Indices Y/Y Feb 20.20% 18.40% 19.10%
13:00 USD Housing Price Index M/M Feb 2.10% 1.40% 1.60%
14:00 USD Consumer Confidence Apr 108.5 107.2
14:00 USD New Home Sales Mar 774K 772K

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