Forex headlines for June 30, 2014:
- Canadian April GDP +0.1% vs +0.2% m/m expected
- US June Chicago PMI 62.6 vs 63.0 expected
- US May pending home sales -6.9% y/y vs -9.6% y/y expected
- US Supreme Court rules against mandatory union dues for some public sector employees
- June Milwaukee PMI at 60.6 vs 63.5
- Dallas June Fed manufacturing index +11.4 vs +8.0 prior
- Williams says Fed won’t raise rates ‘for some time’
- Williams believes first Fed rise will be appropriate in second half of 2015
- Iraqi oil production fell in June but OPEC production higher – survey
- Foreign investment in Australian real estate surging, signs of life in mining investment
- Italian stats agency says growth likely to be more gradual than was expected at the start of the year
- George Soros says the ECB should do quantitative easing
- Gold up $12 to $1328
- WTI crude down 32-cents to $105.42
- S&P 500 down 1 point to 1960
- CHF leads, NZD lags
Cable has been a big story this year and the pound wrapped up the quarter in style with a close above 1.71. There’s no doubt now that cable has broken out. Talk of BOE asset sales and Goldman Sachs moving up their forecast for BOE rate hikes were catalysts but the real story was US dollar weakness.
The major round of USD selling came at the London fix, suggesting that asset managers and corporates had some repatriation demands. It wasn’t only a GBP story as the euro also cleared the June high and flirted to with 1.3700. So far the high is 1.3698 and we’re likely to see another squeeze on a break of the big figure. In any case, a close near the monthly high is good news.
Treasury yields were down for the fourth day with 10s down as low as 2.51% before closing the day down 0.5 bps to 2.5286%. The weakness dragged down USD/JPY ahead of today’s Tankan.
The big intraday turnaround was in the commodity bloc. USD/CAD was chopping higher and got a boost from Canadian GDP up to 1.0696 but sales ahead of 1.0700 and better details in the report helped to turn the pair around. A run on stops below 1.0660 accelerated down to 1.0647 before a bounce to 1.0668.
AUD/USD also turned around ahead of the RBA decision. Expectations are low for Stevens & Co but better signs in real estate, China and investment add the slightest chance of hawkish commentary. AUD/USD bottomed at 0.9388 but caught the wave of USD selling and stormed back to 0.9431. You get the sense that the market is looking for a reason to break the key 0.9461 level.
