The JPY continued its decline as other central banks tightening or look to tighten credit conditions to help slow inflation. Yesterday the reserve Bank of Australia raise rates by 50 basis points. The expectations was for a 25 – 40 basis point hike. Today the Bank of India also rose rates by 50 basis points which was higher than expectations. Tomorrow the ECB will meet and although they are not expected to change rates, the markets will be anticipating a hike in July. Market focus will be on whether they signal a higher than 25 basis point rise. The Fed is expected to raise rates by at least 50 basis points at the next 2 interest rate meetings pushing rate toward the neutral. Meanwhile the Bank of Japan is steadfast in keeping rates steady and bond buying intact.

The USDJPY moved to the highest level since February 2002 and is getting closer to the 2002 high at 135.1. The high price today reached 134.477.

The strongest to weakest of the major currencies

Looking at the strongest to weakest of the major currencies, the EUR is the strongest, while the JPY was the weakest. The USD moved higher as well with gains vs all the major currencies with the exception of the EUR (it fell -0.15% vs the EUR ahead of the ECB decision tomorrow).

The price action in the EURUSD today, saw the pair move lower in the Asian session, back higher in the European session that tock the pair above the 100.200 hour MAs near 1.0716. After reaching to the low of a higher swing area between 1.0748 to1.0763, the pair moved back down toward the near converged 100/200 hour MAs. The current price is just below the MAs at 1.0714 going into the close. Tomorrow the MAs will be a barometer for bullish and bearish. Move above and away from the MAs is more bullish. Move below and away on the downside is more bearish.

The USDJPY did see an intraday correction that saw the pair fall below its 100 bar MA on the 5 minute chart, but stall the fall ahead of the midpoint of the days trading range and the lower 200 bar MA (see chart below). The pair is back above the 100 bar MA (currently at 134.08). It will take a move back below the MA to tilt the short term bias lower, with the 200 bar MA at 133.805 (and moving higher) as another target.

The USDCAD extended the number of days where the price moved to a new low to 10, but has rallied into the close. The low for the day came in at 1.25166 and will be the target for day 11. However, with the price up at 1.2554, the pair will start with a 38 pip gap to fill before reaching that low. On the topside, the pair did stall just ahead of its 100 hour MA at 1.2565. A move above that level would give the buyers more confidence. Stay below, and another new low is certainly possible.

IN other markets:

  • Spot gold is trading down around near unchanged at $1851.27.
  • Spot silver is down -$0.20 or -0.95% at $22.02
  • Crude oil is up $3.15 or 2.67% at $122.56
  • Bitcoin is still within trading ranges (see post here) at $30248.52
  • Natural gas moved to a new high at $9.65 before running into some selling . The price is trading at $8.68.

IN the US debt market, yields are higher. The US treasury auctioned $33B of 10 year notes, but had luke warm demand from foreign investors for the 2nd consecutive day (the 3 year was not any better). Yields are up 4-5 basis points across the curve.

Yields are up 4-5 basis points

In the US stock market today, the major indices all moved lower:

  • Dow fell -269.24 points or -0.81% at 32910.91
  • S&P Index fell -44.89 points or -1.08% at 4115.78
  • Nasdaq index fell -88.95 points or -0.73% at 12086.28
  • Russell 2000 index fell -28.55 points or -1.49% at 1891.00

The mjor indices are closing above their respective 200 hour moving averages keeping the bias in favor of the buyers in the short term, but a modest down day could see the levels broken and buyers turn to sellers.

The 200 hour MAs currently come in at:

  • Dow industrial average 32520.90
  • S&P index 4062.85
  • NASDAQ index 11913.46