FX market outlook

FX market outlook

Posted on Tuesday, June 27 2017 at 8:51 am GMT+0000

Central bank speeches in focus; euro eases on Draghi; dollar awaits Yellen; gold recovers

As the Asian markets were closing for the day, major currencies were mostly range-bound in a relatively quiet session due to few data releases and ahead some of the key events scheduled for later in the day.

European Central Bank President Mario Draghi will speak shortly at the ECB Forum on Central Banking in Portugal. Bank of England Governor Mark Carney is scheduled to speak following the release of the BoE’s Financial Stability Report, while Federal Reserve Chair Janet Yellen will be speaking later today from London. Markets are keen on getting more insight into the latest thinking of these monetary policy makers.

The dollar has been under slight pressure against the yen as Asian markets were coming to the end of the trading day. At 111.71, the greenback fell 0.16% versus the yen during the session. Market participants are eyeing Janet Yellen’s speech, as they are hoping for more clarity into the latest inflation outlook and the potential for another rate hike this year.

Euro/dollar traded in the narrow range of 1.1180-1.1203 during the Asian session. The euro managed to recoup some of the losses against the dollar, after weakening in yesterday’s US trading session on Mario Draghi’s opening remarks at the ECB Forum. The ECB President defended the Bank’s loose monetary policy.

In the meantime, the Bank of England is expected to publish the Financial Stability Report that will be followed by Mark Carney’s speech. His remarks will be closely watched. Pound/dollar traded in the range 1.2722-1.2724.

Both the Australian and the New Zealand dollar got a boost during the Asian session amid yesterday’s soft US durable goods data. The China-linked aussie might have also been helped by Chinese industrials strong profit growth, as well as positive comments by Chinese Premier on the growth outlook for the Mainland. The Australian dollar posted gains for the third consecutive day against the greenback. It was last trading at $0.7606, up 0.3% on the day.

New Zealand’s trade surplus in May stood at NZ$103 million (US$75 million), well under the NZ$420m expected and the prior month’s NZ$536m. A strong rise in imports of both petroleum products and motor vehicles caused imports to top forecasts and weighed on the overall balance. By contrast, exports were close to the expected level at NZ$4.95 billion, with the key dairy sector leading the gain. The New Zealand dollar edged lower against its US counterpart as the data were released, but firmed up later during the Asian session.

Taking a look at gold, the precious metal managed to recover some of yesterday’s losses, following a large sell order that hit the market. The commodity last traded at $1250.33 an ounce. This compares to yesterday’s one-month low of $1235.84 an ounce.

WTI oil futures (August 2017 contract) continued to gain for the fourth consecutive day, trading at $43.65 a barrel.