FX market outlook

FX market outlook

Posted on Friday, June 30 2017 at 8:44 am GMT+0000
Yen, kiwi up; euro volatile ahead of inflation, eyes key data releases

During today’s Asian trading session, news and data flow was mostly focused on Japan and China. The yen is up for the third consecutive day relative to the dollar. The euro, sterling and the aussie retraced some of the early gains against the dollar as the Asian session was closing.

The upbeat in China’s manufacturing PMI pushed up the aussie against the dollar (as China and Australia are major trading partners) to reach an intra-day level of $0.7712, a more than three-month high. At 51.7, China’s manufacturing PMI in June was above the expected level of 51.0 and above May’s 51.2.  However, the aussie has been under pressure against the dollar, retracing earlier gains as the Asian session was coming to a close.

The New Zealand dollar also rose higher against the greenback, last trading at $0.7321.  The kiwi is set for a seventh consecutive week of gains against the dollar.

Economic data releases out of Japan were mostly on the positive side. Japan household spending rose 0.7% month-on-month in May, above the forecasted 0.2% and the prior month’s 0.5%. At 0.4% as expected, the inflation for May was above April’s 0.3%. The unemployment rate increased to 3.1%, up from 2.8% in April.

Dollar/yen was trading below the 112 handle for most of the Asian session, continuing to slide for the third consecutive day. The Dollar Spot Index broadly held steady, down 0.01% at the end of Asian session and heading for a 5% quarterly loss.

The euro was steady against the dollar for most of the Asian session, with some pressure being recorded as the European markets were starting the day. Euro/dollar was last trading at 1.1414.

Sterling held above the $1.30 handle during most of the Asian session. Pound/dollar was last trading at 1.3004.

Gold prices were rising for most of the Asian session on the back of the dollar backtracking, though the precious metal retraced all the gains later in the session and fell further down from yesterday’s close. The commodity was last trading at $1,242.96 an ounce.

Oil continued its uptrend on the back of signs US production is falling. WTI rose for the seventh consecutive day and it was last trading at $45.17 a barrel.

The rest of the day will have a heavy data flow that could cause significant volatility among major forex pairs. Just some of the key data points to highlight are June flash inflation out of the eurozone, the UK first quarter GDP and the US core PCE for May.