21 Jun: Dovish Fed & US/Iran tensions combine to send US$ lower, stocks higher, while Gold, Oil soar. PMIs due, Friday.

By | June 21, 2019

Thursday saw some major moves across the markets following the Fed’s dovish outlook on Wednesday, with the US$ sold heavily as Treasury yields continue to fall to levels not seen since 2016. At one stage the US10Y fell below 2% ahead of a mild bounce but money markets are now pricing in roughly four Fed rate cuts over the next year, including a fair chance that the Fed will cut 50bp in July. Also contributing to the day’s volatile ride was the escalation of the Middle East tensions, which contributed to a 5% move higher in oil and a 2% rally in Gold, while also adding to safe-haven demand for both the Yen and the Chf, which contributed to the dollar’s woes. Stocks have also been boosted, led by the energy sector, with the S+P now at new all-time highs.

In other news, the BoE added to the dovish central bank outlook by toning down its growth outlook after keeping interest rate unchanged at 0.75%. In the US, the initial jobless claims dropped -6k to 216k in the week ending June 15, below expectation of 220k, while the Philadelphia Fed Manufacturing Business index dropped sharply, from 16.6 to 0.3 in June, missing expectation of 10.4

Looking ahead, Friday will look to the June Flash PMIs for guidance, led off by Japan and then followed by the EU and the US. Other points of interest will be the Japan CPI, the UK Public Sector Net Borrowing Requirements, BOE Quarterly Bulletin and CBI Distributive Trade Survey –Orders, before the session ends with the US Existing Home Sales for May (exp +1.2%mm) and a speech from the Fed’s Brainard. Have a good w/e.

Economic data highlights will include:

Fri: Japan CPI, EU/US Flash PMIs, UK Public Sector Net Borrowing Requirements, BOE Quarterly Bulletin, CBI Distributive Trade Survey –Orders, US Existing Home Sales,

Market moves, in brief:

FX: DXY 96.67 (-0.57%)

Bonds: US10Y; 2.030% (+0.23%), German 10Y; -0.32% (-11.57%), UK 10Y; 0.805% (-6.8%), Australian 10Y; 1.304% (-3.45%), NZ 10Y; 1.52% (-5.0 %), China 10Y; 3.25% (-0.56%)

Stock Indices: DJI; +0.94%, S+P; +0.95%, NASDAQ; +0.80%, EUStoxx50; +0.39%, FTSE100; +0.28%, Shanghai Composite; +2.38%,

Metals: Gold $1388 oz (+2.0%), Silver $15.42 oz (+1.76%), Copper $2.712 lb (+1.18%), Iron Ore $107.20 per tonne (NYMEX) (+0.95%),

Oil: WTI $ +57.17 pb (+5.15%)

CURRENCIES
EURUSD: 1.1289
Res  1.1315  1.1330  1.1345
Sup  1.1270  1.1255  1.1240
USDJPY: 107.32
Res  107.55  107.80  108.05
Sup  107.05  106.80  106.55
GBPUSD: 1.2704
Res  1.2725  1.2760  1.2790
Sup  1.2685  1.2655  1.2625
USDCHF: 0.9813
Res  0.9835  0.9860  0.9885
Sup  0.9790  0.9765  0.9740
AUDUSD: 0.6921
Res  0.6935  0.6950  0.6965
Sup  0.6900  0.6885  0.6870
NZDUSD: 0.6585
Res  0.6595  0.6610  0.6625
Sup  0.6570  0.6555  0.6540
INDICES / COMMODITIES
S&P.fs: 2960.28
Res  2965.00  2975.00  2985.00
Sup  2950.00  2940.00  2930.00
DJ30.fs: 26776.50
Res  26810.00  26900.00  26965.00
Sup  26445.00  26350.00  26260.00
SPI200.fs: 6619
Res  6635  6645  6655
Sup  6605  6595  6585
XAUUSD: 1388.07
Res  1395.00  1400.00  1405.00
Sup  1380.00  1375.00  1370.00
XAGUSD: 15.42
Res  15.50  15.60  15.70
Sup  15.30  15.20  15.10
WTI.fs: 57.18
Res  58.00  59.00  60.20
Sup  55.95  54.90  53.80