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Markets Today – 28 June 2022

MARKET WRAP – 28 June 2022

  • US equities finished lower after trading in the black earlier in the session. Commodities had a good day with Oil and Iron Ore both finishing up. US treasuries fell as did the USD, however the AUDUSD had a relatively benign trading range after finding comfort at 0.6920/30 in Asia. Asian equities finished higher to start the week, with the Hang Seng was up 2.5% as more reopening news from China hit the wires. The ASX rose 1.9% with bank stocks rebounding strongly. AUD/USD fell sharply to 0.6906 to then slowly climbed back above 0.6940 as Europe entered the session.
  • The EU Energy Commissioner has said Russian gas supply to the EU has halved from the level it was at last year, adding that it could decrease further. European equities opened higher with Euro Stoxx 50 +0.5% and FTSE100 +0.6%. US Treasuries slipped, pushing the rate on the 10-year note to 3.14%. Industrial metals rebounded, while oil and European natural gas prices rose. Brent crude rose 0.6% to $113.79 a barrel.
  • The NY open saw May Durable Goods Orders rise 0.7% to beat forecasts of a 0.1% increase with the core measure also up 0.7% and beating estimates of 0.3%. US Pending Home Sales for May rose 0.7% MoM to beat forecasts of a 4.0% contraction. No reaction to the data with Wall St showing modest gains in early trade.    
  • The FTSE and DAX gained more than 0.5% on the day though other indices closed in the red with the CAC shedding 0.4%. Wall St meanwhile drifted lower to slide into negative territory into the NY afternoon. Little movement over a subdued NY afternoon with majors generally drifting near the middle of their respective daily ranges. Wall Street slipped into the close with 0.2-0.3% losses from the Dow & S&P.

       FX 

  • Overnight AUD/USD traded sideways around 0.6920 and NZD/USD fell to lows under 0.6300. EUR/USD moved lower towards 1.0560 having been above 1.0590 earlier in the session while GBP/USD fell from highs of 1.23305 to a session low of 1.2256. USD/JPY climbed to a high of 135.55 while USD/CAD moved higher to trade above 1.2900.
  • The greenback firmed in response to its data results with GBP/USD sliding to new lows of 1.22385 while NZD/USD fell to 0.6283 and USD/CAD moved up to 1.2915 highs. AUD/USD and EUR/USD drifting towards their Asian session lows though failing to break new ground. The USD was sold into the London rate set and EUR/USD was the only real beneficiary as it moved up through 1.0600 to hit highs of 1.0615. Gains elsewhere were more limited and largely reversed into the NY afternoon. AUD/USD opens this morning at 0.6921.

 MARKET OUTLOOK

  • A quiet Monday in currencies is likely to be followed by a similarly sedate Tuesday, as the Asian data calendar remains bare. Markets saw JPY selling midway through Monday morning, which moved the AUDUSD to its intraday low but given local stocks and Iron Ore traded higher on the day, the weakness was short lived.
  • The S&P is now 20% lower than it was at the start of 2022, having rallied 5% from recent lows. The question markets are asking now is whether the 5% is a dead cat bounce, or the floor being formed in the short term. Markets expect AUD/USD to be supported ahead of 0.6900, and likely to find sellers ahead of 0.7000 as the week goes on.

Overnight Currency Ranges 

Currency Pair Low High
AUD/USD 0.6906 0.6958
EUR/USD 1.0550 1.0615
GBP/USD 1.2239 1.2331
USD/JPY 134.53 135.55
NZD/USD 0.6283 0.6326
USD/CAD 0.0000 0.0000
USD/CNH 6.6773 6.6940
AUD/JPY 92.94 94.06
AUD/NZD 1.0965 1.1001
DXY 103.67 104.21

Source Bloomberg

 

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