• Reminder: It is a US holiday today
• Swiss franc continues to pace its advance after SNB policy pivot
• ECB’s Kazaks says would support 25 bps hike in July, 50 bps hike in September
• ECB’s Kazaks: We do not target specific spread levels
• ECB’s Centeno: There is a great determination to deal with fragmentation risk
• BOJ’s Kuroda: Important for exchange rate to move stably reflecting economic fundamentals
• Germany May PPI +1.6% vs +1.5% m/m expected
• SNB total sight deposits w.e. 17 June CHF 751.8 bn vs CHF 753.1 bn prior

Markets:

• AUD and NZD lead, USD lags on the day
• European equities higher; S&P 500 futures up 0.8%
• Gold down 0.1% to $1,837.62
• WTI crude up 0.7% to $110.30
• Bitcoin up 1.6% to $20,875

With it being a long weekend in the US, markets are seeing less appetite to stray away from Friday’s bit-part relief.

Equities are trading a little higher after a dreadful escapade last week, with European indices holding decent gains with US futures also ticking higher. The dollar is seeing a bit of a retreat across the board as such amid the calmer risk tones.

EUR/USD was steady during the session around 1.0510-30 after advancing in Asia from its opening gap lower around 1.0475. Meanwhile, GBP/USD also recovered some ground in a push from 1.2230 to test its 200-hour moving average at 1.2281.

USD/JPY was little changed but retreated from 135.10 to 134.80-90 levels as the yen keeps pace with the dollar at the back of the group.

Elsewhere, AUD/USD and NZD/USD are both up 0.9% on the day to 0.6990 and 0.6360 respectively while the franc continues to push for gains after the SNB policy pivot last week. USD/CHF is down 0.5% to 0.9650 with the low earlier touching 0.9620.

It’s going to be a quiet one in the session ahead with Wall Street out for the day but there will be a couple of ECB and Fed speakers to keep things moving along as the new week gets underway.

This article was written by Justin Low at www.forexlive.com.

Steady as she goes for the Swiss franc as it continues to creep higher after the SNB policy pivot last week.

The downside push in USD/CHF ran into trendline support before stalling at the end of last week and that is the key area being tested once again currently. That said, the double-top pattern just above 1.0000 is an ominous technical signal when you couple it with the change in the narrative at the SNB.

A push below the trendline support will bring into focus the late May and early June lows around 0.9545-56 next.

Elsewhere, EUR/CHF is also down 0.4% to 1.0135 as the pair continues to look towards parity. Meanwhile, CHF/JPY is making a run for it above 140.00 – touching fresh highs since 1980 upon the break higher from the end of last week.

This article was written by Justin Low at www.forexlive.com.

• Inflation would need to surprise on the low side for it not to be 50 bps in September
• But investors should not think that 50 bps rate hikes are the new default
• Market expectation of the terminal rate shot up quite dramatically last week
• One should be careful about the speed, not get carried away

Well, if they’re concerned about markets getting carried away then they should have done a better job in terms of communicating their policy outlook from the get-go. Their first mistake was sticking with the ‚transitory‘ narrative for too long. Things have just been snowballing from there ever since.

This article was written by Justin Low at www.forexlive.com.

• But we try to ensure proper transmission
• The increase in spreads has been very fast
• Fundamentals are unlikely to have changed that fast

Sure, sure. But that’s not what Visco said last week here. In any case, they continue to talk up the „fundamentals“ but again how can you really talk about that without addressing the fact that there are risks related to fragmentation and markets are well within their means to look to price that in. *cries in Italian debt*

This article was written by Justin Low at www.forexlive.com.

• Prior 0.0%

Looking at the details, civil engineering activity decreased by 5.5% while building
construction activity increased by 0.1% on the month. That reaffirms some softness in the construction sector to start Q2 in the euro area.

This article was written by Justin Low at www.forexlive.com.