Headlines:

• Swiss franc continues to flex its muscles after SNB policy pivot
• US futures point to a light respite amid a very tough week for equities
• 10-year Italian and German bond yields spread fall back below 200 bps
• ECB’s Knot says several 50 bps rate hikes are possible if inflation worsens
• BOE’s Pill: It is up to markets to decide if we are considering a 50 bps rate hike
• BOE’s Pill: If we act too aggressively, we could cause an undesirable slowdown
• BOJ’s Kuroda says will not hesitate to ease monetary policy further if necessary
• BOJ’s Kuroda: There is no limit to yield curve control

Markets:

• CHF leads, JPY lags on the day
• European equities higher; S&P 500 futures up 0.8%
• US 10-year yields down 8.5 bps to 3.220%
• Gold down 0.5% to $1,847.33
• WTI crude down 0.4% to $117.14
• Bitcoin up 1.5% to $20,984

The day started with the BOJ announcing that it will be the last man standing in keeping easy monetary policy and that saw the yen fall as markets also breathed a sigh of relief amid the central bank bonanza this week.

Equities are able to seek some respite after the heavy selloff yesterday while bond yields are keeping on the retreat, with European spreads also tightening as traders heeded the ECB’s pledge on anti-fragmentation.

USD/JPY pushed higher from the end of Asia trading around 133.80 to 134.90 as the yen is offered amid the ongoing policy divergence. That also provided some relief for the dollar after the blip yesterday with EUR/USD coming back down to 1.0500 and GBP/USD slipping by 0.6% to 1.2280 at the moment.

The aussie and kiwi also came back down, with the former dropping back below 0.7000 against the dollar despite better risk sentiment. That’s indicative of the fact that it is all about flows (the angst kind) at the moment in the market.

But it was the Swiss franc that shone brightly once again with EUR/CHF falling towards 1.0100 and CHF/JPY rising towards 140.00 – its highest since 1980 – as the currency continues to flex its muscles after the SNB policy pivot yesterday.

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

The SNB policy pivot has changed up the FX landscape and the franc is arguably the hot pick (at least mine) in the major currencies space at the moment. The market was caught off guard by the Swiss central bank and now we are having to price in potentially more rate hikes and also the fact that policymakers now no longer see the franc as being „highly valued“.

What a time to be alive.

EUR/CHF is down another 0.8% on the day to 1.0114 and USD/CHF down 0.5% to 0.9620 at the moment. Meanwhile, CHF/JPY is on a runaway train as it now nears 140.00 on the day.

• Parity beckons for EUR/CHF
• It’s looking line sunny skies for CHF/JPY

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

This will be in observance of Juneteenth, so that could play into some positioning or profit-taking to wrap up the selling pressure this week. After the central bank bonanza this week, markets in general may look for a bit of a breather but the bigger picture remains tough for equities and the franc is arguably now the hot pick (at least mine) in the major currencies space.

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

It has been an awful week for equities as the central bank bonanza brought about jitters all across markets. A quick repricing towards a 75 bps rate hike for the Fed kicked things off before we got a surprise policy pivot by the SNB.

The only relief is that the BOJ decided to play its cards straight or else all hell would break loose ahead of the weekend. Here’s a snapshot of US futures at the moment:

• S&P 500 futures +0.8%
• Nasdaq futures +1.1%
• Dow futures +0.6%

It isn’t much when you put into context the sharp selloff from yesterday but it is a bit of a respite after an extremely tough week. The weekly charts are the ones telling the story for US indices at the moment:

The S&P 500 is breaking below the 38.2 Fib retracement level support and is headed towards a look at the 200-week moving average (blue line) at 3,502. That sits close to the 50.0 Fib retracement level at 3,505 and will be a key support region to watch for any potential reprieve as the bears sharpen their claws.

Meanwhile, the Nasdaq is threatening a break below its own 200-week moving average (blue line) at 10,795 and that will keep sellers poised to extend the downside momentum towards the next leg. The 61.8 Fib retracement level at 10,291 might offer some light support before the 10,000 mark comes into play.

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

• I don’t think we are behind the curve, we are balancing risks

So, he’s suggesting that the central bank is not behind the curve on inflation and aren’t able to go with bigger rate hikes in case of an economic backlash, yet still wants markets to guess about a 50 bps rate hike? It sounds like all they want is to have their cake and eat it too. That’s awfully greedy when it comes to policy guidance at this point in time.

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