It was quad witching in the equity market and that played a big role in today’s trading.

• S&P 500 down 0.2%
• Nasdaq Comp down 0.2%
• Russell 2000 up 0.2%
• DJIA flat
• Toronto TSX Comp down 0.1%

On the week:

• S&P 500 +0.6%
• Nasdaq flat
• DJIA +1.4%

The candle on the Nasdaq could be nothing or it could be something, especially with the reversal in Nvidia yesterday that continued with a 3.2% decline today.

This article was written by Adam Button at www.forexlive.com.

• Mon, Jun 24, 3 AM ET. USD: FOMC member Waller speaking
• Mon, Jun 24, 1:45pm CAD: BOC Gov Macklem Speaks

Tuesday June 25

• Tue, Jun 25, 8:30am CAD: CPI m/m (Estimate: 0.3%, Previous: 0.5%), Median CPI y/y (Estimate: 2.6%, Previous: 2.6%),Trimmed CPI y/y (Estimate: 2.8%, Previous: 2.9%)
• Tue, Jun 25, 10:00am USD: CB Consumer Confidence (Estimate: 100.2, Previous: 102.0)
• Tue, Jun 25, 10:00AM USD: Richmond Fed manufacturing index. Estimate 2.0. Previous 0.0

Wednesday, June 26

• Weds, Jun 26, 9:30pm ET (Tuesday) AUD: CPI y/y (Estimate: 3.5%, Previous: 3.6%)

Thursday, June 27

• Thu, Jun 27, 5:30am GBP: BOE Gov Bailey Speaks
• Thu, Jun 27, 8:30am USD: Final GDP Q1 q/q (Estimate: 1.4%, Previous: 1.3%)
• Thu, Jun 27, USD: Unemployment Claims (Estimate: 240K, Previous: 238K)
• Thu, Jun 27, USD. Durable goods orders (Estimate -0.1%, previous 0.6%), Core durable goods orders (Estimate 0.1%. Previous 0.4%
• Thu, Jun 27, 10:00am USD: Pending Home Sales m/m (Estimate: -7.7%, Previous: -7.7%)

Friday June 28

• Fri, Jun 28, 8:30am CAD: GDP m/m (Estimate: 0.3%, Previous: 0.0%)
• Fri, Jun 28, USD: Core PCE Price Index m/m (Estimate: 0.1%, Previous: 0.2%)
• Fri, Jun 28, 10:00am USD: Revised UoM Consumer Sentiment (Estimate: 65.9, Previous: 65.6)

In addition to the above the US treasury will auction off:

• June 25, 2-year notes
• Jun 26: 5 -year notes
• Jun 27: 7-year notes

This article was written by Greg Michalowski at www.forexlive.com.

Today’s outside reversal lower in gold prices rekindles some worries on the chart.

Gold has looked to be forming a head-and-shoulders top over the past two months in a move that would target $2150. However yesterday the bulls made a move and tried to take out the late-May highs. That failed through and today the sellers returned with a vengeance, knocking it lower by $40 to $2318.

While the pattern isn’t exactly textbook, it is a head-and-shoulders top and it comes after some data showing that the US service sector isn’t slowing. In fact, the S&P Global services PMI rose to a 26-month high.

That could keep the Fed from cutting rates at all this year and lead to aggressive profit taking in gold.

This article was written by Adam Button at www.forexlive.com.

MUFG highlights the yen’s recent weakening trend and anticipates the Bank of Japan (BoJ) raising rates at next month’s meeting. Concurrently, the Ministry of Finance (MoF) faces increased pressure to intervene in the currency markets to prevent the yen from further depreciation beyond critical levels.

Key Points:

1. Yen Weakness and Intervention Reversal:
   • USD/JPY has risen back above 159.00, approaching the year-to-date high of 160.17 from April.
   • The impact of Japan’s intervention in late April/early May to support the yen has nearly fully reversed.

2. Yield Spread Dynamics:

   • Despite the narrowing of the 2-year yield spread between US and Japanese government bonds from a peak of around 4.75% in April to a 30bps decrease, the yen continues to weaken.
   • The yield spreads remain at their widest levels since the late 1990s/early 2000s, insufficient to reverse the yen’s weakening trend.

3. MoF Intervention Pressure:

   • The yen’s re-weakening increases pressure on the MoF to intervene again if USD/JPY breaks above 160.00 and the pace of the yen sell-off accelerates.
   • Previous interventions have had limited lasting impact, suggesting the need for more substantial or coordinated efforts.

4. BoJ Policy Normalization:

   • The weakening yen also puts pressure on the BoJ to expedite its policy normalization process.
   • MUFG expects the BoJ to raise rates by 15bps at next month’s policy meeting.
   • Additionally, the BoJ is anticipated to announce detailed plans to slow the pace of Japanese Government Bond (JGB) purchases over the next couple of years.

Conclusion:

MUFG forecasts that the BoJ will raise rates by 15bps at the upcoming policy meeting and announce plans to reduce JGB purchases. Concurrently, the MoF may face increased pressure to intervene in the currency markets to prevent the yen from depreciating beyond critical levels, particularly if USD/JPY breaches 160.00. The combination of BoJ policy adjustments and potential MoF interventions aims to stabilize the yen and address the ongoing currency depreciation.

For bank trade ideas, check out eFX Plus. For a limited time, get a 7 day free trial, basic for $79 per month and premium at $109 per month. Get it here.

This article was written by Adam Button at www.forexlive.com.

The drop today brings us back to where we were on Friday, testing the waters below the 1.0700 mark. The close at the end of last week was just above the figure level, so that will be one to watch again today to see if sellers can find more conviction for a break under.

For the time being, large option expiries at 1.0650-60 and 1.0700 are keeping price action more contained after the earlier fall. The euro area PMI data was softer than anticipated and that weighed on the euro slightly. The low earlier today touched 1.0670.

Sellers are holding control of the pair since last week and have done well to fade the slight bounce earlier in the week. The high this week failed to breach the 200-hour moving average on the near-term chart, for what it is worth.

And that brings us to where we are now. The next key risk event left before the weekend will be the US PMI data for June. That will impact the dollar side of the equation and broader market sentiment. So, we’ll see if the data will side with sellers in chasing a firmer break below the 1.0700 mark to end the week.

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

The subtle dovish hints by the BOE yesterday was enough to pin the pair down, erasing the gains from earlier in the week. That is putting cable near where it left off on Friday but with the low today having tested the 100-day moving average (red line) of 1.2638.

That alongside the 61.8 Fib retracement level of the swing higher since April, at 1.2646, is helping to limit losses as we look towards the final stretch this week.

Keep above the 100-day moving average and buyers are still in to try and look for a rebound momentum. But break below, and sellers will have more conviction in chasing a push towards the 200-day moving average (blue line) next.

Coming up later today, the US PMI data for June will be one to watch in potentially deciding how this plays out before the weekend.

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

Here are the changes among key dollar pairs on the week as we look to the final day of US trading later:

• EUR/USD: -0.1%
• USD/JPY: +0.9%
• GBP/USD: -0.2%
• USD/CHF: +0.3%
• USD/CAD: -0.3%
• AUD/USD: +0.6%
• NZD/USD: -0.2%

Outside of the Japanese yen and perhaps arguably the aussie, the changes on the week are rather insignificant thus far. The mid-week break also didn’t really help in lifting the appetite in markets.

The move higher in USD/JPY owes much to a few reasons, as Adam outlined here. Meanwhile, the aussie is slightly higher after the RBA left the cash rate unchanged at 4.35% on Tuesday. But the central bank did say that they discussed rate hikes at this week’s meeting, so that is helping to put a floor on the currency.

Besides that, the franc is a touch lower after the SNB decided to cut interest rates further. The currency had been enjoying a stellar June up until then, helped by political woes in Europe as well as of late.

Overall, the changes we’re seeing point to a steadier dollar despite US equities keeping its run higher. Instead, the dollar seems to be taking its cue from the bond market. 10-year Treasury yields are also seeing a bit of a back and forth week, seen up just 1.1 bps at 4.234% currently.

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

• The responsibility lies entirely with the EU side
• Hopes that EU would meet China halfway and handle differences through dialogue

For some context, the EU launched five new anti-dumping investigations against China in May. That was seen totaling to roughly $1.71 billion. And they are following that up with proposed tariffs on Chinese electric cars. If China were to retaliate, the likes of Germany would be the most at risk given their exposure to trade with China.

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

• Prior 52.9
• Manufacturing PMI 51.4 vs 51.3 expected
• Prior 51.2
• Composite PMI 51.7 vs 53.1 expected
• Prior 53.0

Election jitters starting to creep in? The headline reading is a 7-month low and that is weighing on the overall UK business activity for June. The only bright side is that manufacturing conditions are seen improving further, with the reading there being a 23-month high. Going back to services activity, S&P Global notes that there is some evidence that the
slowdown was partly driven by a pause in client spending
decisions ahead of the election period.

“Flash PMI survey data for June signal a slowing in the
pace of economic growth, indicating that GDP is now
growing at a sluggish quarterly rate of just over 0.1%.

“The slowdown in part reflects uncertainty around the
business environment in the lead up to the general
election, with many firms seeing a hiatus in decision
making pending clarity on various policies.

“Meanwhile, from an inflation perspective, stubbornly
persistent service sector inflation – a major barrier to lower
interest rates – remains evident in the survey, but should
at least cool further from the current 5.7% pace in coming
months. However, companies‘ costs are rising, most
notably in manufacturing, where shipping costs in
particular are spiking again and adding to a renewed rise
in inflationary pressures from goods.

“In short, while a slowdown in economic growth may prove
temporary, should businesses react positively to the
policies announced by any new government, the
stubbornness of underlying inflationary pressures above
the Bank of England’s target still looks somewhat
engrained.”

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

Headlines:

• BOE leaves bank rate unchanged at 5.25%, as expected
• August back in the picture for the BOE?
• SNB cuts key policy rate by 25 bps to 1.25% from 1.50% previously
• SNB chairman Jordan: FX intervention can be in both directions
• Swiss franc falls as SNB continues with rate cuts
• ECB’s Knot: Optimal policy path is broadly in line with just under three rate cuts in 2024
• Japan top currency diplomat says there is no limit to FX intervention resources
• Germany May PPI 0.0% vs +0.3% m/m expected
• Switzerland May trade balance CHF 5.81 billion vs CHF 4.32 billion prior

Markets:

• AUD leads, CHF lags on the day
• European equities higher; S&P 500 futures up 0.4%
• US 10-year yields up 2.7 bps to 4.243%
• Gold up 0.5% to $2,340.17
• WTI crude up 0.1% to $81.70
• Bitcoin up 2.3% to $66,327

Central banks were in the spotlight in European trading today and they at least kept things interesting despite the decisions being as „expected“.

The SNB was the first up to bat and they decided to cut interest rates once again. The Swiss franc slipped in the aftermath though, with market expectations arguably leaning closer towards a 50-50 rather than a done deal.

But adding to that, SNB chairman Jordan was explicit in outlining that the franc has „significantly appreciated“ in the past weeks. He also steered clear of mentioning what he did in May, that being „a weaker franc is the main source of inflation“. That suggests the central bank is comfortable with present levels in the currency.

USD/CHF jumped from around 0.8840 to 0.8900 and is holding thereabouts now.

Then, we had the BOE decision which played out more or less as expected. However, the central bank dropped a couple of subtle dovish hints which might potentially draw an August rate cut back into the picture. I still think the bar for that is extremely high but there will be plenty of watchful eyes on the next UK CPI report on 17 July in any case.

The pound fell amid those considerations, with GBP/USD easing from 1.2705 to 1.2680 levels currently.

Looking to FX as a whole, the dollar continues to keep steadier on the week. EUR/USD is down 0.2% to 1.0720 while USD/JPY continues to creep higher in a push from 158.00 to 158.40 on the day.

In other markets, equities continue to keep up some optimism on the week awaiting the return of US markets later. European indices saw a bit of a setback yesterday but are seen bouncing back today.

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