• June US ISM manufacturing index 53.0 vs 54.9 expected
• US May construction spending -0.1% vs +0.4% expected
• S&P Global final June US manufacturing index 52.7 vs 52.4 prelim
• Atlanta Fed GDPNow Q2 tracker falls deeper into negative territory
• Crypto lener Voyager suspends withdrawals
• BlockFi sells itself to FTX in earnout-laden deal
• OPEC badly missed production quotas in June
• Honda reports a sharp drop in June US auto sales, blames supply issues
• GM warns that supply chain issues affected Q2 but re-affirms 2022 guidance
• Baker Hughes US oil rig count 595 vs 594 prior
• Fed’s Daly: Want to get to around 3.1% Fed funds at year end

Markets:

• Gold flat at $1806
• US 10-year yields down 8.5 bps to 2.89%
• WTI crude oil up $2.51 to $108.29
• S&P 500 up 1.1%
• JPY leads, AUD lags

This was a holiday-thinned trade with Canada out and many US traders heading out early for the long weekend but it was also the start of a new month of trade.

There were some massive moves in FX and bonds. The dollar and yen soared in Asia and Europe with the euro, pound and Australian dollar crumbling. The latter ran stops after busing the May low and fell to 0.6765, which is the lowest since June 2020.

In the bond market, 5-year yields were down 22 bps at the lows to 2.88%, a far cry from 3.62% on June 14. It’s a similar story across the curve as it bull flattens. The Fed funds market has taken down the terminal top to 3.34% in Feb and falling 50 bps over the remainder of the year from there.

The moves in the dollar and bonds both unwound to some extent. 5-year yields halved the decline while the dollar did the same.

EUR/USD fell as low as 1.0367 before bouncing to 1.0422. Cable was even more intense in a swan dive to 1.1971 before bouncing 130 pips (and still ending down 85 pips).

The commodity currencies turned around with the loonie finishing nearly flat with the help of oil and gas, far outperforming its commodity cousins. I’d caution on that trade as Canada was out.

The yen was the winner on the day as spread compression becomes the norm. The BOJ may have won the war if inflation starts coming down again and so do international bond yields. That will be an interesting one to watch in the days ahead.

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

The crypto lender was caught up in the 3AC collapse. 3AC had a loan of 15,250 BTC and $350 million USDC. Voyager says it’s ‚pursuing all available remedies for recovery‘ but 3AC is in bankruptcy so that’s going to be a long wait.

„This was a tremendously difficult decision, but we believe it is the right one given current market conditions,“ said Stephen Ehrlich, Chief Executive Officer of Voyager. „This decision gives us additional time to continue exploring strategic alternatives with various interested parties while preserving the value of the Voyager platform we have built together. We will provide additional information at the appropriate time.“

The company hired Moelis & Company and The Consello Group as financial advisors, and Kirkland & Ellis LLP as legal advisors. 

Moelis specializes in M&A and restructurings.

The market wasn’t expecting much from Voyager. The stock isn’t trading today because of a holiday in Canada but it’s been a precipitous fall since before the 3AC collapse.

The company entered into a definitive agreement with Alameda for a US$200 million cash and USDC revolver and a 15,000 BTC revolver on June 17.

On June 14, it said:

Voyager differentiates itself through a straightforward, low-risk
approach to lending and asset management by working with a select group
of reputable counterparties, which are all vetted through extensive due
diligence by its Risk Committee.It’s tough for crypto to find any kind of a bottom until we get all the bad news. Stuff like this makes crypto investors want to pull their funds.

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

There was a fierce bid for US dollars to start the month but it’s now largely reversed.

I could tie together a narrative around rates, Fed hikes and whatnot but I’m going to shrug here and put this on flows around the turn of the calendar.

I don’t know if that was European money scrambling for dollars or something else. But it ended abruptly after the European close.

Directionally, some of it makes sense with the market significantly shifting the terminal top of Fed funds down to 3.33% from +4% a couple weeks ago.

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

The market is navigating different outcomes and in the simplest terms, here’s how it shapes up.

1) High inflation with ongoing growth and Fed hikes above 4%

This is the scenario the market grappled with for most of the year and the results speak for themselves. It was the worst H1 for the S&P 500 since 1970 and the worst for the Nasdaq ever.

2) A recession but inflation under control

The word ‚recession‘ never sounds good to investors but I’d argue that done right, this is the better scenario. As the market has shifted its focus to recession, borrowing costs have come down and a terminal rate of 3.25-3.50% in Fed funds is priced in, coming down to 2.75% about 8 month later.

Unfortunately, markets have gotten drunk on cheap money for far too long and are hopelessly addicted now. Everything is leveraged. If rates top out and we can kick the can down the road on popping the bond bubble, then there’s scope for a ‚recession rally‘ as bizarre as that sounds.

The third scenario

The nightmare scenario is stagflation, where we get a recession and inflation doesn’t fall. That might be possible if the world continues to be short of commodities, or loses faith in central banks. I think we priced in a chance of this in the past few weeks but given how quickly consumer sentiment and industrial orders are declining, along with commodities, this has grown more remote.

Overall though, I don’t see a ‚recession‘ scenario as that bad, especially since I think the hit to the jobs market will be modest.

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

Headlines:

• Aussie and kiwi technicals begin to crack again
• USD/JPY pulled back towards 135.00 as the weekend draws near
• GBP/USD has its sights set on 1.2000 again
• Reminder: It will be a US holiday on Monday
• Eurozone June preliminary CPI +8.6% vs +8.4% y/y expected
• Eurozone June final manufacturing PMI 52.1 vs 52.0 prelim
• UK June final manufacturing PMI 52.8 vs 53.4 prelim

Markets:

• JPY leads, AUD lags on the day
• European equities lower; S&P 500 futures down 0.6%
• US 10-year yields down 2.4 bps to 2.950%
• Gold down 1.1% to $1,786.92
• WTI crude up 2.4% to $108.31
• Bitcoin up 2.1% to $19,140

The selling in equities continues to play out even as we begin the new month/quarter, and that is weighing on the overall mood in markets. The 4th of July weekend coming up in the US may not leave much appetite for a switch in sentiment, so there’s that to consider for now.

In any case, stock futures were heavily sold coming into European trading with S&P 500 futures falling down by 45 points, or 1.3%, before cash markets opened in Europe. That set up for a sour time when the opening bell struck but stocks managed to pare some losses with regional indices turning higher for a brief period.

But as we look towards US trading now, risk appetite is sapped again and European stocks are lower with US futures modestly softer as well. S&P 500 futures are down 22 points, or 0.6%, currently.

The mood in Treasuries also pointed to a more risk-off tendency with yields keeping lower again. 10-year Treasury yields are keeping below 3% and that continues to keep the yen more bid ahead of the weekend.

USD/JPY fell from 135.20 to 134.75 early on before picking up to keep around 135.10-30 levels at the moment.

Elsewhere, the dollar strengthened across the board with the pound and the antipodeans suffering a brutal beatdown. GBP/USD fell hard from 1.2130 to 1.2030 while AUD/USD and NZD/USD are both facing key technical breaks to the downside with the former slipping by 120 pips to below 0.6800 (weakest since June 2020) and the latter down 85 pips 0.6156 (weakest since May 2020) on the day.

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

The drop in the middle of May was thwarted as buyers held their ground at the $1,800 mark before the daily close. But now with the dollar going from strength to strength, even gold is finding it tough to stay afloat as commodities in general (industrial metals especially) are struggling over the past few weeks. It looks like precious metals are being hit hard this week with silver down 3% today to below $20 and its lowest since July 2020. Meanwhile, platinum has fallen to $860 and that is the lowest since November 2020.

Going back to gold, there is some light support around the swing region at $1,780-82 but further support is only seen out at the swing region around $1,753-59. Beyond that, the September 2021 lows around $1,721 will be the next target before $1,700.

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

You’d be hard-pressed to find a day where the pound isn’t acting somewhat like a commodity currency these days. On a day where the aussie and kiwi are slumping as the technicals start to crack, the pound is also struggling being dumpstered.

Cable is down 0.9% to 1.2064 now as sellers resume the downside momentum and go in search of a push towards 1.2000 again.

Although the risk mood has improved considerably since the start of the session, there hasn’t been much change to sentiment in the major currencies space. The aussie and kiwi are hammered hard while the dollar and yen are firmer across the board. That is weighing on cable with a drop of over 100 pips today.

As mentioned before in the past two weeks, the defining range for cable is between 1.2000 and 1.2400. It looks like we could see sellers poised to try and test the former and a break below that will exacerbate further weakness for the pair with the March 2020 lows between 1.1410 to 1.1500 next in the firing line.

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

Bitcoin was
down 7.2% on Thursday, ending it at around $18,800. Ethereum lost 8.7%, while
other leading altcoins in the top 10 fell from 4.4% (BNB) to 10.6% (Dogecoin).
However, Bitcoin greeted the new day, month and half-year with buying. In a
thin market early in the day with Asia predominantly active, this spurred the
price up 11% to $20,800, quickly deflating to $19,400.

 

In other
words, we see attempts to create the appearance of buying the dip in bitcoin.
Still, the rise in price entails increased selling – a typical sign that
institutional and market professionals are “dumping” the asset to retail
investors guided by the price chart.

 

By Friday,
the cryptocurrency fear and greed index remained unchanged at 11 points
(“extreme fear”).

 

Bitcoin
intensified its decline on Thursday after breaking the $20,000 level. BTC
tested 11-day lows near $18,600 amid a plunge in stock indices.

 

Last month
was one of the worst for bitcoin, with BTC losing 41% of its value, falling
short of historical trends.

 

In terms of
seasonality, July is considered a relative success for BTC. Over the past 11
years, bitcoin has ended the month up seven times and down four times. The
average rise was 22%, and the average decline was 9%. In the first case, BTC
could end July at around $23,000. In the second, it could end July at about
$17,000.

 

According to
Deutsche Bank, Bitcoin could recover to $28,000 by the end of 2022 on the back
of a likely rally in US equities.

 

JPMorgan
Bank believes the crypto market could bottom out soon, after which bitcoin and
other crypto-assets will consolidate. Most traders with margin positions have
already washed out of the market.

 

We continue
to maintain our position that there remains a sellers’ advantage, and the
slowest of them will be careful to sell the crypto market on upside attempts.

 

According to
BitInfoCharts, bitcoin’s fall from historic highs has stripped some 75% of
investors (82,600) of their millionaire status.

 

Pantera
Capital founder Dan Morehead is confident that it’s too early to talk about a
“bottom” of the market. He expects several more defaults by companies in the
sector shortly – similar to the story of Three Arrows Capital.

 

OTC
cryptocurrency dealer Genesis Global Trading could face hundreds of millions of
dollars in losses due to the loss of liquidity of counterparties Three Arrows
Capital and Babel Finance.

 

Lee Reiners,
director of the Center for Global Financial Markets at Duke University in North
Carolina, believes digital currencies have no real value and should be banned.

 

This article was written by FxPro’s Senior Market Analyst Alex
Kuptsikevich.

 

This article was written by FxPro FXPro at www.forexlive.com.

European indices have pared the early declines while US futures have trimmed the drop from earlier with S&P 500 futures now down just 8 points, or 0.2%, after having been down by around 45 points earlier. Here’s a look at the equities space:

• Eurostoxx +0.1%
• Germany DAX +0.3%
• France CAC 40 +0.4%
• UK FTSE +0.2%
• S&P 500 futures -0.2%
• Nasdaq futures -0.3%
• Dow futures -0.1%

There’s not much of a catalyst for the turnaround but at least investors are not throwing in the towel just yet with there being some slight optimism. I’m still skeptical of the overall mood until we see what Wall Street has to offer, especially with the long weekend looming just around the corner.

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

Headlines:

• Dollar holds more mixed with month-end, quarter-end in focus
• Risk appetite sapped as the session gets underway
• France June preliminary CPI +5.8% vs +5.7% y/y expected
• Germany June unemployment change +133k vs -6k expected
• Germany May retail sales +0.6% vs +0.5% m/m expected
• Germany May import prices +0.9% vs +1.6% m/m expected
• UK Q1 final GDP +0.8% vs +0.8% q/q second estimate
• UK June Nationwide house prices +0.3% vs +0.5% m/m expected

Markets:

• JPY leads, EUR lags on the day
• European equities lower; S&P 500 futures down 1.5%
• US 10-year yields down 5.6 bps to 3.037%
• Gold down 0.7% to $1,805.33
• WTI crude down 0.9% to $108.84
• Bitcoin down 5.9% to $18,995

A glance at markets would suggest a typical risk-off kind of day but that hasn’t really translated to much significant action in FX, for the most part at least.

Equities slumped early on with US futures being pummeled lower as the focus rests on month-end and quarter-end trading. That dragged European stocks down as well, erasing a lot of the good work from last week.

Treasuries were bid throughout with 2-year yields dipping back below 3% and commodities were also sold, with gold and oil both looking rather heavy on the session. Elsewhere, even Bitcoin slumped back below $20,000 and is in a battle to try and thwart obscurity at the moment.

The yen was a notable gainer on the session but a push lower in USD/JPY to 136.00 was quickly bid back up to 136.20-30 levels, as it is now – still down 0.2% on the day. The euro lagged as it continues to struggle for love from investors with EUR/USD falling back below 1.0400 for the first time in two weeks in a drop from 1.0450 to 1.0385.

GBP/USD was mostly little changed but is seen now down 0.2% to near 1.2100 as the dollar keeps a modest advance after a slow start. USD/CHF also recovered to push to 0.9600 only to drop back to 0.9570-80 levels now.

Against commodity currencies, the dollar is mostly little changed though USD/CAD is back up above 1.2900 with the help of some selling in oil. WTI crude is down 0.9% to $108.84 currently.

Well, it’s all about getting over the month-end and quarter-end hump today. But with tomorrow being a Friday and a long weekend in the US beckoning (Monday is 4th of July), it may be tough to read into much of the moves before next week.

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