Forex today: stocks fall, VIX up to 12, DXY on the defence again
Forex today was a mixed bag of tricks lead by a drop in U.S. stocks following the European slide in shares - a negative day for Wall Street following the biggest gains in two months yesterday. US GDP for 1Q was annualized arrived at 1.4%, beating the previous estimate of 1.2%.
However, it was the Central Banks that were again dominating the outlook and driving sentiment in the FX space today. Fed's Bullard came out and said that inflation breakevens suggest Fed is being too hawkish while BoE’s Haldane expressed his concerns again and suggested interest rates policy should be set to prevent entrenched inflation. Sterling was subsequently elevated again after a 1.2% rise yesterday when Carney also raised the prospect of rate hikes.
GBP/USD made a fresh high of 1.3015. EUR was up to 1.1445 highs. BOC Governor Poloz and other officials have put rate hikes on the table and that has supported the CAD to 1.2986 vs the dollar. The JPY reversed losses on the back of US stocks dropping. USD/JPY made a low of 111.80 from 112.92 highs. EUR/JPY rallied to 61.8% & 50% Fibos at 128.93 on EZ data earlier but buckled and dropped in line with itermarket moves down to 127.72 the low. Gold advanced on dollar weaknes to $1,253 and US yields in the 10 year closed +1.66%, to 2.2648%.
Day ahead in Asia (GMT)
• 23:30 JP CPI, Core Nationwide YY May 0.4% Rtrs f/c, 0.3% prev
• 23:30 JP CPI, Overall Nationwide YY May, 0.4% prev
• 23:30 JP All Household Spending MM May 0.2 Rtrs f/c, 0.5% prev
• 23:30 JP Unemployment Rate 2.8% Rtrs f/c, 2.8% prev
• 23:30 JP Industrial Output Prelim May -3.2% Rtrs f/c, 4.0% prev
• 01:00 CN NBS Manufacturing PMI Jun 51.0 Rtrs f/c, 51.2 prev
• 01:30 AU Private Sector Credit MM May, 0.4% prev
• 01:30 AU Housing Credit MM May, 0.5% prev
• 22:45 NZ Business Consents MM May, -7.6% prev
Key notes from US session
- Wall Street extended losses as volatiliy soared
- US Dollar Index continues to slide: lowest close since September
- BoC delivers support to CAD - Scotiabank
- Fed's Bullard: Current level of the policy rate is appropriate
- Bank of Canada could hike rates as soon as July - Wells Fargo