The Greenback has fallen further following last week’s dovish Fed policy meeting and Friday’s relatively weak PMIs, with the DXY faltering after a fleeting attempt to pare losses and probe above 96.200. The 96.000 handle looks under threat and could be relinquished amidst strength elsewhere, with Gold edging back over Usd 1400/oz and Eur/Usd eyeing 1.1400. Note also, the pressure could build as the week unfolds with at least one currency rebalancing model flagging a strong sell signal for the end of June, Q2 and H1, not to mention the G20 where US President Trump is due to meet his Chinese counterpart Xi for extensive trade talks.
Perhaps surprisingly given ongoing global trade and geopolitical uncertainty, the Antipodean Dollars are outperforming major peers, or rather deriving most momentum from their US rival’s demise. The Kiwi is pivoting 0.6600 and Aussie 0.6950 ahead of this week’s RBNZ meeting on Wednesday with rates widely tipped to remain unchanged before another cut in August, while comments from RBA’s Lowe may have dampened some dovish expectations as he questioned the effectiveness of easing to support the economy in the context of moves by other Central Banks aimed at sustaining growth and reaching inflation targets.
The next best G10 currencies, as the Loonie consolidates recovery gains through 1.3200 after its post-Canadian retail sales wobble, with some support from firmer crude prices, and the Euro draws encouragement from the latest German Ifo survey that was not as weak as forecast overall. Moreover, the institute maintained its 2019 GDP estimate and played down the prospect of a recession even though the economy is in the doldrums, or heading that way. However, Eur/Usd has tested the 50 DMA (1.1390) after clearing 200 DMA and WMAs, but falling just short barriers at the next big figure where the top end of 2 bn option expiries lie (from 1.1390 coincidentally).
All narrowly mixed vs the Buck as the Franc stalls ahead of 0.9750 and Pound meets resistance above 1.2750 in the form of a 38.2% retracement of the fall from 1.3185 to 1.2506 at 1.2766. Meanwhile, the Yen has retreated a bit further from 107.00 and into a 107.29-48 band with technical support seen a fraction under (107.27 Fib) and decent expiry interest a whisker above (1.3 bn at the 107.50 strike).
The Lira has rebounded further from recent lows and in large part on the back of a resounding result at the 2nd Istanbul election that will not be contested this time. Indeed, President Erdogan congratulated the victor after the landslide saw Imamoglu defeat ex-PM Yildirim by whopping 800k votes. Usd/Try is hovering towards the bottom of a 5.7085-8200, with additional support for the Lira from an improvement in Turkish manufacturing sentiment.