Summary: The Dollar steadied, rising modestly against most of its rivals, despite extended falls in US bond yields. Traders were reluctant to get too bearish on the Greenback ahead of today’s US Retail Sales report and upcoming Federal Reserve and G20 meetings. The Euro slipped 0.14% to 1.1275 (1.1290) after IMF Managing Director Christine Lagarde remarked that escalating trade tensions posed a risk to the Eurozone. The Australian Dollar edged lower to 0.6915 from 0.6927 after an Employment report, seen as mixed, heightened expectations of an RBA rate cut. Against the trend, USD/JPY slipped to 108.40 (108.50) and USD/CHF was at 0.9942 (0.9957) as global risk sentiment remained fragile. The Swiss National Bank kept its policy rate at -0.75% and said it could relax its ultra-loose monetary policy. SNB Chairman Thomas Jordan said that the appreciation in the Swiss Franc was due to the escalation of the China-US trade dispute in May.
Y Charts US Two Year Treasury Yield – 14 June 2019
US bond yields extended their drop with the 2-year slumping 4 basis points to 1.84%, a 1.1/2 year low. The benchmark 10-year treasury yielded 2.09% (2.12% yesterday). Expectations for a Fed interest rate cut rose ahead of the Federal Reserve’s meeting next week.
Wall Street stocks rose together with treasuries. The DOW ended 0.46% up at 26,133.00. Brent Crude Oil prices rebounded 2.27% to US$ 61.00 (US$ 59.5) after an oil tanker attack off the coast of Iran.
- EUR/USD – The Single currency edged lower to close at 1.2475 from 1.2490 following a failed topside attempt above 1.1350 earlier in the week. The Euro spent the day trading under key level 1.1300 after Euro Zone Industrial Production slipped to -0.5%, against expectations of -0.4%.
- AUD/USD – slip-sliding away, the Aussie Battler slid to 0.6915 at the New York close. Australian Employment gained 42,300 jobs against expected gains of 17,500. Once again most of the gain was in Part-time employment. The Jobless rate increased to 5.2% from 5.1% which saw speculation increased for an RBA rate cut at its next meeting.
- USD/JPY – slipped to 108.39 from 108.50 against the general Dollar trend. The fall in US bond yields and heightened trade tensions kept a lid to any USD gains against this haven currency.
On the Lookout: Despite lower US bond yields, which are the result of growing expectations of a Fed rate cut in July, currency markets remain unimpressed. It seems bond market traders are more bearish than their currency counterparts. US economic data have underwhelmed with the latest US Employment report underwhelming all expectations. FX traders are reluctant to let go of their preference for the Greenback.
Tonight’s US Retail Sales report could be a game-changer. Median expectations from economists for Headline Sales are forecasting a gain to 0.7% for May from April’s 0.2%. An increase in Motor Vehicle Sales of 5.5% last month is the main contributor.
Forex Factory US Retail Sales – 14 June 2019
China releases its trifecta of key data today, Fixed Asset Investment, Retail Sales, and Industrial Production. Also set for release today is China’s Unemployment rate. Japan reports on its revised Industrial Production (May). Europe sees French Final CPI. US reports finish off the day with Core (ex-autos) and Headline Retail Sales for May, Capacity Utilisation Rate, Industrial Production and Preliminary University of Michigan Consumer Sentiment.
Trading Perspective: Without yield support, the Dollar will struggle to make substantial gains. Market positioning remains well long of US Dollars. A bearish read on tonight’s retail sales could shake FX markets and send the Greenback sharply lower.
- EUR/USD – The Euro traded to an overnight low of 1.12684. Immediate and strong support lies at 1.1260. The next support level can be found at 1.1210. Immediate resistance can be found at the key 1.1300 level (overnight high 1.13037). The next resistance level lies at 1.1340. The latest COT/CFTC report saw speculative Euro short bets trimmed to -EUR 89,900 from -EUR 92,400 bets. Net total shorts are still near at multi-year highs. Likely range today is 1.1270-1.1320. Prefer to buy dips.
DAILY FX Aussie Chart – Hourly – 14 June 2019
- AUD/USD – The Aussie dropped to a low of 0.69013 before steadying to 0.6915 at the NY close. AUD/USD has immediate support at 0.6900 followed by 0.6870. Immediate resistance can be found at 0.6940 (overnight high 0.69385) and 0.6970. Market sentiment remains bearish on the Aussie and positioning is short. A sharply lower Greenback will turn the Aussie Battler around and send the shorts scrambling for the exits. Australia’s 10-year bond yield slipped 2 basis points to 1.40%. Which is mild compared to the fall in US yields. Likely trading range today 0.6900/50. Look to buy dips.
- USD/JPY – The Dollar slipped against the Yen to 108.39 after trading to an overnight high at 108.537. Immediate resistance today lies at 108.60 followed by 108.80. Immediate support can be found at 108.10 and 107.90. The fall in US bond yields and heightened risk tension will cap the Dollar at the 108 level. Japanese 10-year JGB yields were unchanged at -0.12%. Look for a likely range today of 108.10-60. Prefer to sell rallies.
Happy Friday and trading all.
UK based 
Fed rate cut hopes, easing tensions surrounding Sino-U.S. trade war on lack of major market impact headlines boost risk appetite in the market. ADP NFP data in focus now.
On The Lookout: While Sino-U.S. trade war proceedings take back seat, Brexit takes center stage. While uncertainties surrounding Brexit has already caused sharp losses to market, PM May’s resignation coming Friday is set to bring forth a greater power struggle which could greatly damage any and all progress made in terms of Brexit so far and could lead to hard Brexit. Such an outcome will cause loss in global market worth several hundred millions to few billions depending on impact of same on market. While US FOMC is expected to cut rate and hopes for same is high in the market weighing down USD, Fed chair Jerome Powell made cryptic comments during his speech last night commenting that Federal Reserve will respond as appropriate. US President Trump’s visit continues to UK continues to garner some level of attention but has had limited impact on market so far. On the release front, focus is now on ADP NFP data from US scheduled to release later tonight.
Escalating trade war woes, disappointing macro data updates, China’s stance on ceasing trade talks until US makes amends cause European markets to bleed red.
Trading Perspective: US Wall Street is likely to see subdued opening on cautious investor sentiment today. Traders expect US to retaliate in some form as part of its process to try and make China bend the knee. This has already caused global market to suffer but doesn’t seem to end anytime soon which suggests that Wall Street is likely to see price action from earlier this week repeat itself today.
European equities saw positive price action today on Adidas earnings and bank stocks rally influenced momentum. Traders now await US macro data updates for short term profit opportunities and directional cues to place major long term bets.
On The Lookout: The latter half of this week has so far experienced dovish price action in major global markets. Risk appetite has taken a serious hit resulting in overall equity price action remaining dovish despite geo-political events namely Brexit and Sino-U.S. trade talks seeing progress in favorable direction. European market’s macro calendar updates saw mixed outcome but failed to have any visible impact on price action of major equity assets and the common currency. Moving forward, as trading session comes to close for the week, all eyes turn towards US macro data updates for short term profit opportunities and directional cues. US macro calendar will see the release of Goods trade balance, Nonfarm payroll, Unemployment rate, Manufacturing PMI, Markit Composite PMI and Services PMI, ISM non-manufacturing PMI and speech by FOMC member Williams later in the day.
April 24, 2019, 
