June Market Overview

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Monthly Currency Trading News

$Us Dollar:  June started with disappointing CB Consumer Confidence and much improved ISM Manufacturing PMI. ADP Non-Farm Employment Change came above expectations while Non-Farm Employment Change was very disappointing (the lowest since September 2010) causing big weakening in US Dollar. Unemployment Claims and Crude oil came below expectations. Unemployment Rate came down to 4.7%, the lowest since 2007 (but it was due to people leaving Labor Force), Average Hourly Earnings m/m came as expected. This followed with disappointing ISM Non-Manufacturing PMI.  Yellen was non-committal on rate hike, she outlined four main risks to the US economy: slower demand, productivity, inflation and overseas risks.  Second week started with Crude oil Inventories as expected, improved Unemployment Claims and Preliminary UoM Consumer Sentiment. Core Retail Sales m/m came unchanged, Retail Sales m/m and PPI m/m improved.

Second half of the month saw unchanged Federal Funds Rate but they signalled the plan of two increases before the end of the year, hoping for improvement in the job market. FOMC has lowered its economic growth forecast 2016/2017. This was followed by disappointing CPI m/m  and Building Permits, unchanged Core CPI m/m, improved Filly Fed Manufacturing Index and  increased Unemployment Claims.  “If there were to be a negative shock to the economy…we don’t have a lot of room using our traditional tried and true method” Fed Chair Janet Yellen told the Congress on 22 June during semianual testimony on the U.S. economy. The month ended with improved Unemployment Claims, CB Consumer Confidence and Final GDP q/q while Core Durable Goods Orders m/m came much below expectations.

Brexit: 24 June UK voted to Leave EU. David Cameron resigned. EU requested a quick exit strategy from UK. Scotland voted to remain in Europe and is now considering its options. EU future is at stake as other EU countries are now considering their options and potential votes on EU membership. Japanese Prime Minister said they will continue to work closely with the G7 states to minimise Brexit impact on global financial markets. Central banks have taken steps to ensure liquidity. Markets reflected the vote with huge volatility.

OPEC failed to agree on production cuts, insiders speculate OPEC may be ‘dead’ as Saudi Arabia and Iran cannot reach agreement on the way forward.

CNY: The month started with improved Manufacturing PMI, while  Caixin Manufacturing PMI dissapoinded.  Trade Balance came below expectations. Industrial Production y/y and CPI y/y came disappointing.

EurUsd:  ECB left Interest Rates on hold at 0.0% with unchanged inflation forecast. German Zew Economic Sentiment and German Ifo Business Climate came well above expectations. Spanish Parliamentary Elections delivered more uncertainty by ending with hung Parliament second time in 6 months. The month ended with EU economic Summit where Merkel stated that there was no way back for the UK from Brexit.  UK was urged to provide exit strategy as soon as possible.

EurUsd
EurUsd: after forming a double top at 1.141 Eur plummeted 520 pips post Brexit, now bouncing back and re-testing the trendline from the bottom.

GbpUsd:

The month started with Manufacturing and Services PMI and Manufacturing Production m/m above expectations, Construction PMI came disappointing. CPI y/y came unchanged at 0.3but below expectations. Average Earnings Index 3m/y, Claimant Count Change and Retail Sales improved.  BOE kept interest rates on hold. The month ended with UK voting to leave EU. Final GDP q/q came as expected and Current Account was disappointing.

GbpUsd
GDPUSD dropped 1795 PIPs and reached all-time low of 1.3119 after the Brexit vote. Now hovering/consolidating above the support.

AudUsd: The month started with improved GDP q/q and Trade Balance, while Retail Sales were disappointing. Cash Rate remained unchanged at 1.75%. Second half of the month saw improved Employment Change and Unemployment Rate remained at 5.7%. Australia Votes in Double dissolution election.

AudUsd
AudUsd ascended to 0.7643 on Brexit vote then plummeted some 340 Pips, quickly re-bouncing to 0.75.

Week ahead in the News

USD: ADP Non-Farm Employment Change, Non-Farm Employment Change , ISM Non-Manufacturing PMI, Unemployment Claims and Unemployment Rate.

CNY: Manufacturing PMI, Caixin Manufacturing PMI; Eur: ECB latest release; GBP: Manufacturing, Construction and Services PMI; BOE Gov Carney speaks,  AUD: Federal Elections, Building Approvals m/m, Cash Rate, Trade Balance,  Retail Sales; CAD: Trade Balance, Employment Change and Unemployment Rate.

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