Bullet Report | AUD, GBP skyrocket versus USD

We are now past NFP and Janet Yellen speech and the market seems to have come to terms with possibility of no rate hikes in the coming months. Yesterday Janet Yellen was perceived to be more dovish than expected and now according to current market pricing, the probability of a hike in July is below 30% and in September it is around 50% (before the jobs report the figures were 70% and 85%, respectively). The market was also characterized by a fat finger move in the GBP overnight.

Currencies: USD is mixed following NFP and Yellen yesterday. Initially the USD weakened after Yellen’s speech, however it stabilized against EUR at 1.1360 and strengthened versus the JPY at 107.66. GBPUSD rallied almost 200 points at 04 GMT today, in a move that had no catalyst and is attributed to a large single trade that might have triggered many stop losses and thus pushed even higher. AUDUSD posted a 1 month high at 0.7435 after the RBA kept rates unchanged.

Stocks: Stock markets welcomed the dovish tone of Fed chairwoman. Last night, U.S stocks finished higher and this morning Asian and EU stocks have also recorded gains. The Fed chief said last month’s jobs report was “disappointing” but warned against attaching too much significance to the payrolls data in isolation. Still, Yellen was careful not to give any hints about the timing of a next rate increase, in contrast to a speech on May 27, when she said such a move would probably be appropriate “in coming months.”

Oil and GOLD: oil prices held firm after crippling attacks on Nigeria’s oil industry and fresh declines in U.S. crude stockpiles. BRT prices hit a 7 month high of $50.83 per barrel. U.S. West Texas Intermediate (WTI) crude stood firm in Asia at $49.60 per barrel, after rising 2.2 % on Monday, its largest gain in three weeks.

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