European Open Briefing Tuesday 24th June

Global Markets:

• China (CNY) CB Leading Economic Index (MAY): 0.7, Previous: 0.9
• Japan FM Aso: The economic growth rate must be maintained to raise the sales tax to 10% in FY15
• Asia stock markets: Nikkei up 0.10 %, Shanghai Composite gained 0.40 %, Hang Seng rose 0.30 %, ASX fell 0.40 %
• Commodities: Gold at $1316, Silver at $20.86, Crude Oil at $105.70
• Bonds: US 10 year yield at 2.62

FX Update:

• AUD – AUD/USD rallied yesterday after better than expected Chinese econ data and stayed bid throughout the day. Bids are reported in front of the big figure and in better size towards 0.9370-75. To the topside, there is talk of a barrier option at 0.9450, which continues to slow upside momentum. However, it’s likely just a matter of time we’ll see a breakout above and the stops cleared.
• CAD – USD/CAD extended losses and is slowly approaching the 1.07 level. A close beneath that level would pave the way for a 1.0606 test. Intraday resistance at 1.0750 and 1.0780, where leveraged funds have their offers resting. 1.0820 remains the key resistance level in the short-term and it would take a clear break above to regain some bullish momentum.
• CHF – Comments from the Swiss National Bank that the Swiss Franc was overvalued by 12 % in May did not have any impact on the Franc. USD/CHF remains in a stubborn range, with 0.90 the big resistance level which needs to be taken out before we can see any larger gains.
• EUR – The Manufacturing and Services PMI figures all missed expectations and the EUR/USD fell slightly. The pair has already retraced those losses and has consolidated between 1.3590 and 1.36 overnight. Today, we have the German IFO release, which could finally move the Euro a bit more. Dealers report that interest around the current levels isn’t strong. Good bids start from 1.3550 down to 1.3530, from corporate names and leveraged funds. Offers lined up from 1.3650 up to 1.3680.
• GBP – Position covering from longs saw the GBP/USD dropping from 1.7040 to a low of 1.70. Overnight, the Pound bounced, helped by GBP/JPY buying. Key intraday support at 1.6960 and then 1.6920. Specs remain heavily long the Pound and are probably not keen to add to their positions at the current levels, but are rather waiting for a larger dip.
• JPY – USD/JPY still caught in a 14 pips range. Overnight, we saw buying from Japanese names and importers still have good demand for the pair as oil prices continue to rise. Exporter and ACB offers reported at 102.20, while specs have bids in front of the 200 DMA at 101.59. For today, expect a 101.70-102.10 range.
• NZD – Key resistance at 0.8776; support at 0.8685 and then 0.8640.

Upcoming Events:

• 08:00 GMT – German IFO Business Climate (110.2)
• 08:30 GMT – Bank of England Carney speaks
• 14:00 GMT – US CB Consumer Confidence (83.5)
• 14:00 GMT – US New Home Sales (440k)