The USD moved lower yesterday helped by the Swiss National Bank surprise tightening, and a string of weaker data.
Today the story was different. The Bank of Japan kept rates unchanged and said that they would continue the put a ceiling on the 10 year yield by being a buyer. The industrial production was weaker than expected but Fed’s Kashkari – usually one of the more dovish Fed members – said that he would welcome another 75 basis point. Giving equal time to another view, KC Pres. George, who dissented against the 75 basis point hike, said she did so because:
“The speed with which we adjust the policy rate is important, Abrupt changes can be unsettling to households and small businesses.”
Meanwhile the Fed’s semiannual monetary policy report had a little something for everyone
- Recent indicators suggest that private fixed investment may be moderating but consumer spending remains strong
- Our commitment to restoring price stability is unconditional
- Real GDP appears on track to rise moderately in the second quarter
- Further risks to global supply chains abound
- Some measures of wage growth appear to have moderated
- Some signs of easing the labor market have appeared
- High inflation, supply chain disrutpions and the Ukraine war remain substantial sources of uncertainty with the potential to add stress to the system
A positive for inflation this week potentially is the sharp fall in oil prices. The high price this week reached $123.66. The low price for the July contract which tops trading on Tuesday reached $108.33. That was the lowest level May 20. The 100 day MA is at $104.77. That MA will be eyed as a key barometer for the buyers and sellers next week if the price does continue the rotation to the downside.
Looking at the strongest to the weakest, the USD is the strongest while the JPY is the weakest at the end of the day
Some technical highlights going into the weekend (and into the new week):
- EURUSD: The EURUSD dipped to and briefly through the 100 hour MA at 1.04576 currently (and moving higher). That came after a break above the 200 hour MA yesterday that failed into the close and stayed below in trading today. The price is trading between the 100 hour MA below at 1.04576 and the 200 hour MA above at 1.05415. The price near the end of week is at 1.0496. Next week, the MAs will help to define the next bias move for currency pair. Move below the 100 hour MA is more bearish. Move above the 200 hour MA is more bullish.
- GBPUSD: The GBPUSD moved down today, and in the process fell back below the 38.2% at 1.2213 and a swing area near that level between 1.22038 and 1.2216. The pair then extended to another swing area between 1.2154 and 1.2173. The 100 hour MA was within that area at 1.21582. The price bounced modestly into the close and is settling just above the 38.2% at 1.2213. Next week, the 100 hour MA below will be a key barometer on the downside. Stay above would be good for buyers. Move below is more bearish. On the topside, watch 1.2260 and above that the falling 200 hour MA and 50% of the move down from the May high at 1.22995. That is also near the natural resistance at 1.2300.
- USDJPY: The USDJPY fell yesterday and rose today more than the fall. The price moved back above its 100 and 200 hour MAs at 134.19 area (they are near converged). The price is settling near 134.95. The high for the week reached 135.577 which was the highest level going back to 1998. The buyers remain in control above the 100/200 hour MA. When speaking of 24 year highs, it is tempting to sell, but there is not technical reason to do so unless those hour MAs can be broken – and remain broken.
- USDCHF: The USDCHF took a breather today – consolidating in an up and down range. Teh move higher did extend briefly above a swing area at 0.9713 to 0.9723 (swing levels on hourly from June 6 to June 9), but moved back below that area into the close (the price is trading at 0.9700). IF the price cannot get and stay above 0.9723, the buyers are not winning. The sellers remain in full control.
- USDCAD> A new 2022 high was reached in the USDCAD today, but only by 2 pips at 1.3078. The price moved back below a near high swing area between 1.3037 to 1.30515. Those levels are tempting to sell against after the double top, but it is tough picking a top too. Sellers would feel more confident on a move back below a swing area between 1.2949 and 1.29805. The rising 100 hour MA is at 1.29378. The price declines yesterday found dip buyers against the 100 hour MA line.
- AUDUSD: The AUDUSD stalled on Thursday’s run up against the 200 hour MA and 50% of the move down from the June high at 0.7066. The move down today, stepped back below the lower 100 hour MA at 0.6955 and stayed below. That put the sellers back in control. The price is closing at 0.6934. Next week, stay below the 100 hour MA keeps the sellers in control. A swing area comes between 0.6891 to 0.69168 on the downside, ahead of the low this week at 0.68499 and the low from May at 0.6829.