Forex Forecast

Nothing New From Bernanke Those hoping to cement their QE expectations were left disappointed by Fed Chair Bernanke’s testimony, which flagged the risks and kept all policy options open – yet failed to offer any real hints of impending action at the FOMC meeting on June 19-20.

China Cuts Rates Risk appetite remained supported in the European session and received a boost when China cut its benchmark deposit rate by 25bp, the first move on benchmark policy since July of last year and the first rate cut since 2008.

Strong AUD Jobs Data AUDUSD continued its move higher after a strong employment report. 38.9k jobs were added in May (0.0 cons). This marks the 3rd consecutive monthly print above consensus and the first 3-month jobs gain in over a year. Importantly, the gains were driven by full-time positions (+46k).

Euro Bounce Euro bulls were initially disappointed by the ECB’s decision to leave rates unchanged and comments from Draghi which did not indicate the ECB was any closer to delivering rate cuts or another 3-year LTRO.

Draghi Up Next Ahead of today’s ECB meeting, the euro and other risk assets pushed higher. Renewed hopes for further stimulus from the Fed (largely as a function of the softer data of late) and hopes of a policy response from Mario Draghi have helped, with equity markets and periphery fixed income performing well.

ECB Under Scrutiny The ECB decision takes centre stage today as the ECB’s response to the recent escalation in the Eurozone debt crisis comes under scrutiny. Up until know, the central bank’s position on the Spanish financial sector and how banks can (and cannot) be recapitalised has been clear, and some key decisions are being […]

More Talk, No Cohesion EURUSD managed to stabilise at lower levels overnight, with conditions thinned by the UK holiday. The tone remains heavy in the wake of the softer than expected data prints (German services PMI down to 51.8 in May; German factory orders down 1.9% m/m in April; Eurozone retail sales down 1.0% m/m […]

G7 Call, BoC Due The euro pushed lower again overnight in a fairly quiet session. Data prints were on the soft side, German PMI slipped to 51.8, and Eurozone retail sales fell 1.0% m/m. German factory orders also dell 1.9% m/m. The G7 emergency call is due to take place at 11.30 GMT but there […]

RBA Cuts 25bp In line with expectations, the RBA cut the cash rate by 25bps overnight. The central bank noted weakness in Europe and China as the principal drivers but did point towards some domestic indicators such as the labour market stabilizing.

Some Respite For The Euro No news is good news. That pretty much summed up the story for the euro overnight, as the lack of any major political headlines or data releases set the stage for EURUSD short covering amid hopes that a pan-European roadmap towards a banking union would emerge in coming weeks.

Risk Appetite Struggles Risk was broadly soft during overnight trading, though FX markets generally held Asia session ranges. Growth-sensitive Asian markets were heavily hit by the poor run of data in recent days, especially the weaker jobs numbers out of the US on Friday.