Market Update – June 8 – Ripples from the BOC Reverberate

By
Analysis Team
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The USDIndex continues to rotate around 104.00 holding its positive bias, the BOC surprised with a 25 bp rate hike after no changes since January, following the RBA surprise earlier in the week. Yields rallied (2/10 yr inversion now up to 78 bp) the FED’s assumed “no change” next week comes into focus; the CME FedWatch tool showed the probability of the Fed hiking by 25 bps next week is now 36%, it was under 20% a day earlier. The latest Reuters poll of analysts have been 90% expecting no change next week but 35% expecting at least another 25bp before the FOMC is done. Stocks closed with a negative bias as recession risks ticked up, Asian markets have followed through despite starting in positive mode. Japan GDP annualized 2.7%, beats; q/q -0.3% JPY liked it the Nikkei did not closed (-0.85%). European & UK Future lower, too.
  • FX – The USDIndex continues to rotate in a wide arc around 104.00. EUR holds above 1.0700, today at 1.0710 but remains capped at 1.0750. JPY briefly breached the 140.00 handle yesterday & is once again testing it today. Cable holds over 1.2400, but  below next resistance at 1.2450, having tested the mighty 1.2500 again yesterday.  
  • Stocks – Wall Street traded mixed with tech particularly vulnerable to any further rate hikes the NASDAQ lost -1.29% whereas the DOW edged out a 0.27% gain. US500   (-0.38%) closed -16.33pts at 4267, FUTS are trading at 4266, a tenth day above the key resistance at 4175 and a sixth day north of 4200.

  • Commodities – USOil – Futures rallied into $73.00 zone from $70.00 on Tuesday. EIA Inventories  showed a decline of -0.5M barrels vs expectations of a 1.2M build. Gold – rallied to $1970 before breaking below the key $1950 handle, and trades at $1945 now.
  • Cryptocurrencies – BTC reversed from the $27k level to 26.5k as both Binance and Coinbase reject any wrongdoing and the SEC accusations. 

Today – EZ GDP, US Weekly Claims  & Speech from SNB’s Jordan.

Biggest FX Mover @ (06:30 GMT) NZDCHF (-0.57%) Rallied from 0.5480 today to break 0.5500, next resistance at 0.5520.  MA’s aligning higher, MACD histogram & signal line negative but rising, RSI 54.08 & rising, H1 ATR 0.00072, Daily ATR 0.00451.

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Stuart Cowell

Head Market Analyst

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