The US Dollar Index, which measures the buck vs. its main rivals, has bounced off session lows in the 96.80 area and is now flirting with 97.00 once again. US Dollar bid after ECB, data The index has gathered some buying interest after the ECB meeting failed to give any clues regarding the potential moves of the central bank in the near/medium term, removing in consequence some tailwinds from the risk-associated space.
EUR/USD failed to gather further steam after the ECB meeting today, briefly testing the 1.1060 area – or session highs – in response to the usual volatility during Draghi’s press conference. It is now threatening to break below the psychological support at 1.1000 the figure following a pick up in the demand for the US dollar. On the other side, the greenback –tracked by the USD index – has sparked a rebound after bottoming out in the 96.80 area along with a positive performance of US yields, giving further evidence that the rally remains healthy for the time being.
The US Dollar seems to have caught up a fresh bout of selling pressure, with the USD/CAD pair dropping to session low level of 1.3025. According to the data, Canada May wholesale trade sales recorded a growth of 1.8% as against 0.2% (revised from earlier 0.1%) rise posted in the previous month and was also better-than 0.2% expected.
The volatility around the shared currency has now accelerated, taking EUR/USD to navigate the 1.1010/60 range. EUR/USD vigilant on Draghi Spot keeps the composure after President Draghi stressed that the current QE programme will run until March 2017 at least, while rates will remain in low levels ‘well beyond horizon’. Draghi stated that recovery should continue at a moderate pace in the region, while past ECB measures remain supportive of domestic demand.
Sue Trinh, Senior Currency Strategist at RBC Capital Markets, notes that the CNY fix was higher than expected at 6.6946, against consensus expectations of a 6.70 handle, putting a lid on USD/CNH and USD/CNY. Key Quotes
Research Team at BBH, suggests that the BOJ meets next week while the IMF trimmed its forecast for Japan's growth this year by 0.1%, which sounds small, and it is, but that proportionately, it is a third, so it now expected 0.2% growth. Key Quotes
Research Team at BBH, suggests that the Turkish President Erdogan chairs a meeting today of the National Security Council. Key Quotes “He will then chair a council of ministers meeting, and said that an “important decision” will be announced afterwards. Markets have reacted badly to the ongoing purges of the judiciary, military, police, and academia. If Erdogan announces more draconian measures, we suspect that USD/TRY (which made a marginal new high for this move) will likely make new all-time highs.”