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Dean's Daily FX Update – 28 June 2017
In the Zone
- AUDUSD
- NZDUSD
Noteworthy News
- The Senate decided to postpone the Healthcare vote yesterday, which suggests that they didn’t have enough votes to get it through. Trump invited all Republican Senators for a meeting last night, no doubt to try and get the conservatives and moderates on the same page. I will be watching this carefully in a couple weeks, but I have a feeling that a bill in some format will get through.
Recap
If you are like me and like to only look at the markets every morning, then you would be wondering what happened to the dollar. The market was waiting on Fed Chair Yellen yesterday and you would be forgiven if you thought she changed her tone this week, the truth of the matter is that the Yellen interview was actually a bit of a dud. Instead it was the ECB President Draghi that was the catalyst for the move, I have always said that Draghi is a danger to markets – only because he is so non-committal in his speeches and his views can often change with his mood.
Having mulled over his speech, there were a lot of dovish undertones to his speech but the market decided to fixate on only one line, “While there are still factors that are weighing on the path of inflation, at present they are mainly temporary that the central bank can look past.”
That one comment was the catalyst for the EURUSD to break through the US Election highs, the cable to endure a 60 pips flash as stops were battered, USDCAD to break through a long term trend line and for the NZDUSD to trade to the 2017 highs. Later on in the day, the IMF downgraded growth forecasts in the US and later in the evening the much anticipated Healthcare Bill was postponed until mid-July – all of these factors weighed even more on the greenback.
We have a panel discussion this afternoon that includes the central bank heads of the EU, UK, Canada and Japan and so for that reason I will not look at those pairs until tomorrow morning. The only pairs that I will look at today are shorting opportunities in both the AUD and the NZD but in particular the NZDUSD. Despite the dollar getting battered. The NZD still finished slightly lower on the day and also closed below the recent trend line, this suggests to me that the NZD bulls are starting to fizzle out and once the dollar index turns – it is this pair that could feel the hurt first.
It is unprecedented to have four “giants” of global monetary policy on the same panel discussion, and today I just hope that they are able to keep their egos in check. It is for this reason that we won’t be publishing daily ranges today. All the pairs, majors and cross currencies could be affected by just one headline.
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