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Forex News June 23, 2022

US futures

  • US futures are rising, but broader optimism is still lacking.
  • S&P 500 futures are up 7 points, or 0.2 percent, on the day.
  • The earlier sell-off followed dreadful PMI readings from France and Germany, with S&P 500 futures down 28 points, or 0.7 percent, at one point.
  • There was a quick turnaround earlier before some moderation, but we’ve seen a slow increase in the last hour or so.
  • However, markets remain devoid of broader optimism outside of equities.
  • Bonds remain largely more bid, with 10-year German bund yields falling 17 basis points to 1.44 percent and 10-year Treasury yields falling 4 basis points to 3.11 percent on the day.
  •  Meanwhile, the dollar and yen continue to outperform the other major currencies in terms of gains. The USD/JPY is currently down 0.7 percent to 135.25.

European bonds

  • German 10-year bund yields are down 17 basis points to 1.44 percent following gloomy PMI readings.
  • This is a significant drop as bonds receive a strong bid following the poor PMI readings from France and Germany earlier in the day.
  •  Ten-year Treasury yields are currently down nearly 6 basis points to 3.10 percent, the lowest in two weeks. The only real consolation is that the 10-year Italian-German bond yield spread remains just above 200 basis points for the time being.
  • However, the fact that yields are looking heavier today fuels the yen’s fire as it maintains its strong gains in the major currencies space.
  •  USD/JPY is down 0.7 percent on the day at 135.30, and a break below 135.00 will raise questions about the breakout move earlier in the week.

GBP/USD

  • GBP/USD runs into near-term support near 1.2160-70 on the day
  • The near-term support around 1.2160-70 helped to stall the pair’s drop yesterday, and we’re seeing a light bounce from there again now as price climbs back up to 1.2190. The recent swing higher’s 50.0 Fib retracement level adds another layer of defence, but all eyes are now on the risk mood and the dollar.
  • The dismal eurozone PMI readings earlier raised new concerns about a recession, with the ECB – almost certainly – set to hike into one, causing a rush of bids into haven assets.
  •  Cable fell from 1.2235 to 1.2170, benefiting the dollar and yen.
  • For the time being, equities are recouping some of their losses, with S&P 500 futures down 0.2 percent after falling as much as 0.7 percent earlier. Bonds are still being bid, with 10-year German bund yields falling 16 basis points to 1.45 percent and 10-year Treasury yields falling 5 basis points to 3.103 percent on the day.
  • Returning to the cable chart, the near-term bias is now bearish if sellers can maintain their position below 1.2200 and the 200-hour moving average at 1.2204.
  • The pressure will be on to break through the above-mentioned near-term support region in order to pursue a further decline towards 1.2000.
  • Any bounce this week appears to stall just above the 1.2300 level, with key resistance still seen closer to 1.2400.

Dollar

  • Despite a rebound in equities, the dollar and yen remain firm.
  • The dollar and the yen remain the day’s top gainers.
  • Equities are producing a rather solid rebound on the session now, with S&P 500 futures rising by 27 points to 3,790, or up 0.7 percent.
  • This compares to earlier, when it fell 28 points to 3,735, or 0.7 percent, following the dismal PMI readings from France and Germany. In terms of currency, the dollar and yen have mostly maintained their gains.
  • EUR/USD is down 0.5 percent to 1.0505 after hitting a low of 1.0485 and testing the 200-hour moving average.
  • Buyers are holding on to that for the time being, with large expiries at 1.0500 possibly also playing a role on the day.
  • Meanwhile, the GBP/USD is down 0.5 percent to 1.2205, but the low earlier was near 1.2270, and the pair bounced off some near-term support.
  • Elsewhere, the USD/CAD is a little higher at 1.2960, up just 0.1 percent on the day, and the AUD/USD is down 0.5 percent to 0.6890, with sellers not relenting just yet despite the shift in risk sentiment.

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