Month End & End Of Q2

The USD and US10Y continue the march higher and remain above the key resistance of 3.82.

The momentum was continued yesterday after the jobless claims report was released with a much bigger drop than market expectations. The fears over the labour market in recent weeks shows that the panic is over, at least for the time being.

The equity markets continue to push higher despite higher USD and higher yields, the push for returns outweighs the fears of current higher interest rates.

Take a look at Europe: low growth, high interest rates and the outlook doesn’t look great – but yet the DAX continues to move higher.

Eurozone HICP showed a bigger than expected deceleration this morning, prompting some marginal downside in the EUR.

However, the miss isn’t large enough to change the ECB’s mind about their rate path just yet.

  Not a lot is happening in the FX markets yet, with NZD the strongest currency this morning. No specific catalyst other than a slim beat on Chinese PMI’s.

Sitting at the bottom of the pack is EUR despite the ECB best efforts to promote a hawkish stance. If we see positive data out of the US this could provide another leg lower on EURUSD.

If we see positive data out of the US this could provide another leg lower on EURUSD.

As mentioned earlier in the week, the intervention level of 145 has been earmarked along with the Japanese finance minister continuing to comment on the JPY one directional moves.

With the quarter and month end coming to a close, expect some volatility as books are rebalanced.

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