U.S. Dollar Trading (USD) the market has fully engaged in the rally with a third day impressive gains on the stock markets. The USD was able to gain however as the main catalyst for the further gains overnight was the promise of further action from the Bank of England and the rumors that the ECB was going to expand QE.
The Euro (EUR) The EUR/USD reversed from above 1.1100 as rumors swirled that the ECB was preparing to expand the parameters of the huge QE stimulus package. Support was found at 1.1020 and the we have rebounded here was EUR/JPY buying on dips supports. The Sterling (GBP) Bank of England Governor Carney didn't disappoint overnight all but guaranteeing further stimulus for the UK economy as the outlook took a hit post brexit. The FTSE is looking forward to these new easing measures which may come in the form of a rate cut or QE or credit line to big businesses. The FTSE100 is now above the pre-brexit levels and confounding the doom predictors.
The Japanese Yen (JPY) Broke above Y103 with the push higher in stocks and the USD strengthened on the EUR and GBP weakness. The GBP/JPY dipped from from Y138.70 to Y136 as Carney spoke but dip buyers have already took back control and we are grinding higher once again with the wave of optimism flowing through all the global risk markets.The Australian Dollar (AUD) A small dip at the start of Europe below 0.7400 was quickly bought up and as stocks advanced we have seen the AUD/USD push closer 0.7500. The Australian General Election is being held over the weekend but the closeness of the two parties economic policies should keep the impact limited. Still regardless the certainty may help improve the AUD footing going forward and with the RBA next Tuesday a push above 0.7500 is likely as global optimism improves.
Stocks Indices(DAX) Surged with the FTSE for a 3rd day, up 2% to 9780. The expectation of central bank easing and no FED hike this year is providing support for the bullish case as Brexit fears evaporate. US Stocks (DOW) Is back in striking distance of all time highs climbing to 17800 and eyeing key 18000 resistance. The S&P500 is back at 2086 and targeting 2100 and then 2130 all time highs. Selling are getting crushed and without a new event to stir the bear will like throw in the towel soon.
Pairs to watch
GBP/USD to ease on BOE or will bargain hunters overwhelm the sellers?
AUD/USD on a strong footing pre RBA and Elections to test 0.7500
Economic Data Ahead
Chinese June PMI forecast at 50.0 vs. 50.1 previously.
US June ISM Manufacturing PMI forecast at 51.3 vs. 51.3 previously.
By Anthony Darvall (TonyD)