U.S. Dollar Trading (USD) an overbought market finally got an excuse to pull back on Friday with news of a attempted Turkish Coup sending risk spiking higher into the close. News over the weekend that the coup has failed has seen a sharp rally in US futures this morning with UJ back above Y106 and Dow looking to open above 18500. The Turkish news sent Oil as well with strategic location prompting supply fears.
The Euro (EUR) the EUR/USD was under pressure Friday firstly from the strong US June Retail Sales data at 0.6% m/m vs. 0.1% forecast helping to push the single currency below 1.1100. Then large EUR/JPY selling on the back of weak equities and Turkish news helped push the EUR/USD to low 1.10's. The outlook is mixed but if EUR/JPY buying resumes as aggressively as last week the range trading should continue until the all important ECB meeting on Thursday. The Sterling (GBP) the GPB/USD short squeeze was already being pared back on Friday and the sellers came back in Force in the US session sending the pair from 1.3450 to 1.3150 by the end of the trading day. We have recovered a little in the Asian session so far and especially the GBP/JPY has rebounded on the fail coup news.
The Japanese Yen (JPY) Tested resistance above Y106 on Friday during the European session before rolling over with the weakness in US stocks and then psiking below Y105 as news of the turkish coup plot first surfaced. The Rally to back above Y106 so far in Asian morning Monday suggests the uptrend is back on but the market may need to trade sideways first to work out the overbought technicals from the huge rally last week. The Australian Dollar (AUD) Finally found some sellers in the risk off mood friday but it was a reluctant selloff and the major supports have held so far. The big mover in the last few days has been the rebound in the AUD/NZD which is now above 1.0700 after some weak NZD CPI monday morning. The AUD/NZD has been in downtrend for a few months and was threatening all time lows near 1.000 just a few weeks ago.
Stocks Indices(DAX) Closed above 10000 and is looking strong having under performed all the major stock markets around the world. Pre brexit we sat at 10400 so there is that distance to make up first before even talking about the new highs and targets from last year. ECB has hinted at further stimulus so this will be play on Thursday. US Stocks (DOW) Daily fresh all time highs were the norm last week and with the exception of Friday we saw buyers on Every dip. New DOW30 all time highs this morning after the failed coup news in Turkey suggests we will continue higher again this week.
Pairs to watch
USD/JPY Looking for Resistance Y107?
EUR/USD ECB to make or break 1.1000 this week
Economic Data Ahead
Bank Holiday Japan
MPC Member Weale Speaks about Brexit
By Anthony Darvall (TonyD)