(19 JUNE 2020)DAILY MARKET BRIEF 2:Trump points at ‘complete decoupling’ with China
The strong US dollar gains strength against most currencies, except the yen and the Swiss franc as de-risking continues.
Gold remains stoic faced with the lack of clarity in market direction.
The black gold, however, gains traction on prospects of improved demand/supply dynamics despite the rising second wave worries and higher US inventories. A successful attempt on $40-offers should pave the way toward the next bullish target, $45.50, the 200-day moving average.
The Swiss National Bank (SNB) maintained status quo at yesterday’s monetary policy meeting.
The Bank of England (BoE) kept the interest rates unchanged and expanded the asset purchases program by 100 billion pound as expected. What was less expected is the BoE’s hint to unwind its QE program at a significant pace over time. The latter certainly wiped out the expectation of further expansion in BoE purchases and tempered the BoE doves in the wake of the announcement. The GBPUSD shortly retreated below the 1.24 mark. Firmer US dollar and somewhat frayed BoE doves are weighing on sterling, but the downside should remain limited given that the real deadline in Brexit negotiations seem to have been postponed to October, although the British and EU negotiators have six weeks of intense negotiations ahead. The barriers remain intractable, but there is hope that the pandemic will encourage Johnson to walk out the EU with a trade deal instead of empty hands by the end of this year.
Activity in FTSE futures (+0.19%) hint at a further consolidation near 6230p (the 100-day moving average) on the back of firmer energy prices and a softer sterling.
The EURUSD cleared the 1.12-support and rebounded from 1.1185 on the back of a stronger US dollar. The pair will likely extend weakness to 1.1160 Fibonacci support, which should distinguish between the past month’s positive trend and a bearish reversal.
By Ipek Ozkardeskaya
