Market Brief
FX markets are subdued at the start of the trading week with UK and US on holiday and with politics dominating discussions. There is however, a slight cautious tone as Eurosceptic national parties made significant gains in European Parliament elections. Early outcomes from the European elections indicate that euro-sceptic plus alternative parties won 30% of the Europe-wide vote. Asian equity markets are broadly in the green following Wall Street’s strong close on Friday (closed at a record high) and a critical and calm victory for billionaire Petro Poroshenko in Ukraine's presidential election. The Nikkei was up +0.87%, Shanghai composite up 0.09% while the Hang Seng slipped down -.11%. USD/JPY was range bound following Fridays move sparked by WSJarticle which quoted BoJ Governor Kuroda stating that he saw little reason for JPY strength.He then added that growth might slow should President Abe fail to move forward on economic reforms. While in the BoJ minutes Sato suggested changing price assessment to illustrate risk to the downside. In addition, members mentioned that positive effects from a weaker JPY were dissipating. USD/JPY bounced around 101.85 and 102.05. We remain bearish on JPY and view it as the ideal carry funding currency on the back of expectations for further easing from the BoJ in July. GBP/USD and EUR/USD were contained in a 20 pip range, as questions over the BoE and ECB policy will keep traders guessing. According to local media, ECB’s Coeure said that policy options include negative interest rates. Today's economic calendar is very light with only Sweden retail sales temporarily taking our minds off politics.
Currency Tech
EUR/USD
R 2: 1.3674
R 1: 1.3646
CURRENT: 1.3622
S 1: 1.3614
S 2: 1.3590
GBP/USD
R 2: 1.6887
R 1: 1.6853
CURRENT: 1.6839
S 1: 1.6815
S 2: 1.6798
USD/JPY
R 2: 102.24
R 1: 102.06
CURRENT: 101.94
S 1: 101.84
S 2: 101.64
USD/CHF
R 2: 0.8985
R 1: 0.8969
CURRENT: 0.8965
S 1: 0.8947
S 2: 0.8928