US DOLLAR
The US dollar limps into the final week of June, losing further ground against the major currencies. The DXY index is testing key technical support line near a four-month low. Geopolitical risks, dovish statement from the Fed and signs of slowdown in the US economic fundamentals are weighing on the greenback. This week, Fed Chair Powell’s speech (Tues), US GDP and G20 meetings to be the key drivers in the currency market. Gold has risen to its highest level in six years as tensions between US and Iran dominate headlines. With the calendar relatively light today, we expect safe-haven trades to be heavily favoured.
CANADIAN DOLLAR
The Canadian dollar firmed against a broadly weakened greenback. As of this writing, the USD/CAD pair is consolidating in negative territory as market contemplates on the next move. The loonie is expected to mirror moves in the oil futures market where crude oil has recorded a fresh three-week high. OPEC members are expected to keep production cut agreement in place this week. Canadian GDP report card is due this Friday. Investors will also take cue from the latest Bank of Canada Business Outlook due for release end of this week.
EURO
EUR/USD is extending its last week’s rally, trading 0.20% higher this morning. Market seems to conveniently ignore soft ifo Business index amidst general US dollar weakness. The ifo Business Climate Index (97.4) dropped to its lowest reading since 2014 down from 97.9 points in May. Investors’ hopes have been buoyed by a “marginal” improvement in the current business situation. The pair may run out of steam as its approaches key 1.14 handle and in the absence of strong domestic data.
BRITISH POUND
The Pound is on course to close the month in positive territory a three-month slide. GBP/USD has been riding the way of general USD weakness, parking aside domestic political woes. The country still waits for its new PM: the two final candidates to the post are expected to entertain the headlines with more debates before July 2nd when the PM is announced. Meanwhile, Donald Tusk has reiterated the EU stance that the Withdrawal Agreement is not open for renegotiation. Failure to agree on a deal leaves the possibility of a hard exit live on October 31st.
JAPANESE YEN
Dollar-yen dropped to its lowest level since January as market continues to favour same-haven assets and currencies. Trade tensions with China and escalating war of words with Iran are keeping investors on their toes. With the 10-year Treasury bond yield trading with negative sentiment, we expect the USD/JPY to consolidate with a bearish tilt.
