Wakeup Call: USD-Crosses In Very Compressed Ranges

USD-Crosses In Very Compressed Ranges

Daily Forex Fundamentals | Written by Saxo Bank | Jun 20 08 06:41 GMT |

Average True Ranges in USD-crosses are extremely narrow. Watch out for a big widening. We believe a sell-off is most likely. Overnight News Bullets SZ Trade Balance (May) out at 1.87B vs. 1.58B expected. SZ 3-Mth Libor Target Rate (Jun) out at 2.75% as expected. UK Retail Sales MoM/YoY (May) out at 3.5%/8.1% vs. -0.1%/4.1% expected. UK Public Finances (May) out at £11.0B vs. £6.5B expected. UK Public Sector Net Borrowing (May) out at £11.0B vs. £9.3B expected. UK M4 Money Supply MoM/YoY (May) out at 0.4%/10.0% vs. 0.5%/10.5% expected. UK Sterling Lending (May) out at £4.8Bvs. £18.7B expected. CA CPI MoM/YoY (May) out at 1.0%/2.2% vs. 0.6%/1.9% expected. CA Bank Canada CPI MoM/YoY (May) out at 0.3%/1.5% vs. 0.3%/1.5% expected. CA Wholesale Sales MoM (Apr) out at 1.4% vs. 0.8% expected. US Initial Jobless Claims (Jun) out at 381K vs. 375K expected. US Continuing Claims (Jun) out at 3060K vs. 3130K expected. US Philadelphia Fed (Jun) out at -17.1 vs. -10 expected. US Leading Indicators (May) out at 0.1% vs. 0.0% expected. US EIA Natural Gas Storage Change (Jun) out at 57 vs. 58 expected. NZ Visitor Arrivals (May) out at 9.4% vs. -11.8% expected. GE Producer Prices MoM/YoY (May) out at 1.0%/6.0% vs. 0.9%/5.8% expected. Markets FX: Very compressed ranges in USD-crosses. We believe the downside is most likely. Fixed Income: Still weakening, only JGB's higher. STIR Futures: 12% chance of hike at the 25th of June. Equities: European session slightly lower, but US higher - especially due to tech stocks. Nikkei down. Commodities: Precious metals slightly higher. Corn and wheat slightly lower. Energy: Lower on Chinese hiked fuel and energy prices to curb the use. O/N Data Heat map: EU US JP UK SZ AU CA NZ NO SE FR - + + + Calendar Today's Highlights: Time (GMT) Region Release Consensus 06:00 GE Producer Prices MoM/YoY (May) 0.9%/5.8% 07:15 SZ Producer & Import Prices MoM/YoY (May) 0.9%/3.6% 12:30 CA Retail Sales MoM (Apr) 0.6% 12:30 CA Retail Sales Less Autos (Apr) 0.6% 17:00 US Baker Hughes U.S. Rig Count (Jun 20) This and Next Week's Highlights: Date Region Release Jun 23 JN Supermarket Sales Jun 23 GE PMI and IFO figures Jun 23 E-Z PMI figures Jun 24 SZ UBS Consumption Indicator Jun 24 UK BBA Loans for House Purchase Jun 24 US S&P/CaseShiller Home Price Ind, ABC Consumer Confidence What's going on? China has raised fuel prices for the first time 7.5 years, causing a significant retreat in crude oil prices and fueling a speculation that Chinese demand will decline as a result of fuel price increases. U.S. stocks rose for the first time in 3-day period with the drop in oil prices boosting transportation, consumer oriented and technology companies' earning forecasts. In contrast to US stocks, European equities were battered in yesterday's trading with news of Goldman forecasting further writedowns for UBS and Deutsche Bank taking a toll on banking shares. The odds of a rate hike in the U.S. at the end of this month has shrunk to 12%, sending USD for a weekly drop against euro, as poor manufacturing data released yesterday has further weakened the case of monetary tightening. FX Break-Out Trade in EURUSD EUR USD JPY GBP CHF AUD CAD NZD NOK SEK PLN - - + - - FX Trading Strategies Pair Supp. Resis. Comments EURUSD 1.5460 1.5587 The pair trading in no-mans land with bigger key directional levels on outside, giving scope for a break out. With no data today, trading should be based on technicals and positioning ahead of the FOMC. We buy at 1.5587 bid, stop offer at 1.5560, targeting 1.57+. Downside - we sell at 1.5464 offer, stop bid at 1.5490, targeting 1.5350.