Forex - US North American Summary and Highlights 14 Jun

 20:10 (GMT) 14 Jun

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US North American Summary and Highlights 14 Jun (0101-BLJH-C01)


USD left well bid as EUR/USD losses out of the dovish ECB spill over. European bonds enjoy a broad recovery rally after the ECB's 'no hike before summer 2019' commitment, while UST further flatten after ECB and strong retail sales mix

News highlights

- ECB announces Sep reduction in APP to EUR15bn from EUR30bn and expected end in Dec, subject to data. However, more than softens the blow by firming up rate guidance to no increase before at least through summer 2019

- US May Retail Sales 0.8% m/m from 0.4R vs Mkt 0.4; ex Autos 0.9% m/m from 0.4R vs Mkt 0.5

- IMF's Lagarde: Fed will need to raise rates at a faster pace to meet its objectives. US tariffs raise risks for global economy if met with retaliation


- Early Europe FX trading was subdued as the initial U.S. yield rise after the FOMC has run out of steam. Though the dots have shifted up, we feel that the market is also focused on Powell guidance that the Fed will not chase inflation if it just a temporary overshoot of the target.

- However, the EUR then lost ground in the wake of the surprise signal from the ECB not to hike rates until after summer 2019, extending to test 1.16 into NY. Short-term momentum suggests that 1.1500 can be tested into next week, but traders are split on whether such a move will be sustained.

- The EUR/USD moved spill over to drag the USD higher against other European currencies, but USD/JPY lagged due to EUR/JPY flows. However, a focus on additional U.S. trade action against China is also a force capping USD/JPY.

- Elsewhere, AUD held up in the European morning with some traders noting that though Thursday's Chinese data disappointed, the PBOC did not raise rates and a PBOC adviser hinted at a further RRR cut. The generally firmer USD post ECB then spilled over to commodity currencies, AUD/USD re-testing 0.75. USD/CAD testing Mar highs


USTs retained a better long end bid after the post Fed reversal that saw 10s reject the 3% test and 30s extend flattening. Even with the above expectations retail sales, the positive spillover from the ECB helped keep the long end resilient, the mix further playing to curve flattening as 2yr yield held up. 2s +0.2bps @ 2.57%, 5s -1.5bps @ 2.81%, 10s -2.4bps @ 2.94%, 30s -2.2bps @ 3.06%

Agency Spreads: Freddie/Fannie 5s +1.0/+0.1 bps, 10s 0.0/+0.4 bps.

Swap Spreads: 2s +0.10bps, 5s +0.10bps, 10s -0.11bps.


Equities tick higher overall with mixed performance. Banks lower on the flatter yield curve, but firm retail sales and the ECB spillover supportive, while tech stocks lead gains.

To Be Released -


22:30 GMT - NZ: BNZ-Business NZ PMI (May) (Prev: 58.9)

23:00 GMT - JP: BoJ 10yr Yield Target (Jun-15) % (Mkt: 0 Prev: 0)

23:00 GMT - JP: BoJ MPC - Overnight Rate (Jun-15) % (Mkt: -0.1 Prev: -0.1)

04:30 GMT - NL: Retail Trade (Apr) % y/y (Prev: 3.7)

06:00 GMT - FI: GDP (Apr) % (Prev: 3.1)

06:00 GMT - NO: Trade Balance (May) NOK bn (Prev: 19.4)

07:00 GMT - AT: CPI (May) % m/m (Prev: 0.2)

07:00 GMT - AT: CPI (May) % y/y (Prev: 1.8)

08:00 GMT - IT: Industrial Orders (Mar) % m/m (Prev: 0.5)

08:00 GMT - IT: Industrial Orders (Mar) % y/y (Prev: 2.6)

09:00 GMT - EU: CPI (May) % m/m (Mkt: 0.5 Prev: 0.3)

09:00 GMT - EU: CPI (May) %y/y (Mkt: 1.9 Prev: 1.2)

09:00 GMT - EU: HICP - Core (May F) % y/y (Mkt: 1.1 Prev: 1.1)

09:00 GMT - EU: Trade Balance (nsa) (Apr) EUR bn (Prev: 26.9)

09:00 GMT - EU: Trade Balance (sa) (Apr) EUR bn (Mkt: 20 Prev: 21.2)

09:00 GMT - IT: HICP (May F) % y/y (Mkt: 1.1 Prev: 1.1)

12:30 GMT - CA: Manufacturing sales (Apr) 4cast: 1% m/m (Mkt: 0.6 Prev: 1.4)

12:30 GMT - US: Empire State Survey (Jun) (Mkt: 19 Prev: 20.1)

13:00 GMT - BE: Trade Balance (Apr) EUR mn (Prev: 265.4)

13:00 GMT - CA: Existing Home Sales (May) 4cast: 2% m/m (Mkt: -1.7 Prev: -2.9)

13:15 GMT - US: Capacity Utilization (May) % (Mkt: 78.1 Prev: 78)

13:15 GMT - US: Industrial production (May) % m/m (Mkt: 0.2 Prev: 0.7)

14:00 GMT - US: Univ of Mich Sentiment (Jun P) (Mkt: 98.5 Prev: 98)

20:00 GMT - US: Net Long-term TICS Flows (Apr) USD bn (Prev: 61.8)

Events & Auctions

UK: Sovereign Debt to be Rated by Moody's

JP: BoJ Monetary Policy Statement

08:45 GMT - EU: ECB's Coeure Speaks in Paris

10:00 GMT UK: Bills Auction

17:30 GMT - US: Fed's Kaplan Speaks in Fort Worth

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