USD/JPY Surges to 2023 Peak, GBP Climbs, DXY Little-Changed

US Treasury Bond Yields Edge Up, Stocks Dip; Fed Speak Eyed

Summary:

The Dollar surged against the Japanese Yen to fresh 2023 highs just under 142.00 (141.96) after the Bank of Japan offered no sign to change policy, sticking with its ultra-low rates.

The Bank of Japan lefts it’s Policy Rate unchanged at -0.10%. In late New York on Friday, USD/JPY was at 141.75, up from its 140.28 open. BOJ Governor Ueda said he expected inflation to moderate.

The British Pound (GBP/USD) climbed to 1.2817 (1.2782 Friday). Traders continue to speculate on a Bank of England rate hike in its next meeting later this week (Thursday).

Against its other Rivals, the Greenback was little changed. The Dollar Index (DXY), which measures the value of the USD against a basket of 6 major currencies, edged up to 102.28 (102.18 Friday).

The Euro (EUR/USD) dipped to 1.0940 from Friday’s open at 1.0947. Eurozone Final Headline and Core Inflation remained unchanged at 6.1% and 5.3% respectively.

The Australian Dollar (AUD/USD) finished virtually where it started on Friday, at 0.6885. In choppy trade, the Aussie Battler traded to an overnight high at 0.6900 before easing.

The Greenback was mixed against the Asian and Emerging Market currencies. USD/CNH (Dollar-Offshore Chinese Yuan) was last at 7.1290 (7.1210). Against the Thai Baht, the Greenback dipped to 34.63 (34.75 Friday). USD/SGD (Dollar-Singapore) edged up to 1.3375 (1.3365 Friday).

Over the weekend, the US and China met for the first time in five years to stabilize their relationship as well as pave the way for more bilateral meetings in the future. Markets will be mildly optimistic.

Global bond yields rose. The US 10-year treasury rate climbed to 3.76% from 3.72%. The UK 10-year Gilt yield was up 2 basis points to 4.40%. Japan’s 10-year JGB yield dipped to 0.40% from 0.41%.

Wall Street stocks dipped. The DOW was last at 34,317 (34,360) while the S&P 500 settled at 4,415 against Friday’s open at 4,420. Japan’s Nikkei edged up to 33,758 from 33,475.

Economic data released on Friday saw the Eurozone’s Annual Final Headline CPI unchanged at 6.1%, matching forecasts. Annual Core Eurozone CPI was also unchanged, at 5.3%, matching expectations.

Canada’s May Wholesale Sales slumped -1.4%, lower than forecasts at 1.4%. The US Preliminary University of Michigan Consumer Sentiment Index in May climbed to 63.9 from a previous upward revised 59.2 (from 59.7).

USD/JPY – The Dollar surged to an overnight and fresh 2023 peak at 141.96, just under the 142.00 resistance level in choppy trade before settling at 141.75 at the New York close. On Friday, the USD/JPY pair opened at 140.28. The Bank of Japan kept its ultra-low-rate policy.GBP/USD – Against the trend, the British Pound rallied against the US Dollar to 1.2817 from Friday’s open at 1.2782. Sterling traded to overnight high at 1.2835 before easing at the close. The overnight low recorded was 1.2800.EUR/USD - The shared currency settled modestly lower against the Greenback to 1.0940 against Friday’s open at 1.0947. The overnight high recorded was at 1.0950 while the overnight low traded was at 1.0919.AUD/USD – The Aussie Battler settled at 0.6885, which is virtually where it opened on Friday. Overnight, the AUD/USD pair rallied to 0.6900 before easing at the close. The overnight low traded was at 0.6845.On the Lookout:

Today’s economic calendar is light ahead of a New York holiday (Emancipation Day).

New Zealand kicked off today’s data with its Business NZ Services Index which rose to 53.3 from a previous 50.1, beating estimates at 49.1.

There was no change in the NZD/USD rate, which was last at 0.6235.

The UK released its Rightmove House Price Index (m/m down to 0% from 1.8%, y/y down to 1.1% from a previous 1.5%). Sterling (GBP/USD) edged higher to 1.2830 from its 1.2817 open this morning.

Germany releases its Deutsche Bundesbank Monthly Report, a publication which handles Germany’s economic issues, including monetary policy.

Canada starts off North America with its May Industrial Production (m/m f/c 1.4% from -0.2% - FX Street), Canadian May Producer Price Index (m/m f/c 1.4% from -0.2%; y/y f/c -5.8% from -3.5% - ACY Finlogix).

The economic calendar picks up from tomorrow with a busy week ahead.

China releases its Prime 1 Year rate (f/c 3.55% from 3.65% - ACY Finlogix) and Prime 5 Year rate (f/c 4.2% from 4.3% - ACY Finlogix) tomorrow (20 June).

The RBA also releases its latest monetary policy meeting minutes.

Trading Perspective:

Today we can expect Asian markets to start off tentatively, keeping FX within the established ranges in New York.

On Friday, the Dollar finished mixed against the major currencies, soaring against the Japanese Yen, while falling against the British Pound.

Global interest rates were generally higher, led by those in the U.S.

This yield advantage will be generally supportive of the Greenback as we begin a new week.

Expect more choppy trade today and for the rest of the week. Happy days!

USD/JPY – All eyes focused on this currency pair today, which opens a tad higher, at 141.90 from 141.75 earlier. Look for immediate resistance at 142.00 to cap initial rallies. Yen traders will also be on the lookout for verbal rhetoric from Japan Inc (BOJ and MOF officials). The next resistance level in USD/JPY lies at 142.30 and 142.60. On the downside, immediate support lies at 141.60, 141.30 and 141.00. Look for another choppy session in this currency pair, likely range: 141.20-142.20.

(Source: Finlogix.com)

GBP/USD – The British Pound edged higher against the Greenback against the trend, settling at 1.2817 (1.2782 Friday). On the day, look for immediate resistance at 1.2835 (overnight high). The next resistance level lies at 1.2865. Immediate support can be found at 1.2785 followed by 1.2765 and 1.2735. Look for the British Pound to stay supported, likely range today between 1.2770-1.2870. Prefer to sell rallies.AUD/USD – The Australian Dollar finished virtually flat at 0.6885 at the close of trade in New York. A generally firmer US Dollar amidst risk-on sentiment supported the Aussie Battler. Immediate resistance today lies at 0.6900 followed by 0.6930. Look for immediate support at 0.6850, 0.6820 and 0.6790. Look for another roller coaster ride in the Aussie Dollar, likely trading range between 0.6850-0.6960. Look to sell AUD/USD rallies.EUR/USD – The Euro was marginally lower against the US Dollar at 1.0940 against its open at 1.0947 Friday. Look for immediate resistance at 1.0960 and 1.0990 to cap any rallies. On the downside, immediate support can be found at 1.0910 and 1.0880. Expect the Euro to drift lower in a likely range today between 1.0880-1.0960 today. Prefer to sell EUR/USD rallies.

Happy Monday all, have a good trading week ahead.

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