Intraday Market Thoughts

Year's 3rd Biggest Daily Gain

by Ashraf Laidi
Jun 29, 2018 18:27

Today maybe a sleepy end-of-month and end-of-quarter day with traders enjoying the sun/beach as the World Cup takes its day off, but EURUSD posted its 3rd biggest daily percentage gain of the year. Sceptics will say the move is insignificant due to end-of-quarter-rebalancing but there is more to USD move than seasonals. The 1st estimate for Eurozone June CPI hit the ECB's 2.0% target, but even as the core CPI slipped to 1.1%, higher energy prices and cheap euro will make an ECB rate hike before next summer inevitable, something that I mentioned on the day of the ECB 2 weeks ago here, but finally stated today by FX journalists following the figures. The Fed's preferred inflation target hit 2.0%, but the US central bank has repeatedly spoken of a symmetric approach to inflation.

The July 4th holiday will coincide with world cup quarter finals, but soon after the US June jobs report will be released, alongside its Canadian counterpart. Meanwhile, odds of a Bank of Canada rate hike next month have spiked to 87% (from 53% earlier in the week) after persistent oil rally and Poloz's insistence that the central bank is indeed feeling less "cautous" despite Trump's ongoing threats at NAFTA.

Act Exp Prev GMT
Eurozone CPI Flash Estimate (y/y)
2.0% 2.0% 1.9% Jun 29 9:00

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