The Swiss franc is generally resilient as the weekend approaches. Although there were no consecutive euro purchases after the ECB did not follow the previous day, the single currency received some moderate support thanks to the strengthening of the franc. Meanwhile, the sell-off in the yen quickly came to a halt along with an attempt to restore Treasury yields. The dollar, Canadian dollar and New Zealand dollar are relatively weaker along with the Aussie.
Technically, the pound sterling may be in the spotlight today given the UK GDP data. The rebound of GBP / USD from yesterday’s low was quite impressive and the focus is now on the 1.4248 resistance. A sustained breakout in this area will confirm the resumption of the uptrend after the resumption of the USD / CHF downtrend. GBP / JPY also maintains most of yesterday’s gains and may return to the 156.05 top.
In Asia, the Nikkei is up 0.06% at the time of writing. The HSI in Hong Kong is up 0.41%. China Shanghai SSE was down 0.18%. Singapore Strait Times shares rose 0.04%. The yield on Japanese 10-year JGBs fell -0.0103 to 0.038. The DOW rose 0.06% overnight. The S&P 500 is up 0.47%. NASDAQ rose 0.78%. The yield on the 10-year bond fell from -0.030 to 1.459.
BoC Lane hinted at further cutbacks in July
Bank of Canada Deputy Governor Timothy Lane said in his speech that “the bottom line is that the Canadian economy is pretty much in line with our history.” Vaccinations are also rolling out “faster than we anticipated in April.” Other economies are also recovering “smartly as they reopened”. These developments are “encouraging” and suggest that “we are on track for a robust recovery at the expense of consumers as containment measures eased here in Canada.”
Some decisions on further adjustment of asset purchases may be made in July. Lane reiterated that “if the recovery develops in line with our latest forecast, or is stronger than our last forecast, the economy will not need as much QE stimulus over time.” BoC will have “coming weeks” to estimate the Canadian opening as well as an updated forecast in July.
BusinessNZ New Zealand production rises to 0.3, putting upward pressure on raw material prices
New Zealand’s Manufacturing PMI BusinessNZ rose 0.3 to 58.6 in May. Looking at some of the details, production has grown from 64 to 65.3. Employment fell from 52.2 to 51.5. New orders increased from 61.0 to 63.7. Inventories of finished goods fell from 54.7 to 52.4. Deliveries rose from 52.6 to 53.5.
BusinessNZ Chief Operating Officer Catherine Beard said: “Globally, manufacturing activity continues to grow at a strong pace, peaking in 11 years in May. However, this has led to an increase in raw material prices in most countries, including New Zealand, taking into account the comments of the respondents, which refer to the increase in the cost of raw materials.
UK GDP will be the focus of the European session, while production and trade balance will be presented. Later, Canada was to publish data on capacity utilization. The US is to publish Michigan Consumer Sentiment Index.
USD / CHF Daily Forecast
Daily pivots: (S1) 0.8928; (P) 0.8959; (R1) 0.8978; More….
The intraday bias in the USD / CHF pair remains moderately negative at the moment. The current decline from 0.9471 should target the 0.8756 low. On the other hand, a break of 0.9052 resistance is needed to indicate a short-term bottom. Otherwise, the outlook will remain bearish in the event of a recovery.
More broadly, the previous 61.8% retracement of the 0.9901 to 0.8756 retracement at 0.9464 suggests that the rebound from 0.8756 was likely just a corrective move. That is, the larger downtrend from 1.0237 may still continue. Medium-term bearish sentiment is also confirmed as the pair is now well below the falling 55-week EMA. A solid breakout of the 0.8756 low would target the 61.8% forecast of 1.0237 to 0.8756 from 0.9471 to 0.8556 onward.
Updating economic indicators
|22:30||New Zealand dollar||BusinessNZ Manufacturing Index for May||58.6||58.4||58.3|
|23:50||JPY||BSI Large Manufacturing Index for Q2||-1.4||1.6|
|6:00||Pound sterling||GDP m / m Apr||2.40%||2.10%|
|6:00||Pound sterling||Industrial production m / m apr||1.20%||1.80%|
|6:00||Pound sterling||Industrial Production YoY Apr||30.20%||3.60%|
|6:00||Pound sterling||Production Production m / m Apr||1.50%||2.10%|
|6:00||Pound sterling||Manufacturing Manufacturing YoY Apr||42.00%||4.80%|
|6:00||Pound sterling||Service index for 3 months / 3 months Apr||-2%|
|6:00||Pound sterling||Trade balance (GBP), Apr||-11.8 billion||-11.7 billion|
|12:30||CAD||Production capacity utilization Q1||79.20%|
|13:00||Pound sterling||NIESR GDP estimate, May||1.30%|
|14:00||U.S. dollar||Michigan Consumer Sentiment, Jun.||84||82.9|