Daily FX Wrap: UK polls remain a key focus for FX markets while a substantial ADP beat helped USD

GBP was a key focus once again for markets as further UK election polls continued to show a narrowing in the Conservative’s lead heading into the finale next week. That said, the currency was granted some reprieve today after yesterday’s YouGov-inspired sell-off with GBP/USD finding demand in the mid 1.2800’s and EUR/GBP retreating back to circa 0.8700. GBP traders also digested the latest UK manufacturing PMI which modestly exceeded expectations (56.7 vs. Exp. 56.4) but the figure was not enough to divert trader’s attention away from the UK political scene.

Elsewhere, EUR ran out of steam against the greenback with some suggesting that the pair has risen too far, too fast and half-an-eye on next week’s ECB meeting which will carry risks of potential tapertalk in what was otherwise a relatively rangebound session for FX markets. USD/JPY was dealt a helping hand despite firm domestic Japanese data during Asia-Pac trade with this afternoon’s blockbuster ADP release the main guiding force ahead of tomorrow’s US Nonfarm payrolls. However,
gains were trimmed heading into the close of European hours as US yields saw a modest pullback.

From an antipodean perspective, AUD/USD underperformed and broke below the 0.7400 handle despite initial support from better than expected Retail Sales and higher Capex estimates through to 2018, as this was overshadowed by disappointing Chinese PMI data. Elsewhere, CAD was initially granted some modest reprieve following the healthy drawdown in Crude reported in the APIs last night ahead of the DoE equivalent which failed to provide too much traction in the market after posting a large drawdown and uptick in crude output.

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Dollar Index H4

Yesterday's support just above WS1 held and price moved higher off a stronger Dollar for all three trading sessions today. Price is back at the top of the range with eyes firmly on tomorrow's NFP. Market is flat with the H4 stoch approaching overbought.

US10Y H4

Price fell just short of WM4 though support at WM3/ 55 currently holding.

One thought on “Daily FX Wrap 1 June”

  1. Arlissa Thiedt says:

    Once again, Ryan,

    Appreciate the hard work you put into your research for others to learn from. I believe that the ADP’s large growth in jobs will signal a generally healthy NFP report tomorrow, looking at the somewhat positive correlation and an overall healthy economy in the US. With a healthy economy, it slightly improves my confidence that the Fed. may raise rates in Sept. as June hike seems early and no word from any FOMC members. After going over all the numbers again, I’m going bearish for oil as it has been stale in it’s climb back up to 52, with the same sentiment for CAD.

    Thanks for your hard work!

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