Market Update - June 23

Broad market sentiment remains cautious and will not have been helped by comments from White House trade advisor Peter Navarro last night who suggested that the trade deal with China was “over”.



In what must have been a stinging behind the scenes rebuke for Navarro, this prompted him to put out an almost instant clarification comment that his words had been taken “out of context”. It also prompted a tweet from President Trump that the deal was still fully intact. Another instance of an astounding lack of clarity, mixed messaging and professionalism, but ultimately, nothing overly surprising. Markets reacted with a spike into (and then out of) safe haven assets over night.


Interestingly though, that aside there are beginning to be some signs that perhaps a shift in positioning is taking place again. Yesterday saw the Dollar Index form a “bearish key one day reversal”, whilst there have been moves out of the yen too this morning. These forex moves may only be minor for now and yet to be confirmed, but could they begin to signal something more positive again?


The yen and dollar have been performing much better in the past couple of weeks as the risk rally has corrected. Signs of traders moving away from the dollar and yen could be a sign of improving risk appetite again. For that to be sustainable, the second wave re-infections in the US probably need to be kept under control. The flash PMIs for June will be watched today for signs of improvement in economic prospects as economies continue to move through their re-opening procedures.


I am long in EURO and GBP in anticipation of good numbers.


AUDUSD



AUDUSD turned up sharply yesterday, forming a bullish engulfing candle pattern in the process. Pay attention levels within the channel from the April low. The center line is proposed resistance near the 6/16 high at .6977. The high volume level from last week is possible support now at .6845.


Good Trading,

Dom

Dominik Stone

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