Morning brief for June 16

The Bank of Japan was in the spotlight in the Asian session. Traders were waiting for its rate decision. The BOJ left its monetary policy settings unchanged having pledged to continue pouring stimulus into the economy and striving to reach their 2% inflation target. USD/JPY moved above 111 on the announcement. At the present moment, the pair is trading along the 111.20 level. There is scope for a further USD strength to 111.70. A break above this level would be a good indication of the beginning of the bullish phase.

The pound gained some pips overnight after the BOE’s monetary policy committee was more divided than expected with only 5 votes for staying on hold against 3 voting to raise. The BOE’s officials are on the horns of the dilemma: whether to take actions to return inflation back to target or support jobs, overall economic activity during the Brexit. The BOE’s rate announcement showed us that this tradeoff is lessening given growth in employment to date and rising inflation that has recently overshot bank’s target. GBP/USD is trading near 1.2770. The downward momentum is waning, but further dips are not ruled out.

The Aussie added some points yesterday due to better-than-expected labor data. AUD/USD is near 0.7577. The bullish phase is still intact. Those who are long may target higher level and plan exiting their positions at around 0.7670/0.7675 levels.

The Kiwi was hit by a weaker than expected quarterly GDP figures. NZD/USD fell sharply overnight from 0.7268 to 0.7185. Now, it is trading slightly above 0.7200.

EUR/USD dropped to 1.1140 on a stronger USD. Thursday’s economic data flow gave greenback some reasons for cheer. It seems that the dollar has started getting over its shock from the core CPI release and lower retail sales released on Wednesday before the Fed’s rate announcement. The immediate pressure is on the downside. So, the single currency may slide towards 1.1110 against the USD. It will stay under pressure until bulls manage to reclaim the level of 1.1210.

After the BOJ’s meeting, there is almost nothing on the radar. In Europe, there will be the final read of May CPI with headline expected to be 1.4% and core inflation figures at 0.9%. In the US, the Fed Kaplan is scheduled to speak at 7:45 pm. In addition, we will get housing starts and the Uni Michigan Consumer Sentiment for June which should deviate greatly from their previous prints.

USD/CAD is trading a bit lower as oil prices have started their recovery. Brent is now trading at $46.98 which is higher than its previous low at $46.68 reached on Wednesday after US data showed a build in gasoline stockpiles.

Anastasia Mileshkina