USD drifted (USDIndex 103.15) thanks to the hawkish SNB and BoE, and the potential for a shift from the BoJ. However, the BoJ eventually left policy on hold & maintained its ultra-low rate settings today, despite looking increasingly like the odd one out. Yen sinks. Stocks were crushed, hit by the surge in yields (NASDAQ -4.4%, Dow -2.4% & S&P -3.25%). Weakness in tech also weighed on USA100. VIX rose to an intraday high of 34.43, but dipped to 33.44 late in the day, versus Wednesday’s 29.62.  Treasuries are rallying and yields are now richer (2-year declined to 3.10%, 10-year at 3.25%. They were as high as 3.39% and 3.49% on the day). European leaders back Ukraine’s bid to apply for EU membership.

• • US mortgage rate surged 55 bps to 5.78%, the biggest weekly jump since 1987.
  • US housing starts plunged -14.4% to 1.549 mln in May, permits fell to 1.695 mln.
  • US Philly Fed index dropped to -3.3 in June, 6-month outlook fell to -6.8.
  • US initial jobless claims slid -3k to 229k in June 11 week.

• USDIndex rebounded to 104.25 from 103.15.
• Υields 10-year climbed 5.5 bp to 3.25%.
• Equities – Nikkei and ASX lost -1.8% today. Elon Musk hints at layoffs in first meeting with Twitter employees.
• Oil settled at 117.50 – Oil set for weekly loss as traders weigh monetary tightening, although persisting supply tightness and new sanctions on Iran limited the downside.
• Gold retested $1856, currently lower at $1845. Platinum and palladium also set for weekly drops.
• Bitcoin steadily lower at $20k area.
• Interest rate differentials between Japan and the US will continue to widen, which will keep pressure on the Yen, which at the start of the week was at the lowest level since 1998.
• FX markets – EURUSD at 1.0505, USDJPY back above 134.67, Cable at 1.2257 from 1.2405 highs.
• Today: BoE Pill & Tenreyro speeches, EU HICP & Fed Chair Powell speech.

Biggest FX Mover @ (06:30 GMT) CHFJPY (+1.54%) breaks 2013 peak. Intraday, MAs aligned higher, MACD lines extending northwards, RSI 76 & rising. ATR(H1) 0.0524 & ATR(D) at 1.506.

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Andria Pichidi

Market Analyst

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