Europe Summary and Highlights 12 Jun
Oil breaks lower, getting braver on pricing in deal hopes
FX more cautious but likely to build into NY session for fresh dollar support tests, headlines allowing
NOK continues to correct in this environment, profit-taking coming through
European morning session
After yesterday’s action, Asia and early Europe was a little more circumspect, with Iran yet to show its hand on a final decision on the deal.
However, oil has now managed to make the break, taking out the band floor of recent week’s and stretching towards the April spike low and down around $4.
FX has slightly lagged this action but it could start to percolate through. EUR/USD has been held by the recent break area for instance but is now mustering another test into the 1.1575/1.16 zone and might look to test through that heading into NY as it catches up with oil.
The market obviously not unreasonably wary of the countless false claims of an imminent deal, but nonetheless trimming of dollar longs seems likely into the weekend unless any headlines emerge to unseat.
NOK is the one currency that does continue to cede some of its outperformance after sustained strong gains, as profit-taking comes in with oil's retreat, risk steadying and given what's priced in to policy. EUR/NOK +0.5%.
UK April GDP -0.1%m/m in line with expectations.
Asia session
Earlier Friday, we have the tough talk from IRGC marketing their strength. It is after Trump suggest a deal is done and could be read as the Iranian side building a solid image instead of caving to the U.S.. Market participants are still euphoric and see major equity indexes deep in the green. AUD/USD slips 0.18% to 0.7039 as precious metal soft. NZD/USD also 0.24% lower while USD/CAD rises 0.06% with oil still lower.
The back and forth headline is keeping market participants on their toes as no one wants to get caught wrong footed over the weekend again. Broader development seems to persuade market participant that a deal is really close this time and see equities still in the green but all session high. USD/JPY is trading 0.28% higher. Else, EUR/USD is down 0.1% and GBP/USD is down 0.05%.