North American Summary and Highlights 25 June
Overview - USD/JPY made modest gains in a generally quiet session but elsewhere there was little net change. USD/CAD slipped on a stronger Canadian CPI report but ended the session little changed.
North American session
The USD was slightly stronger in North America with USD/JPY moving back above 159.50 though a dip in EUR/USD below 1.07 was not sustained leaving EUR/USD little changed on the session. GBP/USD also reversed a dip moving back to near 1.27. US data had little impact with consumer confidence little changed and near consensus. Fed’s Bowman was hawkish early on suggesting further tightening could be seen if progress on inflation stalled but Cook was more balanced, stating easing would become appropriate at some point.
USD/CAD saw a sharp 50 pip slide to a low of 1.3626 after May Canadian CPI unexpectedly increased to 2.9% yr/yr from 2.7%, though subsequently returned to near 1.3650 to leave USD/CAD little changed on the day.
European morning session
The USD traded sideways in Europe, with the market searching for short-term direction. Though the JPY consolidated Monday’ small gains, the mood still remains JPY negative looking for a test of 160 given the mood of higher for longer on Fed rates.
However, some traders are watching the sharp pullback in Nvidia share price in the last few sessions and wonder whether this means a choppier phase for U.S. tech stocks that could see investors rotating elsewhere, which could soften the USD if it became a bigger theme.
EUR remains steady with focus on the 1st round of the French elections this Sunday. Though the hard right national rally have gained some ground in the opinion polls, the French bond market is becoming less worried about a minority national rally government on the view that their fiscal aims are now modest compared to the hard left Popular Front’s huge fiscal stimulus desires.