North American Summary and Highlights 12 June
Overview - FX trade was cautious with traders uncertain whether a Middle East peace deal would be reached over the weekend.
North American session
There was not much FX movement despite plenty of headlines regarding the Middle East. Early on Trump posted some angry comments directed at Iran but later headlines tended to support hopes that a deal might be close, though comments from Pakistan that a final text had been agreed looked premature. USD/JPY traded a little above 160, EUR/USD a little below 1.16. There was little change in EUR/GBP but EUR/CHF was a little firmer near .9220. AUD/USD was slightly firmer near .7050, while USD/CAD held a little below 1.40.
The one significant data release was the preliminary June Michigan CSI of 48.9, up by more than expected from May’s final 44.8, but not far from May’s preliminary 48.2. Inflation expectations were revised down from final May strength but not far from preliminary May levels.
European session
After Thursday’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 weeks 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.
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.