North American Summary and Highlights 11 June
Overview - The USD ended softer after Trump cancelled threatened attacks on Iran and suggested a peace deal was close.
North American session
While there was no absence of significant news elsewhere, the Middle East dominated price action, overshadowing an ECB tightening and US data. An early announcement from Trump that it would hit Iran hard overnight and take Iran’s Kharg Island in the not-too-distant future helped the USD move higher. However the gains were reversed and more after Trump announced that he had cancelled the strikes and suggested that a peace deal might signed as soon as the weekend, though there was no confirmation of this from Iran.
USD/JPY, after peaking above 160.50 fell to 159.75, while EUR/USD after falling to near 1.15 rebounded to near 1.1580. EUR/CHF fell below .9210 with momentum building late, while EUR/GBP erased a bounce that peaked above .8640. AUD/USD bounced above .7050 from below .70. AUD/CAD was also firmer but USD/CAD reversed a move above 1.40 as peace hopes built.
A 25bps ECB tightening was as expected and the market’s initial reaction was a modest sell the fact. US data was mixed, May PPI on balance firm at 1.1% overall and 0.8% ex food, energy and trade, though ex food and energy was slightly softer than expected at 0.4%. Weekly initial claims at 229k from 225k however hinted at a loss of labor market momentum. UK political problems escalated with the resignation of two Defence ministers objecting to insufficient government funding.
European session
Another waiting morning overall ahead of the ECB with sentiment firming from overnight jitters – the market tending to take a glass half full read on the latest military exchanges (i.e at least they didn’t radically escalate after the heated Trump comments). Not helpful of course, but the market hopes still rest on the previous reported diplomatic progress.
On that front, Reuters sources say both sides still exchanging messages over details on the MoU, with wrangling focusing on frozen funds.
Oil now -1% and -$4.5 off the highs. Likewise, equity futures come off the re-test of lows overnight and S&P future now around +0.8% for instance.
FX tending to see smaller gyrations to the noise at present and still pretty flat and wait and see in consolidation of recent action.
NOK the only real net mover, giving back yesterday’s ground on the independent gains seen after it’s CPI print (and the pullback from failed initial 11 test on EUR/NOK for instance).