Daily Market Outlook, June 30, 2021

Daily Market Outlook, June 30, 2021 Overnight Headlines Fed Gov Waller –2022 rate hike possible, wants MBS taper first • Japan's May factory output posts biggest monthly drop in a year • JP May Industrial O/P MM SA -5.9%, -2.4% f'cast, 2.9% prev; but June eyed at +9.1% • Japan tax revenues likely rose to record high Y60 trln+ in FY2020/21 – sources • China manufacturing slows as supply shortages roil Asia industry • CN June NBS Mfg PMI, 50.9, 50.8 f'cast, 51.0 prev; Non-Mfg PMI, 53.5, 55.2 prev • China Huarong says cannot determine when it will publish 2020 earnings • Australia c.bank seen adopting 'flexible' QE, rate hikes seen in 2023- Reuters poll • AU May Private Sector Credit, 0.4%, 0.2% prev; Housing Credit, 0.6%, 0.5% prev • Lockdown measures extended in Australia amid COVID-19 outbreak • UK shop prices fall faster but inflation pressures mount – BRC • UK inflation expectations broadly unchanged in June: Citi/YouGov Looking Ahead – Economic Data (GMT) • 09:00 EZ June HICP Flash YY, 1.9% f'cast, 2.0% prev; HICP-X F&E Flash YY, 0.9% f'cast, 0.9% prev Looking Ahead – Events, Auctions, Other Releases (GMT) • 08:30 Spain EconMin Calviño at European Summit • 09:00 ECB Centeno parliamentary testimony • 11:00 BoE Andy Haldane speaks in London on monetary, FS policyG10 FX Options Expiries for 10AM New York Cut(Hedging effect can often draw spot toward strikes pre expiry if nearby)EUR/USD 1.1850 (293M), 1.1900 (272M), 1.2010-20 (650M),1.2065 (522M)USD/JPY 109.45-50 (1.6BLN), 110.20-25 (1.6BLN), 110.50 (1.9BLN),110.70-75 (1.5BLN), 110.95-00 (750M), 111.50 (415M)EUR/GBP (500M), 0.8600-10 (355M)AUD/USD 0.7450 (360M), 0.7505 (670M)Technical & Trade ViewsEURUSD Bias: Bearish below 1.21 Bullish abovePivots around 1.1900 in quiet Asian session • EUR/USD opened 0.20% lower after USD and JPY firmed during US session • It edged higher in early Asia and traded to 1.1909 before sellers capped • The low was 1.1893 and it was just below 1.1900 into the afternoon • EUR/USD ready to resume trending lower after failing last week below 1.2000 • FX reflecting concerns over spread of Delta variant and impact on growth • USD poised to move higher is US jobs data alters Fed expectations • EUR/USD suppist is at the double-bottom at 1.1845/50 • Resistance is at the 10-day MA at 1.1914GBPUSD Bias: Bearish below 1.4080 Bullish above.Gently bid, but risk remains on the downside • +0.05% in a 1.3838-1.3860 range – flow early then quiet month end in Asia • COVID fraud set to cost UK taxpayers tens of billions pounds • Always mistakes in fresh major stimulus, but UK numbers are eye watering • Charts; daily momentum studies, 5, 10 & 21 daily moving averages fall • 21 day Bollinger bands slide – bearish setup suggests further losses • 10 DMA capped repeatedly, currently at 1.3892 and pivotal resistance • Downtrend targets a test of 1.3756, 61.8% of the 2021 rise • NY 1.3814 low and Asian 1.3860 high initial support and resistanceUSDJPY Bias: Bullish above 108 targeting 112steady, most JPY crosses heavy at month-end • Month, quarter, calendar half-year ends see little JPY action in Asia • USD/JPY steady between 110.44-66 EBS, quiet, flows few, far between • Gravitational pull from massive, $1.9 bln 110.50 option expiries • More above and below – 110.20-25 $1.6 bln, 110.70-75 $1.5 bln • USD/JPY holding just above 110.41 daily Ichi tenkan, near 110.56 200-HMA • Soggy US yields weigh, Treasury 10s @1.478%, Nikkei unch on day @28,815 • JPY crosses mostly heavy after renewed weakness this week, risk not on • MXN/JPY the exception, just off recent highs, Asia indicated 5.5703-5.5815AUDUSD Bias: Bearish below .7790 bullish aboveEdges higher as buoyant equity markets underpin • AUD/USD opened 0.7513 after sliding 0.70% as USD rose versus risk currencies • After trading at 0.7510, the AUD/USD drifted higher with buoyant equities • AUD/USD traded to 0.7523 and is settling around 0.7520 • There was no reaction to China PMI, which was slightly better than expected • Resistance is at 10-day MA at 0.7547 and close above would ease the pressure • Support is at the double-bottom at 0.7478 with buyers ahead of 0.7500 • AUD/USD will struggle to rally while COVID lockdowns persist

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