Daily Market Outlook, June 27, 2022

Daily Market Outlook, June 27, 2022 Overnight Headlines BIS: Leading Economies At Risk Of Falling Into High-Inflation Trap US And G-7 Allies Detail Infrastructure Plan To Challenge China KPMG: Inflation Tipped To Push UK Economy Into Recession UK Proceeds With Legislation To Change N Ireland Trading Regime BoJ Focused On Wages, Yen, No Debate On Tweaking Yield Cap China’s Economy Improves In June From Lockdown-Induced Slump China’s PBoC Makes Biggest Daily Cash Injection In Three Months China's Industrial Profits Slump For Second Month In May PBoC Adviser: China GDP Target ‘Difficult’ To Achieve Australian Treasurer Chalmers Sees Inflation ‘Problem’ Worsening Iran Launches Rocket Into Space As Nuclear Talks To Resume Russia Defaults On Foreign Debt For First Time Since 1918 Dollar Shelters Under Recession Clouds As Investors Put Safety First Crude Oil Prices Gain, Supported by Tight Supply Ecuador Energy Ministry: Oil Production Could Stop In 48 Hours G-7 Weighs Russia Oil-Price Cap Via Insurance, Shipping Ban Asian Stocks Buoyed By Wall Street Gains, Futures Follow Suit Tesla, Ford and GM Raise EV Prices as Costs, Demand Grow Bitcoin Stable Over The Weekend Above 21,000 JPMorgan: BTC Miners To Sell BTC Into Q3The Day Ahead Equities have started the week on a positive note with almost all stock exchanges across the Asia-Pacific region registering gains. This continues to reflect the positive risk sentiment backdrop that has prevailed of late in response to the scaling back in interest rate expectations globally. Meanwhile, Russia defaulted on its foreign debt for the first time since 1918, largely a result of Western sanctions that had shut down payment routes for the nation. G7 leaders at their summit in Bavaria are expected to commit to providing support for Ukraine for “as long as it takes” according to a draft statement. Over the past week, signs of moderating economic activity saw financial markets scale back on their expectations over the extent to which monetary policy will be tightened. Nevertheless, money markets continue to forecast US policy rates to rise above 3.5% by the middle of next year, while UK Bank Rate is expected to rise a further 175bp over the same period, in a bid to bear down on elevated inflationary pressures. How much central bankers should raise interest rates, in the face of slowing economic growth, will be a key focal point at this week’s ECB forum in Sintra (Portugal) entitled ‘Challenges for monetary policy in a rapidly changing world’, which kicks off later today, with ECB President Christine Lagarde set to deliver opening remarks. Ahead of the Ms Lagarde’s comments this evening, ECB member Villeroy (Governor of the Bank of France) is scheduled to speak this morning. In comments last week, Mr Villeroy reiterated a commitment to do what was needed to bring inflation back to target in 2024, supporting expectations that eurozone policy rates will be lifted out of negative territory. Data wise, the economic calendar is fairly limited. However, pending home sales in the US are forecast to have fallen for a seventh consecutive month in May, as higher rates continue to dampen activity in the housing sector. Meanwhile, the US durable goods orders report for May will be watched for signs that business investment has softened in the second quarter, also in response to the ongoing increases in US interest rates.IMM: USD net spec long rises as CAD, EUR selling trumps yen buyingUSD net spec long rose in Jun 15-21 period; $IDX -0.22%...EUR specs -9,587 contracts now short 15,605; EUR$ +1.09% in periodYen specs -11,301 contracts now -58,454; specs buy into yen weaknessGBP$ +2.35% in period, GBP specs buy 2,349 contracts now -63,247$CAD -0.25% in period, specs -19,097 contracts now long -4,105AUD & NZD specs pare shorts AUD specs +2,648, NZD specs +1,415 contractsBTC -5.13% in period anchored by $20k, specs -15 contracts now long 1,046,(Source: Reuters)FX Options Expiring 10am New York Cut EUR/USD: 1.0445-55 (983M) USD/JPY: 134.50 (375M), 135.00 (363M), 137.00 (450M) AUD/USD: 0.7050 (284M). USD/CAD: 1.2820 (200M) 1.2870-75 (200M) Tuesday June 28 EUR/USD: 1.0450-60 (600M), 1.0595-00 (736M) USD/JPY: 135.00 (350M). GBP/USD: 1.2185 (247M) USD/CHF: 0.9425 (480M), 0.9550 (471M), 0.9645 (260M) EUR/CHF: 1.00 (280M), 1.0125 (276M), 1.0200 (280M) AUD/USD: 0.7000-05 (378M), 0.7040-50 (423M)Technical & Trade ViewsEURUSD Bias: Bearish below 1.07 Bullish above EUR/USD trades above Friday’s highs 1.0570’s EUR/USD resistance is at the 21-day MA at 1.0593 and break would be bullish EUR/USD bid supported by improvement in risk sentiment Market eyeing ECB and Fed comments as ECB summit in Sintra starts Initial offers are seen at 1.0615/20 ahead 1.0650 Bids eyed towards 1.05/15 ahead of cycle lows 20 Day VWAP is bearish, 5 Day bullishGBPUSD Bias: Bearish below 1.26 Bullish above. GBP catches a bid in early LDN trade testing Friday’s highs No GBP data cable taking its lead form generally improved risk sentiment Tomorrow notable options expiries GBP/USD 1.2000 GBP664 mln and on Wednesday sizeable GBP1.5 bln at 1.2750 Despite ongoing negative headlines, weak econ data, strikes & partygate GBP holds up Resistance remains sited at 1.2410 Support eyed at 1.2180 20 Day VWAP is bearish, 5 Day bullishUSDJPY Bias: Bullish above 132 Bearish below USDJPY took an early hit in Asian trade on Exporter sales USD/JPY recovers 135 handle as LDN gets underway Importer bids seen sitting toward 134.50 Notable options expiries at 133.50 and 134.00 strikes go off Friday US yields firming supporting USDJPY Global equity sentiment continues to strengthen 20 Day VWAP is bullish, 5 Day bearishAUDUSD Bias: Bullish above .7200 Bearish below AUD/USD opens the week with a bid tone Aussie supported by recovery in risk and commodities 3.2% pop in Iron ore sees AUD testing Friday’s highs 20 Day VWAP remains untested confirming downside Bears now targeting a test of the base towards 0.6840’s Offers seen towards .6960, bids eyed back at .6850 20 Day VWAP is bearish, 5 Day bearish

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