DXY Drifts Lower, Stocks Climb; US PCE Inflation Slows

EUR, GBP Rebound; AUD, NZD Climb; Asia-EMFX Steady

Summary:

The Dollar Index, a popular gauge of the Greenback’s value against a basket of 6 major currencies, drifted lower after the Federal Reserve’s gauge of inflation slowed. At the close of trade on Friday, the USD/DXY settled at 102.90, down from 103.35.

The US Core PCE rose 0.3% in May, down from April’s 0.4%, and matching expectations. Other US economic data saw May Personal Income climb to 0.4% against forecasts at 0.3%.

The Euro (EUR/USD) rebounded to 1.0910 from 1.0865 Friday. Sterling (GBP/USD) rallied to 1.2695 against Friday’s opening at 1.2612. Against the Japanese Yen, the US Dollar (USD/JPY) eased modestly to 144.40 from its open at 144.75.

The USD/CHF pair (Dollar-Swiss Franc) closed at 0.8950 (0.8992). The Australian Dollar (AUD/USD) jumped to 0.6662 from 0.6620 while the Kiwi (NZD/USD) climbed to 0.6125 (0.6070).

Against the Asian and Emerging Market FX, the Greenback rose modestly. USD/CNH (Dollar-Offshore Chinese Yuan) finished little-changed at 7.2690 (7.2695). USD/SGD (Dollar-Singapore Dollar) eased to 1.3520 from 1.3550. USD/THB dipped to 35.32 from 35.60.

Wall Street stocks rallied. The DOW settled at 34,390 (34,100) while the S&P 500 rose to 4,447 from 4,397. Japan’s Nikkei rallied to 33,450 from 33,150. Australia’s ASX 200 was up 0.2% to 7,225.

Other economic data released Friday saw Japan’s Tokyo Core CPI in June at 3.2%, matching the previous month, but lower than estimates at 3.3%. Japan’s May Jobless Rate was unchanged at 2.6%.

China’s June Manufacturing PMI edged up to 49 from 48.8, matching forecasts. Chinese Non-Manufacturing PMI was at 53.2, beating estimates at 53.0 but lower than the previous 54.5.

UK’s Nationwide House Price Index m/m rose 0.1% in June, up from May’s -0.1%. The UK Quarterly GDP Growth Rate matched estimates at 0.2%. US June Chicago PMI edged up to 41.5 against May’s 40.4, but missed forecasts at 44.0.

EUR/USD – The shared currency benefitted from the generally softer US Dollar, climbing above the 1.09 resistance level to finish at 1.0910 (1.0865 Friday). In subdued trade, the overnight high was at 1.0921 while the overnight low recorded was 1.0905.USD/JPY – The Greenback drifted lower to close at 144.40 from Friday’s open at 144.75. Overnight, the USD/JPY pair rallied to a high at 144.47 before easing at the close. The overnight low recorded was 144.22.AUD/USD – The Aussie Battler soared against the overall weaker Greenback to 0.6671 overnight highs from Friday’s open at 0.6620. The Australian Dollar traded to an overnight low at 0.6657.GBP/USD – Sterling soared against the broadly based weaker US Dollar to close at 1.2695 from Friday’s 1.2611 Friday. In volatile trade, the overnight high traded was at 1.2711 while the overnight low recorded was at 1.2674.On the Lookout:

As we begin a new month, quarter and into the second half of this year, the economic calendar is a busy one.

New Zealand kicked off earlier this morning with its May Building Permits, which was at -2.2%, up from April’s -2.6%.

The Kiwi (NZD/USD) rose marginally to 0.6135 from its opening at 0.6125.

Australia follows with its Judo Bank Final June Manufacturing PMI (f/c 48.6 from 48.4 – ACY Finlogix).

Japan follows with its June Tankan Large Manufacturers Index (f/c 3 from 1 – ACY Finlogix), Japan June Tankan Large Non-Manufacturing Index (f/c 22 from 20 – ACY Finlogix).

Australia follows with its May Building Permits (m/m f/c 2.0 from a previous -8.1; y/y -28% from -24.1% – ACY Finlogix).

China follows with its June Caixin Manufacturing PMI (f/c 50.2 from 50.9 – ACY Finlogix).

Switzerland starts off European data with its Swiss June Inflation Rate (m/m f/c 0.2% from 0.3%; y/y f/c 1.8% from 2.2% - ACY Finlogix).

Germany releases its HCOB Final Manufacturing PMI (f/c 41 from 43.2 – ACY Finlogix).

France releases its HCOB Final Manufacturing PMI (f/c 45.5 from 45.7 – ACY Finlogix).

The Eurozone HCOB Final Manufacturing Index is next (f/c 43.6 from 44.8 – ACY Finlogix).

The UK releases its UK S&P Final Manufacturing Index (f/c 46.2 from 47.1 – ACY Finlogix).

The US rounds up today’s data releases with its US S&P Global Manufacturing PMI (f/c 46.3 from 48.4 – ACY Finlogix), US ISM Manufacturing PMI (f/c 47.2 from 46.9), US ISM Manufacturing Prices (f/c 44.0 from 44.2 – ACY Finlogix).

Trading Perspective:

As we begin a new month, quarter, and start the 2nd half of 2023, expect the US Dollar to remain under pressure against its Rivals.

The lower close on Friday saw net speculative US Dollar long bets paring their positions.

The Dollar Index fell below the 103.00 level to 102.90 at the close of trade in New York.

Upcoming economic data releases will determine the next big move of the Greenback.

Most of the expectations of the global economy moving forward are for a slowdown from the current level.

Which will keep the Greenback under pressure against its Rivals.

EUR/USD – The Euro rose above the 1.0900 resistance level against the US Dollar, finishing at 1.0910. On the day, look for immediate resistance at 1.0910. The next resistance level lies at 1.0940 and 1.0970. Immediate support can be found at 1.0870, 1.0840 and 1.0810. Look for the Euro to trade in a likely range today between 1.0850-1.0950. Prefer to sell rallies today. AUD/USD – The Aussie Battler held its own, rallying against the Greenback to 0.6662 from its opening on Friday at 0.6620. The AUD/USD pair closed at 0.6662. Immediate resistance can be found at 0.6675 followed by 0.6705. Immediate support today lies at 0.6620 followed by 0.6590 and 0.6560. Look for more choppy trade in this currency pair, likely between 0.6620-0.6720. Just trade the range on this puppy today. USD/JPY – Against the Japanese Yen, the Dollar was subdued, trading an overnight range between 144.22 and 144.47, before closing at 144.40. Look for immediate resistance at 144.50 followed by 144.80. The next resistance level lies at 145.10. On the downside, look for immediate support at 144.05 and 143.85. Look for another volatile trading range on this currency pair today, likely between 144.10-144.80. Trade the range.

(Source: Finlogix.com)

GBP/USD – Sterling rose against the Greenback to finish at 1.2695 against Friday’s opening at 1.2612. Overnight the British Pound traded to a high of 1.2667 before drifting lower. On the day, look for immediate resistance at 1.2630 and 1.2670 to cap any rallies. Immediate support for Sterling is found at 1.2580 followed by 1.2560. Look for another choppy trading day in this currency pair, likely between 1.2580-1.2680 today. Trade the range, preference is to sell Sterling rallies.Have a good day, week, and month ahead. Happy Monday and trading all.

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