Daily Market Outlook, June 10, 2020

<h2><span>Daily Market Outlook, June 10, 2020 </span></h2>
<p><span><strong>Asian equity market is mostly modestly higher this morning</strong>. China’s annual CPI inflation slipped to 2.4% in May (from 3.3% in April) as pressure from food prices eased. PPI inflation was -3.7% (from -3.1% in April) reflecting a general lack of price pressures. Following yesterday’s UK Cabinet meeting it was confirmed that all retailers in England will be allowed to open from 15th June. However, PM Johnson confirmed that pubs, restaurants and hairdressers will not reopen until 4th July at the earliest. Meanwhile, a UK government minister said that the UK will confirm to the EU on Friday that it does not intend to ask for an extension of the Brexit transition period.  </span></p>
<p><span><strong>The key focus for markets today will probably be the policy update from the US central bank at 7pm BST, followed by Fed Chair Powell’s press conference at 7.30pm.</strong> No major policy changes are expected. Recent comments from Fed officials, however, suggest that many of them remain concerned that the rebound in the economy may be disappointing and that there is a substantial risk that it may falter. So despite Friday’s much stronger-than-expected labour market report, a key message will be that they stand ready to provide further support. That could include more QE if necessary and potentially explicit yield curve control. However, the Fed does not seem to be seriously considering a move towards negative interest rates. In the meantime, Fed policymakers may consider some changes to their ‘forward guidance’ to emphasise that monetary policy is unlikely to be tightened (and in particular interest rates will not be raised) for a considerable period of time. They may also reintroduce the summary of the Committee’s economic projections (suspended in March), and use the interest rate forecasts (the so-called ‘dot plot’) to reinforce their low rates message. </span></p>
<p><span><strong>US May CPI data is forecast to show inflation stabilising at a low level following its recent sharp decline.</strong> As that was primarily driven by the big drop in oil prices their recent rebound, if sustained, will likely lead to some pickup in headline inflation in coming months. However, underlying inflationary pressures are also subdued, so inflation seems set to remain well below the Fed’s target for a long period of time. </span></p>
<p><span><strong>Elsewhere there is no real data of note</strong>. A couple of European Central Bank policymakers are scheduled to speak but they seem unlikely to add much to recent comments from ECB President Lagarde and other officials. Those have said that the ECB stands ready to offer more support to the economy if necessary but that there is also a key role for fiscal policy.</span></p>
<h3><b>Today’s Options Expiries</b><span> for 10AM New York Cut (notable size in bold)</span></h3>
<ul>
<li><span>EURUSD: <strong>1.1300 (1BLN), 1.1390-95 (1.2BLN)</strong></span></li>
<li><span>USDJPY: 106.90 (530M), 107.50 (300M), 107.75 (350M), 108.20 (600M)</span></li>
<li><span>AUDUSD: 0.6900 (553M), 0.7025 (300M)</span></li>
</ul>
<h3><span>Technical &amp; Trade Views</span></h3>
<p><b>EURUSD Bias: Bullish above 1.1250 targeting 1.1420</b></p>
<p><span>From a technical and trading perspective, as 1.1250 acts as support bulls will look for a test of offers and stops at 1.14 before we likely see another round of profit taking. A closing breach of 1.1230 would suggest a broader corrective phase to test bids back towards 1.10 before the next leg higher. UPDATE potential for another test of 1.1250 bids before targeting the offers and stops above 1.14</span></p>
<p><img class="aligncenter size-full wp-image-45016" src="http://blog.tickmill.com/wp-content/uploads/2020/06/Screenshot-2020-06-10-08.57.04.png" alt="" width="2152" height="1181" srcset="https://blog.tickmill.com/wp-content/uploads/2020/06/Screenshot-2020-06-10-08.57.04.png 2152w, https://blog.tickmill.com/wp-content/uploads/2020/06/Screenshot-2020-06-10-08.57.04-300×165.png 300w, https://blog.tickmill.com/wp-content/uploads/2020/06/Screenshot-2020-06-10-08.57.04-1024×562.png 1024w, https://blog.tickmill.com/wp-content/uploads/2020/06/Screenshot-2020-06-10-08.57.04-768×421.png 768w, https://blog.tickmill.com/wp-content/uploads/2020/06/Screenshot-2020-06-10-08.57.04-1536×843.png 1536w, https://blog.tickmill.com/wp-content/uploads/2020/06/Screenshot-2020-06-10-08.57.04-2048×1124.png 2048w" sizes="(max-width: 2152px) 100vw, 2152px" /></p>
<p><b>GBPUSD Bias: Bullish above 1.26 targeting 1.28</b></p>
<p><span>GBPUSD From a technical and trading perspective, as 1.26 supports on pull back look for a test of 1.28 descending trendline and the 78.6% retracement of the covid crisi decline, from here we could see a broader profit taking move and correction. On the day only a close back below 1.2575 would suggest the current cycle has completed</span></p>
<p><img class="aligncenter size-full wp-image-45017" src="http://blog.tickmill.com/wp-content/uploads/2020/06/Screenshot-2020-06-10-08.58.21.png" alt="" width="2151" height="1188" srcset="https://blog.tickmill.com/wp-content/uploads/2020/06/Screenshot-2020-06-10-08.58.21.png 2151w, https://blog.tickmill.com/wp-content/uploads/2020/06/Screenshot-2020-06-10-08.58.21-300×166.png 300w, https://blog.tickmill.com/wp-content/uploads/2020/06/Screenshot-2020-06-10-08.58.21-1024×566.png 1024w, https://blog.tickmill.com/wp-content/uploads/2020/06/Screenshot-2020-06-10-08.58.21-768×424.png 768w, https://blog.tickmill.com/wp-content/uploads/2020/06/Screenshot-2020-06-10-08.58.21-1536×848.png 1536w, https://blog.tickmill.com/wp-content/uploads/2020/06/Screenshot-2020-06-10-08.58.21-2048×1131.png 2048w" sizes="(max-width: 2151px) 100vw, 2151px" /></p>
<p><b>USDJPY Bias: Bearish below 1.09 targeting 1.07</b></p>
<p><span>USDJPY From a technical and trading perspective, the topside breach of 108.50 delays downside objectives opening a retest of range resistance above 109, however as supply above 1.09 stems the upside look for a retest of buds back to 1.08 UPDATE the upside breach of 1.09 suggests range expansion with 110.70 the upside object as 1.09 supports UPDATE sharp rejection above 109.50 suggests a return to range trade and a retest of support back to 107</span></p>
<p><img class="aligncenter size-full wp-image-45018" src="http://blog.tickmill.com/wp-content/uploads/2020/06/Screenshot-2020-06-10-08.59.32.png" alt="" width="2150" height="1188" srcset="https://blog.tickmill.com/wp-content/uploads/2020/06/Screenshot-2020-06-10-08.59.32.png 2150w, https://blog.tickmill.com/wp-content/uploads/2020/06/Screenshot-2020-06-10-08.59.32-300×166.png 300w, https://blog.tickmill.com/wp-content/uploads/2020/06/Screenshot-2020-06-10-08.59.32-1024×566.png 1024w, https://blog.tickmill.com/wp-content/uploads/2020/06/Screenshot-2020-06-10-08.59.32-768×424.png 768w, https://blog.tickmill.com/wp-content/uploads/2020/06/Screenshot-2020-06-10-08.59.32-1536×849.png 1536w, https://blog.tickmill.com/wp-content/uploads/2020/06/Screenshot-2020-06-10-08.59.32-2048×1132.png 2048w" sizes="(max-width: 2150px) 100vw, 2150px" /></p>
<p><b>AUDUSD Bias: Bullish above .6900 targeting .7085)</b></p>
<p><span>AUDUSD From a technical and trading perspective,sustained price action above .6800 witnessed the grind higher persist opening a test of the psychological bit figure at .7000. From this initial foray above .7000 anticipate profit taking pullback to .6800 UPDATE target achieved as .6950 supports look for test of stops to .7050 UPDATE offers and stops towards .7100 look vulnerable, expect supply above .7100 to drive a test of bids back towards .6900</span></p>
<p><img class="aligncenter size-full wp-image-45019" src="http://blog.tickmill.com/wp-content/uploads/2020/06/Screenshot-2020-06-10-09.01.39.png" alt="" width="2148" height="1186" srcset="https://blog.tickmill.com/wp-content/uploads/2020/06/Screenshot-2020-06-10-09.01.39.png 2148w, https://blog.tickmill.com/wp-content/uploads/2020/06/Screenshot-2020-06-10-09.01.39-300×166.png 300w, https://blog.tickmill.com/wp-content/uploads/2020/06/Screenshot-2020-06-10-09.01.39-1024×565.png 1024w, https://blog.tickmill.com/wp-content/uploads/2020/06/Screenshot-2020-06-10-09.01.39-768×424.png 768w, https://blog.tickmill.com/wp-content/uploads/2020/06/Screenshot-2020-06-10-09.01.39-1536×848.png 1536w, https://blog.tickmill.com/wp-content/uploads/2020/06/Screenshot-2020-06-10-09.01.39-2048×1131.png 2048w" sizes="(max-width: 2148px) 100vw, 2148px" /></p>
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