JPY WEAKENS AS MEXICAN TARIFFS ARE CALLED OFF

JPY weakened against the USD somewhat as safe haven outflows affected the currency, due to the US calling off the tariffs on Mexico. However, the US president tweeted yesterday that there was another, “secret”, component in the deal with Mexico, that will be announced in the near future and should Mexico not adhere to it, tariffs will be back on. Mexican officials were quick to contradict the US President’s tweets and analysts speculate that there may be some relevance with Trump’s wall. In general JPY retreated somewhat, yet market sentiment remains fragile, especially concerning the US-Sino trade relationships. The US president yesterday also threatened that should Chinese President Xi not attend the G20 meeting late June, more tariffs on Chinese imports will go into effect immediately.

GBP weakened by weak growth, as Tory leadership contest begins

GBP weakened yesterday against a number of its counterparts as the UK GDP growth rate hit the lowest levels in four months. Also worrying is the fact that the UK manufacturing output growth rate also hit the lowest reading in over 10 years. With the financials showing a rather bleak picture for the UK economy, investors are expected to keep a close eye on the UK employment data today. On the UK political scene, the race for the replacement of Theresa May has officially began yesterday as ten candidates eye the position. Among them are Boris Johnson, Michael Gove and Jeremy Hunt, which seem to gather the most interest. The rhetoric surrounded the Brexit issue and albeit it seems to harden, little specifics came out. It should be noted, that Boris Johnson raised the prospect of a tax cut for individuals as well as corporations, in an effort to gain appeal among Tory voters. Should the recent weak financial data and the tough Brexit language continue, we could see the GBP weakening further.

Today during the European session, we get UK’s employment data for April and Eurozone’s Sentix Index for June. In the American session, we get the headline and core US PPI growth rates for May. In tomorrow’s Asian session Japan’s corporate goods prices growth rate and core machinery orders growth rate are to be released, both for May. Also in tomorrow’s Asian session, we get from China, the CPI and PPI rates for May. As for speakers, please note that BoE’s Vlieghe, ECB’s Rehn and RBA’s Kent, are scheduled to speak.

GBP/USD H4

• Support: 1.2665 (S1), 1.2560 (S2), 1.2475 (S3)
• Resistance: 1.2775 (R1), 1.2875 (R2), 1.2970 (R3)

USD/JPY H4

• Support: 108.50 (S1), 107.50 (S2), 107.20 (S3)
• Resistance: 109.15 (R1), 109.75 (R2), 110.35 (R3)

Posted on

June 11, 2019

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