European Central Bank casts no fresh clues

All charts in this article are for the recent 90-days, click the chart for more information on the currency pair trend with a comparison of the rates available from providers.

EUR/USD – has confined itself to a range in the past month roughly between 1.2080 and 1.2220. The European Central Bank cast no fresh clues after it left interest rates unchanged at the conclusion of its June meeting yesterday. While the ECB upgraded its growth and inflation projections there was no talk of tapering. As for the US Dollar, a recent rise in US inflation is seen as transitory by the Federal Reserve officials. The Euro ended the week lower (1.2110) against an overall stronger US Dollar.

EUR/GBP – 0.8560 to 0.8660 has been the trading range of this cross since early May. The ECB’s June meeting came and went. The GBP component has more scope to move this cross, and Cable’s fate lies with the reopening of the UK economy. No big changes on this cross but the Euro does look like losing ground to the British currency over time.

GBP/USD – closed the week at 1.4160 (1.4210 last week). The big event for Sterling is the UK’s reopening of its economy scheduled for June 21. Weaker than estimated UK GDP, Industrial and Manufacturing Production data will keep a lid on GBP/USD and GBP crosses. Until the economy reopens. A stronger Greenback pushed Sterling to close near 1.4100 on Friday.

AUD/USD – pretty much defined by a range between 0.7680 and 0.7780 since April. Looking rangebound in the short term. The Aussie Battler may need to close outside the above range to move into new ground. Finished at 0.7702 on Friday, weighed by a strong US Dollar.

USD/JPY – retreated from 7-day highs around 110.30 to 109.30 this morning. The decline in the US 10-year bond yield to 1.44%, March lows pulled the Dollar lower against the Yen. Lower US bond yields will continue to cap the Dollar above 110 against the Yen. Further falls in USD/JPY will be limited to 108.50. Rallied to 109.60 at the close of Friday.

USD/CAD – The Bank of Canada became the first major central bank to scale back asset purchases at the conclusion of its April meeting. USD/CAD was trading at 1.2610 and has since slid to a low of 1.2007 earlier this month. The USD has traded a range between 1.2030 and 1.2130 since then. Momentum remains for a lower USD/CAD, but traders are cautious at the recent lows. Friday saw a good break on the topside above 1.2140 to finish at 1.2160. A base on USD/CAD has been formed.

USD/SGD – has traded between 1.3210 and 1.3310 since late May, when the USD broke lower. USD/SGD opened in Asian trade at 1.3240 today looking a touch heavy. Difficult to see the Greenback outside its recent range. Also picked up on USD strength, just like all USD/Asians.

USD/THB – has traded between 31.00 and 31.50 since early March. Today we opened near the low end of the recent range at 31.15. Thailand has navigated Covid better than other Southeast Asian countries (Philippines, Indonesia, Malaysia) but the recent new wave could see many businesses struggle. Particularly the food industry. This will keep a base to this currency pair at 31.00, with the next move likely higher.

USD/PHP – also stuck within a range between 47.70 and 48.30 since late April. The Greenback has found it difficult to rally significantly against most Asian currencies as US yields stay low, while Asian yields have remained relatively firm. Until we see US yields climb higher, the Dollar will struggle against the Asians and the Philippine Peso.

EUR/AUD – has been within a range between 1.5650 and 1.5850 since mid-May. Friday saw this cross little changed at 1.5715, pretty much in the middle of the wider range.

AUD/PHP – 90-day chart has seen this cross between 36.80 and 37.80 (give or take a few points). Difficult to see any changes on this cross unless the US 10-year yield climbs back to recent highs.