1 Minute Market Rundown – 22nd June 2022
Powell in Focus Later Today
UK Inflation Prints as Expected But Still Very High
JPY Hits 24 Year Lows
Risk did rally yesterday as suspected with the S&P posting a 2% gain over the day. Correspondingly, the USD sold off against both the EUR and GBP. Something to note is that the USD did not back off against the Yen. USD/JPY now comfortably sits above 136.00, these are 24 year highs for the pair. I have been bearish Yen for a while although I did square this position up a few weeks back. I feel we will test 140 and potentially higher but USDJPY will face headwinds in the second half of the year as the market tests the BoJ yield curve control strategy. Buying longer dated downside into USD/JPY rallies makes sense I feel.
Overnight, the risk rally stalled with US equity futures turning South and Asian indexes following. There wasn’t a reason for the turn, just perhaps reaffirming the view that risk rallies will be temporary for now. With Powell testifying later, the market is also nervous to be long risk heading into it considering just how hawkish he has been. This morning saw the latest UK CPI print which came inline but at a whopping 9.1%. The BoE is really making life difficult for themselves and their reluctance to be as hawkish as other central banks will keep GBP on the back foot for now. On the day, I remain long CHF versus the EUR.
Crypto markets have come under pressure overnight in line with the general risk sentiment. I find it tough to not be too repetitive in regards to crypto at the moment. Too early to call a base – need either the recession to come or clear evidence one will be avoided. Until then, we will be trading sideways and we advocate trading the extremes. The levels for now remain fairly well defined with support coming in at $17,500 and $850 and resistance at $23000 and $1250 in BTC and ETH respectively. In other news, the world’s largest bitcoin spot ETF, Purpose Bitcoin ETF, lost half of its AUM on Friday which equated to approximately $500m and I am sure contributed to the sell off we saw over the weekend. We could really do with less headlines like this.
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