Summary:
- Currency Choices in June
- Central Banks of Europe, UK and Canada in Tightening Mode
- BOE Mark Carney’s Hawkish Change in Stance
- Logic-Defying Movement of the USDCAD
- Draghi and the ECB’s Contrasting Comments
It’s time for another monthly market wrap up as we close up the very interesting month of June. Let’s dive straight in:
After weeks of undecided market action, the trader is suddenly spoilt for choice as they take their pick from the gamut of currencies. June was a good month for dollar bears, who were greatly rewarded despite the US Fed rate hike.
In a short span of time, the central banks of Europe, United Kingdom and Canada joined the bandwagon by being in tightening mode. The trader does have to reconsider the themes in play throughout the first half of 2017 and acknowledge that they are no longer the same. This change in theme was reinforced further by the hawkish comments we heard from Bank of England and Bank of Canada committee members this month, as covered in our earlier market updates.
Another big news point in the month of June was BOE Mark Carney’s hawkish change of stance, which facilitated the strength of the pound overnight. The considerations for tough Brexit negotiations ahead took a backseat as Carney’s inclinations towards higher rates took the limelight. Revelation Trading view is that this change in macros will result in the pound’s downside to be capped at 1.25 instead of 1.2. It is foolhardy to use the initial considerations as they may not be irrelevant. Stay tuned for our upcoming market forecast to find out our view on what this means for the pound in July.
The USDCAD is another currency pair whose performance has deviated from what economic teachers would say. By right, the weakening oil price and the strength of the US dollar should cause the CAD to weaken. Yet, the loonie (the fondly-used term for the CAD) has strengthened. This is attributed to the hawkish views of Poloz and Deputy Governer Patterson. Yet, RT has not traded the USDCAD to the downside with 1.29 being the psychological support so close by.
Last but not least, Draghi’s speech and the reports from the European Central Bank was the major market-moving event of the last week of June. The market’s “erroneous” interpretation of the Italian economist’s comments resulted in the rollercoaster intra-day price action with the EURUSD continuing its ascent and making new highs at 1.4420.
What an interesting array of events we’ve seen in recent weeks. We hope that you have had a good month of trading with us. Moving forward, one has to pay attention to the divergence in monetary policies which are currently emerging in different countries. We hope to bring you more content on this front in the month of July. Follow us on our Facebook page & TradingView for more news updates and market tips!
Regards,
The Revelation Trading Team
REVELATION TRADING 