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US TSYS

FI Support Evaporates Amid Late Month End Selling

AUDUSD TECHS

Remains Vulnerable

CANADA

Late Risk Off Sees USDCAD Eye Cycle Highs

US TSY OPTIONS

BLOCK, Late Puts

EURJPY TECHS

Bull Cycle Extends

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FOREX

The U.S. dollar turned bid as Tsys retreated once cash trading resumed after the long weekend. Hawkish central bank speak facilitated greenback purchases, as Fed's Waller backed "tightening policy by another 50bp for several meetings," possibly until inflation eases closer to the 2% target.

  • EU leaders reached agreement on a partial embargo on Russian oil, which will prohibit seaborne imports without affecting pipeline supplies for now. There were no curveballs in official communique, hence reaction across G10 FX space was limited.
  • Spot USD/JPY added ~50 pips, ripping through the Y128.00 mark on its way to a near two-week high. USD/JPY 1-month 25 delta risk reversal advanced in tandem with the spot rate, hitting its best levels since May 18.
  • AUD/NZD showed above yesterday's high, supported by relative data outcomes, but gains were capped by the NZ$1.1000 figure. The ANZBO showed further deterioration in NZ business activity, widening the gap with AU business conditions as measured by NAB.
  • Regional risk barometer AUD/JPY moved to a three-week high, piercing its 50-DMA in the process. NZD/JPY also lodged a new three-week high, but trimmed gains after rejecting its 50-DMA.
  • China's official PMI figures improved and were better than expected in May, but the economy remained in contraction, across both manufacturing and non-manufacturing sectors. Offshore yuan was steady after the release, having slipped earlier.
  • On the data front, focus turns to flash EZ CPI, German unemployment, Canadian GDP as well as U.S. Conf. Board Consumer Confidence & MNI Chicago PMI. In addition, ECB's Villeroy, Visco & Makhlouf as well as Riksbank's Ingves are set to speak.
  • Elsewhere, U.S. President Biden, Tsy Sec Yellen and Fed Chair Powell will hold a meeting at the White House, while EU leaders will resume their Brussels summit.

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