June 22, 2022 18:51 GMT
- Treasury yields plunged across the curve as fears of an economic recession sent investors into the relative safety of US government debt. G10 currencies were mixed but overall, lower core yields weighed on the USD index, which reversed significantly following initial strength on Wednesday.
- This prompted a steady and substantial bounce in EURUSD (+0.42%) from the 1.0470 early European lows all the way back to the 1.0600 area. Equities aside, growth fears fed into a sense of souring risk sentiment, which also boosted Euro crosses with EURNZD and EURAUD the standout performers, rising around 1% within close proximity of the May highs.
- USD/JPY (-0.25%) retreated off this week's multi-decade cycle high, putting the rate back below the Y136.25 in what's likely to be only a brief respite. USDJPY broke to new cycle highs this week, with price clearing short-term resistance at 135.59, Jun 15 high and this resistance point held as short-term support during today’s session. Overall, the technical break higher confirms a resumption of the primary uptrend and maintains the bullish price sequence of higher highs and higher lows.
- EURNOK had a firm 0.9% rally as a downleg in oil prices undermined sentiment somewhat ahead of tomorrow’s Norges bank meeting. Tighter policy has been well signposted for the June meeting, with the bank signalling a rate hike is “most likely” to be delivered. The size of the hike, however, is less forecastable and may keep NOK volatility elevated over the next 24 hours.
- European flash PMIs for June will headline Thursday’s docket as Fed Chair Powell continues to testify on the Semi-Annual Monetary Policy Report before the House Financial Services Committee.