Market Outlook for 22nd June 2016

Market Outlook for 22nd June 2016

The US dollar came under renewed pressure on Wednesday and erased modest gains against most of currencies. Dollar Index stands at session lows in early hours of European trading, down from Tuesday’s recovery high at 94.18.

The greenback eased against British pound, after rising to 1.4614 high, on latest polls that showed rising number of Brexit supporters, but remains below Tuesday’s peak at 1.4780. Strong uncertainty remains in the markets, as historical referendum nears, with recent polls showing shift towards keeping Britain in the European Union, but with signs of this trend losing momentum, as Tuesday’s poll showed.

The dollar remains below 105 barrier against yen, which was cracked on Tuesday, however, significant loss of yen’s safe-haven appeal, keeps the dollar’s tone in positive mode. The US currency received support from Fed’s Chair Yellen testimony, where Yellen showed general optimism about US economy and held the line of gradual rate increase.

Antipodean currencies hold positive sentiment against US dollar on Wednesday, with Kiwi dollar trading just under Tuesday’s fresh one-year high at 0.7167 and the Aussie stands under Tuesday’s sike-high at 0.7510, after being unable to clear 0.7500 barrier at first attempt.
Gold remains under pressure and holds near 2 ½ week low at $1261, posted overnight, as extension of Tuesday’s strong fall that marks the biggest daily loss since 24 May. The yellow metal was pushed lower by Yellen’s comments on Tuesday that showed optimism for rate hike in coming months, however, outcome of Thursday’s UK referendum is seen as key driver. Vote for Brexit would push the Europe into recession and significantly increase demand for safe-haven instruments.
US Oil joined Brent oil on return back above $50 per barrel barrier, on three-day recovery action from $46.38, correction low. Fresh demand for oil comes on uncertainty above referendum’s outcome, however, vote for Brexit would put oil prices under fresh pressure.
On the other side, bullish acceleration was supported by strong fall in US Crude inventories, which fell by 5.2 million barrels for the week until June 17, tripling the forecast of 1.7 million barrels draw, API data showed on Tuesday.
Today’s highlights

With no significant releases in the European session, focus turns towards American session. Canada Retail Sales are the first highlight of the session, forecasted for significant rise in April. Retail Sales m/m are forecasted at 0.9% vs March’s -1.0%, while Core retail Sales are forecasted to rise by 0.6% in April, after showing draw of 0.3% in March. Data are due at 12:30 GMT.

US Existing Home Sales are expected to rise in May on forecast at 5.54M vs April’s 5.45M.

Fed’s Chair Yellen is ending her two-day testimony today and is due to start speech at 14:00.

US EIA Weekly Crude Stocks release is due at 14:30 GMT, with forecast showing draw of 1.6 million barrels, against previous week’s draw of 0.9 million barrels.
Important levels

GOLD registered the strongest daily loss in one-month on Tuesday, descending from $1294 high to $1267, session low. Wednesday’s action extended dips to $1261, holding firmly in the daily cloud, with mixed tone from technical studies.
Downside risk persists, with focus on Tomorrow’s referendum, which is expected to be the key driver.
Supports lay at $1261; $1257 and $1253, while daily cloud top offers initial resistance at $1270, followed by $1276 and $1288.

GBPUSD regained some ground on bounce from yesterday’s low at 1.4614, hit on fresh bearish acceleration from 1.4780 peak, after the pair failed to sustain gains above key barriers at 1.4737/68.
renewed strength probes above 200SMA at 1.4681, with sustained return above 1.4700 handle, needed to refocus targets at 1.4737/68 and 1.4780.
Initial support lies at 1.4637, followed by 1.4614 and 1.4598, loss of which would have negative impact on near-term structure.

WTI Oil attempts to stabilize above $50, which was broken on Tuesday’s rally, with daily close above $50 per barrel barrier, generating bullish signal. Session high at $50.44 marks initial resistance, followed by $50.70 and $51.00, which guards key resistance AT $51.65, 09 June recovery peak.
Initial support lies at $49.85, followed by $49.35 and $49.02., Market Analysis