Intraday Market Thoughts

Lowe Asks the Question

by Ashraf Laidi
Jun 24, 2019 12:25

RBA Governor Lowe touched a delicate subject that his counterparts may also have to deal with, especially if this week's G20 goes well.The German June IFO survey beat expectations for the current assessment and slipped on the expectations component. We expect a period of a relative lull in the markets ahead of Trump/Xi meeting at this weekend's G20 summit. GBP pushes above 1.2740 as Jeremy Hunt and Boris Johnson battle it out for the PM race. More below.  The Premium long  in XRP Ripple at 0.33 entry hit the final target of 0.49. The long EURUSD Premium long at 1.1230 is a few pips away from its final 1.1400 target for 170-pip gain. Below are the chart breakouts for EURUSD and XAUUSD net longs among speculative futures traders in the IMM and Comex respectively.

Click To Enlarge
Lowe Asks the Question - Gold Net Longs Eur Net Longs June 24 2019 (Chart 1)

In a panel discussion on Monday, RBA Governor Lowe mused that it's legitimate to ask how effective monetary easing will be globally. Domestically he also cast questions, saying the exchange rate effect of cutting rates is offset if everyone cuts. That gave the Australian dollar a boost to start the week. We ended the week with US equity markets near an all-time record and economic data still well-within the range of expansion.

The Fed is undoubtedly committed to at least one rate cut, but if US-China talks improve and data holds at these levels, the market may pare back expectations for four cuts in the year ahead. That could be the signal from bonds late in the week as long-end yield crept higher, albeit from extremely depressed levels.

At the same time, proxies for global easy money like gold and bitcoin continue to surge, with the latter touching $11,200 on the weekend and gold climbing above $1405 to start the week. Here is a useful Bitcoin factoid from Ashraf

With regards to the latest in the race for Conservative Party leader and PM, Jeremy Hunt has seen his odds improve from 8-1 on Friday morning, to 3-1 today.  Reports of domestic violence related to Boris Johnson may have weighed, epecially as he avoided discussing the matter in this weekend's interviews. More on this from Ashraf.


Latest IMTs