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The Euro posted gains after Monday’s European and maintained a firm underlying tone, although gains were limited into the US open. Markets were still concerned over the Euro-Zone outlook, especially given reservations over gas supplies and the EU energy commissioner warned that serious disruption to gas supplies is likely.

Russian attacks on Ukraine civilian targets were also significant in undermining confidence during the day ahead of Tuesday’s NATO conference.

The US Dallas Fed manufacturing index declined sharply to -17.7 for June from -7.3 the previous month. Overall confidence in the US outlook remained more fragile with markets fretting over the recession risks. Concerns over the US outlook were significant in undermining potential dollar support. Markets also moved to lower the expected peak in Federal Reserve interest rates to around 3.5% from 4.0% earlier in the month which sapped support for the US currency.

The ECB monetary conference will start in earnest on Tuesday with comments watched closely during the day, especially with global central bank representatives also making comments.  Markets are very confident that the ECB will increase interest rates at the July and September meetings and the Euro also gained an element of support from expectations that the deposit rate will move out of negative territory in September.

Narrow ranges prevailed in early Europe on Tuesday with the Euro trading around 1.0580 as the dollar failed to generate sustained support.




The US durable goods orders increased 0.7% for May after a revised 0.4% increase the previous month and above consensus forecasts of a 0.1% increase. Underlying orders also increased 0.7% on the month and above expectations of a 0.3% increase with little net impact.

The dollar pushed to highs just above 135.50 at the New York open, but failed to hold the best levels amid the scaling back of Fed expectations.

Pending home sales recovered 0.7% for May after a revised 4.0% decline for April with US housing data continued to be a significant focus.

Overall risk appetite was less confident after the New York open after the S&P released a notably cautious report on the outlook for the global economy. The ratings agency forecasted that there will be a low-growth recession in 2023. Weaker demand could have an important impact in curbing inflation pressures, although there is still a high degree of uncertainty over supply-side issues. Hopes for further progress in easing Chinese coronavirus restrictions would provide an element of support.

There was choppy trading Treasuries with the 10-year yield increasing to 3.20% before a retreat to 3.17%.

Treasuries were little changed in Asia on Tuesday with an easing of volatility and the dollar traded around 135.30 against the Japanese currency.




Sterling posted significant gains at the European open on Monday, but again failed to hold the move above the 1.2300-30 resistance band against the dollar. The consistent failure to break above this level triggered another round of selling with lows below 1.2250.

Overall confidence in the UK outlook remained weak, although forthcoming fiscal support measures could provide an element of relief

There were further reservations over the risks of a trade war with Europe as the government brought the Northern Ireland Protocol Bill to the House of Commons. UK Foreign Secretary Truss stated that the government did not rule out using Article 16 down the line. The legislation passed its second reading and will now go to the committee stage with markets monitoring any retaliation threats by the EU. SNP leader Sturgeon is set to announce further details on Tuesday of the proposed second independence referendum which will tend to unsettle the currency to some extent.

The UK currency was also hampered by a slightly less robust risk tone after the New York open, although dollar weakness was a significant element towards the European close. Sterling still settled below 1.2300 against the dollar and traded around 1.2275 on Tuesday with the Euro around 0.8620.




Swiss sight deposits declined to CHF748.5bn in the latest week from CHF751.8bn previously and the largest weekly decline for close to 10 years. The significant weekly decline suggests that the National Bank did not intervene to curb franc gains following the decision to raise interest rates at the latest monetary policy meeting.

The Euro was able to secure a net advance to 1.0140 as yields moved higher again with the dollar little changed on the day.

The franc was little changed on Tuesday with the dollar held around 0.9560 as markets waited for further impetus from equities and bonds.


Technical Levels 




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