European Open: Volatile trade on the yen as the BOJ stand pat

Asian Indices:

Australia's ASX 200 index fell by -121.2 points (-1.84%) and currently trades at 6,469.90
Japan's Nikkei 225 index has fallen by -469.4 points (-1.78%) and currently trades at 25,961.80
Hong Kong's Hang Seng index has risen by 163.57 points (0.78%) and currently trades at 21,009.00
China's A50 Index has risen by 112.79 points (0.8%) and currently trades at 14,152.91

UK and Europe:

UK's FTSE 100 futures are currently up 13.5 points (0.19%), the cash market is currently estimated to open at 7,058.48
Euro STOXX 50 futures are currently up 25 points (0.73%), the cash market is currently estimated to open at 3,452.91
Germany's DAX futures are currently up 98 points (0.75%), the cash market is currently estimated to open at 13,136.49

US Futures:

DJI futures are currently up 217 points (0.73%)
S&P 500 futures are currently up 107.25 points (0.96%)
Nasdaq 100 futures are currently up 29.75 points (0.81%)

FTSE 350: 3918.07 (-3.14%) 16 June 2022

26 (7.43%) stocks advanced and 324 (92.57%) declined
1 stocks rose to a new 52-week high, 91 fell to new lows
17.43% of stocks closed above their 200-day average
83.71% of stocks closed above their 50-day average
4.86% of stocks closed above their 20-day average

Outperformers:

+ 3.74% - Inchcape PLC (INCH.L)
+ 2.34% - London Stock Exchange Group PLC (LSEG.L)
+ 1.68% - BH Macro Ltd (BHMG.L)

Underperformers:

-11.98% - Persimmon PLC (PSN.L)
-10.08% - Carnival PLC (CCL.L)
-9.90% - Darktrace PLC (DARK.L)

The Japanese yen jolted after the Bank of Japan stood pat today. I don't recall the last time BOJ ultimately doing nothing was of such great interest. The volatile spike higher, lower and back to the starting point is what trepidation and disappointment look like in one.

On the back of an exciting week of central bank meetings, this was not the end of the week many wanted. The BOJ have stuck to their dovish guns, and show no immediate signs of changing course.

USD/JPY has now erased all of yesterday’s post-SNB losses – and with the BOJ remaining the lone dove among central banks, yield differentials are likely to regain control and support the US dollar. Traders are now waiting for the press conference to see if any forward guidance is provided.

Oil gaps lower

The US dollar is once against the strongest major, although outside of the yen volatility has been low – with JPY losing -1.36% to the dollar. WTI prices have gaped lower although found support at $114 and brent trades just above $117. Natural gas has piqued our interest having printed a potential swing high around $8.00 before printing a bearish engulfing candle on the 4-hour chart. Our next target is around the 6.45 support zone.

EUR/USD pulls back to support ahead of inflation data

We’re watching EUR/USD to see it it can hold above 1.0500 before continuing higher, which makes it a pivotal level to monitor this session. The decline from 1.0787 held above the 2017 low and formed a base, with a series of lower wicks (three of which were on high volume to show demand at these lows levels). Prices saw a clear break above 1.0508 resistance and have since retraced to the daily pivot point and original breakout level. Our next bullish target is 1.0600 and the 1.0640 resistance zone. A clear break (or 30-min close) below 1.0500 invalidates our bullish bias for the day.

Economic events up next (Times in BST)

BOE’s Silvana Tenreyo speaks at 09:30 – a day after the hikes rates and upgraded their CPI forecast to 11%.
Jerome Powell speaks at 13:45 BST although he is not expected to provide comments on monetary policy.
BOE’s chief economist Huw Pill speak at 15:30.

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