Risk off mood saw the JPY surging across the board. AUD suffered despite strong GDP overnight, while GBP selling continued as we enter June.
A sudden turn in risk sentiment prompted a surge in the JPY, prompting dislocated trade across the board. USD/JPY fell through 109.40-50 support, but held 109.00 lower down. AUD was the major loser after the overnight release of Q1 GDP shows a much higher than expected reach, anticipated to some degree by the export data reported the day before. We saw .7300 in Asia, but failed to get anywhere near this before the slow drift lower saw a push down to the lows of the day just under .7230. CAD was also on the back foot as energy prices – also to the detriment to AUD – added to the support ahead of 1.3000, and we have since pushed back above 1.3100 with the help of stronger than expected US manufacturing ISM. EU manufacturing PMIs were as expected, while the UK equivalent beat expectations, but to impact on GBP. Instead, the EU polls continue to dominate trade here, and while many have been warning of complacency, the ICM poll yesterday (showing a small lead for Brexit) has underlined the fact and we see the market pouncing on any retracement. Cable tried to gain some ground through 1.4500 but has since been smashed down towards 1.4400, with the figure level now looking extremely vulnerable. EUR/USD has moved into the middle of the 1.1100-1.1200 range ahead of the ECB meeting tomorrow, in line with the usual response to a risk off scenario. The Fonterra GDT index 3.4% with WMP -1.7% (inside the futures forecast range). NZD/USD was well supported through the day, with AUD/NZD selling also contributing to a pressured AUD spot rate as mentioned above.