 Welcome to Tick Mill Weekly Market Outlook for week commencing the 22nd of June with me, Patrick Mullerly. It appears that the markets are trying to come to terms with the daily swings in the new US coronavirus cases, although the increase in total daily cases is now above 25,000 mark, this does give some cause for concern and we did see some late weakness in the equity markets on Friday. Looking ahead, the market will be paying attention to a couple of key themes. One, news on US relations with China and any news about a fourth US stimulus package will also be closely watched. This is expected to be announced before unemployment benefits end in late July. On the US data side this week, it seems that there is a slight slowing in the improvement in the employment situation. Thus, Thursday's initial and continued claims will be closely scrutinised. We'll also see May existing home sales, May durable goods orders and final reading of June consumer sentiment. We'll also hear from the Federal Reserve's Charles Evans and James Bullard. We'll expect then to echo with HomeSeachare Powell's view that the recovery will be a hard-fought battle. Note, however, that the financial system seems healthier. Drawings on the Fed US dollar swap lines have dropped to 280 billion from 445 billion over the past couple of weeks. From a technical perspective, the dollar index has stayed a recovery from the symmetry swing objective at the 96th level. We're now just coming into the first level of resistance here with Friday's close up towards this 97-70 area, which is symmetry swing resistance versus the last corrective phase in the dollar. Looking early in the week to see if we get a key reversal Monday, Tuesday, which then could set the tone for the next leg lower, certainly to retest prylos at 95-70, ultimately on route to the 94-60 objective. However, if we don't get that early reversal, then I'd be looking for a move higher to extend up into the next resistance area, which is the equality objective versus this structure at the 98-20, and then we also have some sending trend line resistance at 98-70. So again, watching for bearish reversal patterns in this zone to set short positions, targeting certainly the retest of the prylos, but ultimately looking for a move down into this 94-70 area. The euro experienced some late losses on Friday in the wake of the European Commission's Recovery Fund meeting that concluded really in no accord, but some consensus on certain parts of the proposal and crucially perhaps no critique of the idea about mixing grants with loans. This week, the European Data Calendar will focus on the flash-dune PMIs and the German EFO. Look for further modest improvement in the EFO expectations index, but it will take some time to return to levels seen at the start of the year. Any manufacturing PMIs above the 50-level, however, would be great progress and could certainly help the euro. Given the big take-up in the ECB's Teltro 3, we could see peripheral debt spreads, particularly at the short end of the curve, continue to be contained. From a technical perspective, the euro dollar is set now to test its equality objective at this 1,1140 to 1,1150 area. If at the beginning of the week buyers step in and take advantage of the pullback, then I'd be looking for key reversal patterns to set long positions, ultimately targeting a retest of the year-to-day highs at the 1,1490 area. However, if buyers fail to step in early in the week, then I'm looking for a deeper corrected pullback to retest the area of the 1,1020 to 1,10. Again, watching for bullish reversal patterns if we do trade down to this area, as this will provide a set-up on the long side, certainly to see us look for a retest of the 1,13 handle in the interim. Despite the Bank of England's delivering a tapered version of QE extension, i.e. the pace of asset purchases set to decline in the remainder of the year, Sterling failed to benefit as the market remains focused on the odds of negative rates. While not discussed at the BOE meeting, it was not ruled out by the governor during the press conference. This is important for Sterling's prospects as the stalling of the UK-EU trade negotiations suggests that the market will likely take a glass half-empty approach and keep Sterling risk premium in place, both from the economic side as well as the possibility of negative rates. On the data front this week, UK June PMIs released on Tuesday should continue their gradual recovery after the COVID-19 induced slump. Despite the increase, all forward-looking indicators should remain in contractionary territory. Given the volatility of PMI numbers, I don't rule out an upside surprise this week, but this is unlikely to have a long-lasting effect. No key negotiations are scheduled on the trade front. Sterling weakened into the close. We're sitting, as with a bunch of these pairs at the moment, at the equality objective of the 1,2320. Again, if buyers step in early in the week and a key reversal Monday Tuesday could look to set long positions from this area, certainly targeting a retest of 1,26 and the descending trend line now coming in at 1,2758. However, if buyers don't step in early in the week, then I'm looking for a move down to test support at the 1,21 area before we might see a recovery. With the reflation trade on hold, at least until investors feel more confident about second wave COVID risks, the dolly yen has sunk back into range. One month realised an implied volatility is just above 6% compared to levels above 10% in early April. As such, the dolly yen's daily correlation with the S&P 500 is not particularly high right now, suggesting the JPY story remains in the crosses. In the week ahead, markets will be watching Japanese foreign bond buying. After a very quiet few months, Japanese purchases of foreign bonds have picked up over the last couple of weeks. This may owe more to the greater confidence in the foreign debt story rather than strategic buying of foreign bonds when the dolly yen approaches that 105 handle. But a consistent pickup in purchases will start to attract greater market attention. From a technical perspective, dolly yen is sitting just above the 10650 area. I'll be looking for a move down to ultimately retest the 106 recent cycle lows enroute to the ultimate objective of this equality target at the 10430 before we could see a more material recovery in the dolly yen. The calendar for next week doesn't show any key releases for Australia. With some attention though, we'll be given two remarks by the Reserve Bank of Australia. I'm going to fill it low on Monday. The two hot topics for the RBA now are one, the tapering plans and two, whether the strong Aussie dollar is becoming a factor in monetary policy decisions. Next RBA meeting will be on 7 July. China-related sentiment has started to creep back in as the main driver for the Aussie dollar and this should continue to be the case. Despite some encouraging signals that the second wave in Beijing may have passed its peak, news of transport disruptions following some new restrictions may hit appetites on the China-sensitive currencies which are specifically the Australian dollar. From a technical perspective, we close on Friday. I'm looking now for the Australian dollar to test the equality objective at the 6680 area, certainly against Friday's highs at the 69. So when we get down to this 6680, I'm looking for bullish reversal patterns to set long positions, ultimately looking for a test of the 71 handle. If we fail to find support at the 6680, look for a deep correction to the 65 handle before we attempt to set another base. That concludes the weekly market outlook for a week commencing the 22nd of June.