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MARKET WRAP – 11th July 2022

 

MARKET WRAP – 11th  July 2022

  • Strong NFP print; Atlanta Fed raised GDP tracker, but still in contractionary territory; Feds Williams notes July will be a debate between 50 or 75bps, Fed Bostic supports 75bps.
  • NFP: The US jobs report was stronger than expected at 372k (exp. 268k), but it did slow somewhat from the prior 384k – but clearly not enough to spark concern.
  • Equities were somewhat choppy on NFP day but ultimately settled relatively flat after the headline beating NFP release sparked a typical hawkish reaction as markets started to price in a 75bps hike from the Fed in July with more certainty.
  • The Dollar was also flat but it did post a fresh YTD peak of 107.79 Overnight, before paring ahead of the release.
  • However, in a knee jerk reaction the Dollar reclaimed 107.50 after NFP but once again pared gains back to the psychological 107 level.
  • Attention now turns to the US CPI report this week to help settle the 50 or 75bps debate at the Feds July meeting. Fed’s Bostic on Friday said he was in the 75bps camp, while Williams said the debate will be around 50 or 75bps.
  • Looking ahead, the agency adds “these data are consistent with our strong view that the Fed’s September decision will be 25bp or 50bp “markets currently price-in 56bp.” In wake of the data, the Atlanta Fed GDP Now tracker was revised higher to -1.2% from -1.9%, still signaling a Q2 contraction.
  • Nonetheless, given the stronger than expected print it shows the labour market is holding up well against the Fed’s normalisation process and increases the odds of a 75bp move in July.

FX.

  • The AUD/USD is almost unchanged on Friday, amidst a positive tone in the market, as US equities rise but remain at the brink of turning red, on sudden market sentiment shift after June’s US employment report exceeded expectations, signaling that recession fears are overblown. At the time of writing, the AUD/USD is trading at 0.6837.
  • EUR/USD has extended its slide to its lowest level in nearly two decades below 1.0100 in the early European session on Friday. The pair shows no signs of a convincing recovery and it wouldn’t be surprising to see the euro hit parity against the dollar at this point.
  • Meanwhile, European Central Bank (ECB) Governing Council member Ignazio Visco said on Friday that the bank could consider a bigger rate hike in September after raising rates by 25 basis points in July.


TODAY’S KEY RISK EVENTS
.

Source FX street

WEEKLY KEY RISK EVENTS

  • Tuesday, ZEW Survey
  • Wednesday, RBNZ Meeting
  • Thursday, US CPI – Bank of Canada Meeting, Australian Jobs
  • Friday, China GDP, US Retail Sales

CURRENCY/INDICIES RANGES

Currency Pair Low High
AUD/USD 0.6792 0.6873
EUR/USD 1.0072 1.01915
GBP/USD 1.1920 1.2055
USD/JPY 135.33 136.565
NZD/USD 0.6133 0.6204
USD/CAD 1.29365 1.3035
USD/CNH 6.6839 6.7905
AUD/JPY 92.30 93.48
AUD/NZD 1.1055 1.1095
DXY 106.805 107.786
     

 

Equity Index Daily % Change Closing Level
ASX 0.5% 6678
SHANGHAI COMP -0.2% 3356
NIKKEI 0.1% 26517
FTSE 0.1% 7196
DAX 1.3% 13015
CAC 0.4% 6033
DOW JONES -0.1% 31338
S&P 500 -0.1% 3899
NASDAQ 0.1% 11635
VIX -5.5% 24.64
     
     
Commodity Daily % Change Closing Level
CRUDE OIL 2.0% 104.8
ICE NAT GAS -14.0% 255.5
GOLD 0.1% 1741.7
SILVER 0.4% 19.3
SGX IRON ORE -2.6% 110.0
CMX COPPER -1.6% 351.5
ICE SUGAR 2.7% 19.0
ICE COTTON 4.1% 95.6
CBT WHEAT 6.8% 893.3
BITCOIN 1.1% 21844.7
     
     
Rates Markets Yield Daily Change
US 2 YEAR 3.10% 8.6
US 10 YEAR 3.08% 8.2
AUST 2 YEAR 2.57% 5.7
AUST 10 YEAR 3.48% 1.0

Source Bloomberg

   

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Disclaimer:This material is provided by Navigate Global Payments (Navigate) ACN 615 699 888, AFSL 502711.  The material contains general commentary only and does not constitute investment or any other advice.  Certain types of transactions, like futures, options and high yield securities can be risky, and not suitable for all investors.  This information has been prepared without considering your objectives, financial situation or needs.  Please seek your own independent legal or financial advice before proceeding with any investment decision. The information is believed to be accurate at the time of compilation and is provided in good faith.  Navigate does not warrant the accuracy or completeness of any information contributed by a third party. The information is subject to change without notice and Navigate is under no obligation to update the information. The information contained in this material are opinions of the author at the time of writing and does not constitute an offer, recommendation to act, a solicitation of an offer, or an inducement to subscribe for, purchase or sell any financial instrument or to enter a legally binding contract.  This information, including any assumptions and conclusions is not intended to be a comprehensive statement of relevant practise or law that is often complex and can change.  Past performance is not a reliable indicator of future performance. Any forecasts given in this material are predictive in character.

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