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Market Wrap – 20th July 2022

MARKET WRAP – 20th July 2022

  • Wall St had its best session in 3 weeks overnight with the NASDAQ closing +3.1%, while the S&P 500 and the Dow Jones finished +2.8%, and +2.4% respectively.  U.S 2 year and 10-year yields ticked higher to 3.01% and 3.23% while crude oil managed gains of 1.5% and closed at $104.10 a barrel. Asian equities were mostly lower on Tuesday, except for the Nikkei which rose 0.65% while the Hang Seng fell 0.9%. The ASX closed 0.6% lower driven by a fall in tech and healthcare stocks.
  • There were headlines out of Europe that ECB policymakers are to discuss a rate hike worth 25 bps or 50 bps at Thursday’s meeting. Additionally, ECB policymakers are closing in on a deal to make new bond purchases conditional on next generation EU targets and fiscal rules. European equities fell on the open, with Euro Stoxx 50 falling 0.6% and CAC -0.5%. US 10-year treasuries were lower at 2.98%. Another headline released that the EU commission doesn’t expect Nord Stream to restart pushed EUR/USD off its highs. Elsewhere and temperatures in the UK reached the highest on record.
  • Into the NY open and US Housing Starts for June declined by 2.0% to 1.559m, weaker than the expectations of a 2.0% increase to 1.580m. Building Permits declined by 0.6% to 1.685m to beat expectations of a 2.7% fall to 1.650m. There was no reaction to the data. Wall St was firmer from the open with early gains of around 1.5% for the Dow and S&P while the Nasdaq was up near 2% over the NY morning but markets were more subdued over the NY afternoon.

 FX

  • The AUD firmed after the RBA meeting minutes yesterday revealed little that markets didn’t already know. As a result, markets are still pricing in a 0.50% increase on 2 August.
  • The US dollar was generally softer overnight which saw the EUR/USD trade to a high of 1.0269, the GBP/USD to 1.2044 while the AUD/USD peaked at .69125 before closing at .6900. Into the London lunch and both AUD/USD and NZD/USD traded around their respective session highs of 0.69025 and 0.6237. EUR/USD continued climbing, reaching new highs of 1.0269 while GBP/USD traded sideways at 1.2026, just off its high of 1.20395. USD/CAD continued its steady decline trading down to lows of 1.29305 (Canadian CPI out tonight is expected to post 8.4% vs 7.7% previous) while USD/JPY fell to lows of 137.38.
  • Having drifted off the highs, EUR/USD was up 30 points to trade back above 1.0260 in response to the Nordstream headlines. AUD/USD and NZD/USD made new highs of 0.6909 and 0.6240 ahead of the London rate set while GBP/USD moved up to 1.2044. USD/CAD meanwhile fell to 1.28865 lows in the move. The AUD/USD traded firmly within a .6803/.69125 range overnight.  Demand is expected ahead of .6790 while .6950 should provide the next meaningful level of resistance. At the time of writing the AUD sits at 0.6900.

CURRENCYI/INDICIES RANGES

Currency Pair Low High
AUD/USD 0.6803 0.69125
EUR/USD 1.012 1.0269
GBP/USD 1.1926 1.2044
USD/JPY 137.38 138.39
NZD/USD 0.61415 0.624
USD/CAD 1.2871 1.299
USD/CNH 6.7405 6.7615
AUD/JPY 93.97 95.41
AUD/NZD 1.106 1.1098
DXY 106.404 107.627

Source Bloomberg

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