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Market Wrap – 22nd July 2022

MARKET WRAP – 22nd July 2022

  • Wall St posted its 3rd consecutive day of gains overnight with the NASDAQ closing +1.4%, the S&P 500 +.7% and the Dow Jones +.5%.  U.S 2- and 10-year yields both fell 15bps to 3.08% and 2.87% respectively while crude oil dipped 3.6% to $96.26 a barrel. Asian equities were mixed on the close with the Hang Seng the worst performer down 1.6%. The ASX finished up 0.5%, as a fall in energy and material stocks was offset by a late rally in tech and healthcare.
  • Russia resumed supplies of gas to Europe via the Nord Stream pipeline. Italian PM Draghi announced his resignation for the second time in recent days. Japan’s Kuroda hit the wires, saying uncertainties are extremely high for Japan’s economy, adding that the BoJ won’t hesitate to ease further if necessary.
  • The ECB surprised markets as they hiked rates by 50bp to beat expectations of a 25bp hike. The accompanying statement noted that it was appropriate to take a larger first step and the central bank were ready to adjust all instruments and supported the return of inflation to target with a “meeting to meeting” approach to further rate decisions. ECB President Lagarde focussed on the fact that inflation was spreading across sectors and would remain undesirably high for some time with risks to the outlook skewed to the upside. She also noted that the war in Ukraine was an ongoing drag on growth and the 2H economic outlook was clouded.
  • US weekly jobless claims data was released and came in weaker than expected. Also released was the July Philly fed Business Survey printed at -12.3, down from -3.3 and well short of expectations of 0.8. Little reaction to the weak data though USD/JPY slipped around 50 points to the 138.30 area.

FX

  • AUD/USD climbed steadily to 0.6916 highs, then rebounded sharply to finish the Asian session at 0.68765 lows before rebounding to close near its high of .6940 which is where we find it this morning.
  • EUR/USD was just under 1.0200 heading into its rate decision and spiked to the 1.0240 area in the aftermath before reaching highs of 1.0266 ahead of Lagarde’s press conference. European equity markets moved modestly higher. Elsewhere and GBP/USD briefly fell to lows of 1.1914 though the USD was generally weaker. USD/JPY slipped around 50 points to the 138.30 area after its jobs data. GBP/USD was dragged down to lows of 1.1891 while USD/CAD moved up to 1.29365 highs though the antipodeans were largely unaffected. USD/JPY meanwhile fell to lows of 137.72 into the London rate set.
  • It was a much more subdued NY afternoon though there was movement with the USD weakening ahead of the Sydney open. USD/JPY was the biggest mover as it fell to lows under 137.50 while AUD/USD pushed modestly higher. EUR/USD moved off the lows to sit above 1.0200 with GBP/USD also moving higher to trade near 1.1980.
  • The AUD/USD traded in a .6860/.6940 range overnight.  Demand remains ahead of .6770 while offering interest will likely emerge as we approach .7000.

CURRENCYI/INDICIES RANGES

Currency Pair Low High
AUD/USD 0.686 0.6940
EUR/USD 1.01535 1.0279
GBP/USD 1.1891 1.2004
USD/JPY 137.35 138.88
NZD/USD 0.6185 0.6253
USD/CAD 1.286 1.2936
USD/CNH 6.7618 6.788
AUD/JPY 94.92 95.59
AUD/NZD 1.1064 1.1105
DXY 106.41 107.32

Source Bloomberg

Equity Index Daily % Change Closing Level
ASX 0.5% 6794
SHANGHAI COMP -1.0% 3272
NIKKEI 0.4% 27803
FTSE 0.1% 7271
DAX -0.3% 13247
CAC 0.3% 6201
DOW JONES 0.5% 32037
S&P 500 1.0% 3999
NASDAQ 1.4% 12060
VIX -3.2% 23.11
     
     
Commodity Daily % Change Closing Level
CRUDE OIL -3.5% 96.4
ICE NAT GAS 10.4% 296.1
GOLD 0.5% 1719.6
SILVER 0.5% 18.9
SGX IRON ORE 1.1% 99.0
CMX COPPER -0.6% 330.7
ICE SUGAR -1.7% 18.4
ICE COTTON -1.3% 296.1
CBT WHEAT -1.3% 808.8
BITCOIN 0.3% 23108.4
     
     
Rates Markets Yield Daily Change
US 2 YEAR 3.09% -14.0
US 10 YEAR 2.88% -15.0
AUST 2 YEAR 2.82% 0.8
AUST 10 YEAR 3.57% 2.6

Source Bloomberg

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