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Market Wrap – 26th July 2022

 

MARKET WRAP – 26th July 2022

  • AUD/USD climbs towards 0.6950, after soft US data, ahead of Aussie CPI and the FOMC meeting.

 

  • The Dow Jones Industrial Average rose 0.3% to 31,990.04, and the S&P 500 climbed 0.1% to 3,966.84. The Nasdaq Composite, however, fell 0.4% to 11,782.67.

 

  • Asian equities closed in the red across the board, with the CSI300 down 0.6% despite property shares pushing higher amid a report officials plan a fund to support developers. The ASX finished Mondays session flat, as mining gains were offset by a fall in tech and healthcare stocks.
  • ECB’s Kazak said big interest rate hikes may not be over, and that a ‘too-weak Euro is a problem’. He continued by saying he has no objections to the market view of 150bps by June. EUR/USD shot up on these comments reaching new daily highs of 1.0222.

 

  • Germany’s July IFO Business Confidence index printed at 88.6, missing expectations of 90.1, the worst level since the early months of the Pandemic. An IFO economist hit the wires saying if Putin continues to deliver gas as we have seen recently, there won’t be a recession.

 

  • The Chicago Fed National Activity Index for June printed at -0.19 against expectations of a flat result. Released later, the Dallas Fed Manufacturing Activity Index fell to -22.6 to be worse than expectations of -22.0. No reaction to the data with markets subdued though AUD/USD ticked up to 0.6965 and GBP/USD moved up to 1.2085 and USD/Cad fell to lows of 1.2843 over the NY morning.

 

  • Headlines then that Gazprom had halted one more turbine in the Nord Stream 1 gas pipeline with flow to drop to 20% of capacity. European gas prices gained as much as 10% on the headlines while EUR/USD fell around 50 points to trade near 1.0200 with some suggestions that Germany would not have enough gas supplies for winter and would need to activate its emergency program.

 

 

  • Morgan Stanley (MS) revised its economic outlook to include “significantly higher inflation and weaker growth,” according to a research note Monday. “We see risk that the Fed raises rates to a peak of 3.875% or higher” in Q4 2022 or Q1 2023, it said.

 

FX

  • DXY extends the bearish mood and revisits the low-106.00s, where some initial support appears to have turned up so far on Monday.

 

  • The EUR/USD pair trades around 1.0220, incapable of advancing despite a weaker dollar. Concerns about the EU economic growth and central banks’ imbalances weigh on the shared currency.

 

  • GBP/USD peaked at 1.2086 amid risk-on flows, now trading in the 1.2040 price zone. Political turmoil in the UK on pause until early September, when Tories will announce a new Prime Minister.

 

  • A combination of factors weighed on the JPY and assisted USD/JPY to gain traction to close at 136.6. The widening US-Japan yield differential, the risk-on impulse undermined the safe-haven JPY. The USD languished near a two-week low and capped gains as the focus remains on the FOMC.


                                                    TODAY’S KEY RISK EVENTS

  • US housing data at market open and consumer confidence will be in focus tonight.  BoJ monetary policy minutes this morning will provide insight into BoJ interest rate decision with still no change in interest rates still forecasted.

                                                                                                          

CURRENCY/INDICIES RANGES

Currency Pair Low High
AUD/USD 0.6878 0.6965
EUR/USD 1.0179 1.0258
GBP/USD 1.1962 1.2085
USD/JPY 135.89 136.78
NZD/USD 0.62155 0.62785
USD/CAD 1.2835 1.2945
USD/CNH 6.7443 6.7672
AUD/JPY 93.85 95.18
AUD/NZD 1.1064 1.111
DXY 106.187 106.883

 

Equity Index Daily % Change Closing Level
ASX 0.0% 6790
SHANGHAI COMP -0.6% 3250
NIKKEI -0.8% 27699
FTSE 0.4% 7306
DAX -0.3% 13210
CAC 0.3% 6238
DOW JONES 0.3% 31990
S&P 500 0.1% 3967
NASDAQ -0.4% 11783
VIX 1.1% 23.28
 
     
Commodity Daily % Change Closing Level
CRUDE OIL 2.2% 96.8
ICE NAT GAS 2.7% 320.5
GOLD 0.0% 1718.5
SILVER 0.0% 18.4
SGX IRON ORE 1.0% 107.3
CMX COPPER 0.4% 336.3
ICE SUGAR -2.3% 17.5
ICE COTTON 0.2% 320.5
CBT WHEAT 1.4% 769.5
BITCOIN 0.6% 22092.8
 
     
Rates Markets Yield Daily Change
US 2 YEAR 3.02% 5.0
US 10 YEAR 2.81% 5.6
AUST 2 YEAR 2.68% -6.0
AUST 10 YEAR 3.35% -8.6

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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