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Market Wrap – 27th July 2022

 

MARKET WRAP – 27th July 2022

  • The AUD/USD pair trades around 0.6930, marginally lower amid a dismal market mood. Stock markets edged lower, weighing on the Aussie dollar, with the focus now shifting to Australian quarterly CPI figures.

 

  • The Dow Jones Industrial Average dropped 0.7% to 31,761.54, the S&P 500 declined 1.2% to 3,921.05, and the Nasdaq Composite slumped nearly 2% to 11,562.57.

 

  • Asian equities were largely higher on the close, with the Nikkei underperforming its peers down 0.16%. The ASX finished Tuesday’s session 0.3% higher, driven by gains in energy and materials.

 

  • Into the NY open and some US housing data was released. The FHFA House Price Index for May rose 1.4% to fall short of expectations of 1.5% while Case Shiller House Prices rose 1.32% MoM and 20.5% YoY to fall short of expectations of 1.50% and 20.6%. Little reaction to the data.

 

  • Richmond Fed Manufacturing Index for July was flat, up from -9 and above expectations of -14. On a less positive note, July Consumer Confidence fell from 98.4 to 95.7 to come in worse than expectations of 97.0 while June New Home Sales declined by 8.1% to 590k, coming in mixed against expectations of a 5.9% decline to 655k as a result of some negative revisions.

 

  • ECB’s Cos said that inflation rates in the EU would remain high for some time though would return to target in the longer term. He also added that 50bp rate hikes don’t imply a higher terminal rate and that future rate decisions would be data dependent.

 

  • The International Monetary Fund now expects global economic growth to be 3.2% in 2022, below the 3.6% forecast in its April estimates. It now sees global growth at 2.9% next year, also below the 3.6% previous guidance. The growth forecast for the US economy was lowered to 2.3% for this year and 1% in 2023.

FX

  • DXY picks up extra pace and advances to 2-day highs north of the 109.00 yardstick on Tuesday.

 

  • The shared currency is among the weakest USD rivals, as shortage of natural gas poises a major risk for EU economic progress. Softer-than-expected US data further hurt the market mood ahead of Fed’s decision.

 

  • GBP/USD recovered modestly from an intraday low of 1.1963 but struggles to recover beyond the 1.2000 threshold amid a risk-averse environment. The absence of positive developments around the UK political scenario weighs on the pound.

 

  • The USD/JPY pair has displayed a meaningful rebound after hitting a low of 136.30 in the Asian session. The asset has surpassed the crucial hurdle of 135.50 and is heading towards Monday’s high at 136.80

 


                         TODAY’S KEY RISK EVENTS

  • A massive day for global markets starting with Australian CPI numbers which will be released at 11:30am this morning.  The Fed interest rate decision will take place overnight with market expectations for a .75 basis point hike.

 

 

                                                                                                          

CURRENCY/INDICIES RANGES

Currency Pair Low High
AUD/USD 0.69205 0.6984
EUR/USD 1.0108 1.025
GBP/USD 1.19645 1.209
USD/JPY 136.265 136.87
NZD/USD 0.6225 0.62805
USD/CAD 1.2816 1.2901
USD/CNH 6.7466 6.7716
AUD/JPY 94.52 95.26
AUD/NZD 1.111 1.1141
DXY 106.201 107.283

 

Equity Index Daily % Change Closing Level
ASX 0.3% 6807
SHANGHAI COMP 0.8% 3277
NIKKEI -0.2% 27655
FTSE 0.0% 7306
DAX -0.9% 13097
CAC -0.4% 6211
DOW JONES -0.7% 31762
S&P 500 -1.2% 3921
NASDAQ -1.9% 11563
VIX 6.1% 24.79
 
     
Commodity Daily % Change Closing Level
CRUDE OIL -1.5% 95.2
ICE NAT GAS 9.1% 404.2
GOLD -0.1% 1717.6
SILVER -0.1% 18.6
SGX IRON ORE -1.7% 110.3
CMX COPPER 1.0% 338.7
ICE SUGAR 0.0% 17.5
ICE COTTON 3.8% 404.2
CBT WHEAT 4.5% 804.8
BITCOIN -0.3% 20877.1
 
     
Rates Markets Yield Daily Change
US 2 YEAR 3.06% 4.1
US 10 YEAR 2.80% 0.6
AUST 2 YEAR 2.71% 3.0
AUST 10 YEAR 3.34% -1.4

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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