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Navigate Global Payments – Markets Today 10th June 2022

 

MARKET WRAP – 10th June

  • AUD/USD is down over 1.25% on the day and is moving in hard on the next critical support area after breaking the prior higher lows of the rising daily trend. The Australian dollar turned sharply lower on Thursday as broader market risk appetite took a turn for the worse in wake of the ECB’s hawkish policy announcement. Tuesday’s post-larger than expected RBA rate hike and more hawkish-than-expected RBA rate guidance upside in the Aussie has proven short-lived.
  • Stocks and Bonds were hit, particularly Eurozone assets, in wake of the hawkish ECB which left rates unchanged and announced an end to its APP from July 1st as expected, along with a commitment to a 25bps hike in July  with room to do more if needed in September, while little new was shared on potential fragmentation tool.
  • Meanwhile, the ECB also issued higher inflation forecasts and lower growth forecasts for the near term. The hawkish ECB and cautious outlook added to the growth concerns from overnight on fresh COVID concerns in Shanghai, while there were mixed reports about Ant Group’s IPO which initially suggested an easing of crackdowns, although Ant Group later dismissed these plans.
  • Meanwhile, the Euro gave up its post ECB gains as risk sentiment soured and the buck prospered with all eyes turning to US CPI on Friday to help gauge Fed expectations for September with the FOMC widely expected to hike by another 50bps next week, with another 50bp move in July before they “assess” their normalisation plan..

FX

  • The Dollar was supported thanks to the downbeat risk tone and the weaker Euro which helped the Dollar index print a fresh weekly high of 103.34 despite an uptick in jobless claims data this week.
  • EURO: The ECB left rates unchanged and announced an end to its bond-buying process, as expected, while also signaling a 25bp hike in July and September, although added if it is required they are prepared to implement a larger hike in September, while also signaling gradual rate hikes thereafter.
  • The ECB reiterated the issue of preventing fragmentation and preserving policy transmission will be tackled via adjusting PEPP reinvestments flexibly across time, asset classes and jurisdictions at any time, disappointing those looking for more concrete fragmentation solutions.
  • In response to the statement, EUR/USD was choppy but went on to hit session highs just before President Lagarde started her speech.
  • ECB sources were hawkish, although provided little support to the Euro as it propelled growth concerns where some policymakers wanted a 50bps hike already in July and a large majority were against making an announcement on a fragmentation-fighting tool.


TODAY’S KEY RISK EVENTS

  • Attention now heavily turns to the US CPI report on Friday, where the headline is expected to rise 0.7% M/M, picking up from 0.3% in April while Y/Y is seen maintaining a pace of 8.3%.
  • The core metrics are expected to slow, however, to 0.5% from 0.6% MIM with Y/ Y slowing to 5.9% from 6.2%. Note, Redfin released a survey which saw median monthly asking rent in the US rise above USD 2k for the first time in May, rising 15% Y/ Y, matching Aprils pace but slowing from March’s 17% gain.
  • The report will help shape Fed expectations for September where they are expected to “assess” their current normalisation plan which is widely expected to hike by another 50bps in June & July.

 

CURRENCY/INDICIES RANGES

Currency Pair Low High
AUD/USD 0.7094 0.7193
EUR/USD 1.06115 1.0774
GBP/USD 1.2488 1.2557
USD/JPY 133.19 134.56
NZD/USD 0.638 0.6461
USD/CAD 1.255 1.2705
USD/CNH 6.666 6.7094
AUD/JPY 95.25 96.76
AUD/NZD 1.1111 1.1157
DXY 102.152 103.367

 

Equity Index Daily % Change Closing Level
ASX -1.4% 7020
SHANGHAI COMP -0.8% 3239
NIKKEI 0.0% 28247
FTSE -1.5% 7476
DAX -1.7% 14199
CAC -1.4% 6358
DOW JONES -1.9% 32273
S&P 500 -2.4% 4018
NASDAQ -2.7% 11754
VIX 9.4% 26.22
Commodity Daily % Change Closing Level
CRUDE OIL -0.7% 121.2
ICE NAT GAS 16.0% 150.6
GOLD 0.0% 1848.0
SILVER -0.5% 21.7
SGX IRON ORE -1.3% 139.9
CMX COPPER -2.1% 436.0
ICE SUGAR 1.5% 19.5
ICE COTTON 2.0% 150.6
CBT WHEAT -0.2% 1073.0
BITCOIN -0.7% 30106.5
Rates Markets Yield Daily Change
US 2 YEAR 2.82% 4.1
US 10 YEAR 3.04% 1.8
AUST 2 YEAR 2.74% -0.2
AUST 10 YEAR 3.61% 6.0

 

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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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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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