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Navigate Global Payments – Markets Today 12th July 2022

 

MARKET WRAP – July 12th 2022

  • China COVID woes, EUR/USD flirts with parity, NY Fed 1yr inflation expectations rise, 3yr infaltion set to fall; Fed Bullard & Bostic in favor of 75bp in July, Fed George spoke on risks of moving too fast;
  • AUD/USD trades near a fresh 2-year low of 0.6713, as demand for the greenback surged in a risk-averse scenario. On the other hand, global indexes settled in the red, weighing on the Aussie.
  • Fed speak saw George  reiterate her concerns about the Fed moving too fast, while Bostic (non-voter) and Bullard (2022 voter) reiterated calls for 75bps in July.
  • Bostic was encouraged by the fall in longer run inflation expectations after the NY Fed consumer survey saw 3yr inflation expectations decline, although the 1yr expectations rose to a series high.
  • Commodities, all felt the pressure of the Dollar bid, although oil did rise off lows into the settlement given stock indices found some earlier paring, only then to dip back to lows into the close, although oil failed to follow suit.

FX

  • The Dollar surged on Monday to print fresh YTD highs at 108.190, a level not seen since 2002. The move in the Dollar was supported by the risk-off tone in markets with equities lower while bonds were bid, although the higher yields did little to stop the greenback’s rise.
  • Risk off had started in Asia on renewed COVID/demand fears out of China where Macau shut all of their casinos and a Shanghai official announced additional areas of high risk areas.
  • Fed speak Monday saw George (2022 voter) warn moving rates too fast risks oversteering and noting communication the rate path is far more consequential than the speed of policy changes.
  • George appeared to lean back on faster tightening once again after she dissented in June voting for a 50bp hike rather than a 75bp move, she also warned that abrupt changes in rates could create strains in the economy.
  • Euro was put in the dust amid the Dollar bid as the cross looks ever closer to parity, touching a fresh low of 1.0042, a level not seen since 2002 as rate differentials, geopolitics, and recession fears continue to weigh on the cross while ING note fears of a Russian gas shutdown, hawkish Fed bets, and risk sentiment in general all argue against a recovery in the cross.
  • Yen weakened to a 24yr low against the rising greenback at 137.75 with the Boj’s ultra-easy policy settings set to remain as BoJ Governor Kuroda once again signaling the central bank is prepared to ease policy further without hesitation if needed while also warning the economy is showing signs of weakness, reiterating they will maintain their ultra-loose policy to stably achieve its 2% price target.


TODAY’S KEY RISK EVENTS

  • German ZEW Event: OPEC MOMR speakers: Fed’s Barkin; BOEs Bailey & Cunliffe supply: UK, Germany & US. NAB business confidence & Westpac consumer sentiment.

CURRENCY/INDICIES RANGES

Currency Pair Low High
AUD/USD 0.6716 0.6860
EUR/USD 1.00335 1.0183
GBP/USD 1.18675 1.2034
USD/JPY 135.985 137.75
NZD/USD 0.60975 0.6192
USD/CAD 1.2945 1.30515
USD/CNH 6.683 6.726
AUD/JPY 92.26 93.69
AUD/NZD 1.0998 1.1071
DXY 106.92 108.268

 

Equity Index Daily % Change Closing Level
ASX -1.1% 6602
SHANGHAI COMP -1.3% 3314
NIKKEI 1.1% 26812
FTSE 0.0% 7197
DAX -1.4% 12832
CAC -0.6% 5996
DOW JONES -0.5% 31174
S&P 500 -1.3% 3850
NASDAQ -2.3% 11373
VIX 7.8% 26.57
Commodity Daily % Change Closing Level
CRUDE OIL -1.3% 103.5
ICE NAT GAS -13.0% 222.2
GOLD -0.1% 1732.8
SILVER -0.6% 19.1
SGX IRON ORE -2.0% 107.8
CMX COPPER -2.7% 342.6
ICE SUGAR -0.8% 18.9
ICE COTTON -0.8% 222.2
CBT WHEAT -4.1% 855.3
BITCOIN 0.5% 20514.2
Rates Markets Yield Daily Change
US 2 YEAR 3.06% -4.4
US 10 YEAR 2.98% -9.9
AUST 2 YEAR 2.61% 3.7
AUST 10 YEAR 3.51% 3.1

 

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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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