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Market Wrap – 25th July 2022

 

MARKET WRAP – 25th July 2022

  • The AUD/USD pair reversed an intraday dip to sub-0.6900 levels and inched back closer to a four-week high on Friday. AUD/USD faces strong resistance at 0.6975 as investors await key comments from the Federal Reserve later in the week.

 

  • The Dow Jones Industrial Average declined 0.4% to 31,899.29, giving up earlier gains. The S&P 500 slid 1% to 3,961.63 and the Nasdaq Composite dropped 2% to 11,834.11.

 

  • Asian equities were mostly higher on Friday’s close with the Nikkei up 0.4% and Hang Seng rising 0.2%. The ASX fell 0.04% however closed out its best week since March 2022 as tech stocks rallied.

 

  • France July PMI missed estimates, with July flash Manufacturing PMI of 49.6 (est. 51) and Services PMI of 52.1 (est. 52.7). German PMI was released shortly after and came in well below consensus with July Services PMI falling to 49.2 (51.4 forecast) and July Manufacturing PMI of 49.2 (50.7). EUR/USD fell sharply on the headlines from 1.0210 reaching a session low of 1.0131.

 

 

  • ECB’s Kazimir commented that the September rate hike may be 25bps or 50bps, adding that data convinced him to start hiking ‘with a bang’. We then heard from ECB’s Rhen who said rate decisions will be determined by incoming data.

 

  • The seasonally adjusted number of initial unemployment claims advanced by 4,000 to 235,000, the highest level since Jan. 15, during the week ended July 2, the Department of Labor said Thursday. The consensus on Econoday was for 230,000. The previous week’s level was unrevised at 231,000.

 

  • Asian equities were higher across the board on the close, despite Shanghai reporting the highest number of Covid cases since May. The ASX finished Thursday’s session up 0.8%, buoyed by miners, stabilising oil and iron prices.

 

  • The Bureau of Labor Statistics showed that the unemployment rate fell in 10 states in June, rose in two states, and held steady elsewhere. The largest rate decline was in Missouri, while Minnesota has the lowest jobless rate in the US at 1.8%, followed by Nebraska at 1.9%. The District of Columbia posted the highest unemployment rate in the US at 5.5%. The national unemployment rate held steady at 3.6% in June.

 

  • The flash manufacturing reading from S&P Global fell to a 2-year low of 52.3 in July from 52.7 in June after regional data from the New York, and Philadelphia Federal Reserve banks were mixed.

FX

  • DXY consolidated higher after it prepares for a crucial week in economic data.  DXY bulls will be eyeing the 110 level for a further push towards multi year highs.

 

  • EUR/USD bulls have moved in from below parity in a correction of three prior weeks of supply. The single currency ended down 0.13% on the final day of last week, falling from a high of 1.0255 and reaching a low of 1.0129 after French and German PMI data disappointed.

 

  • GBP/USD has gathered bullish momentum and advanced above 1.2000 ahead of the weekend. The weaker-than-expected Services and Composite PMI reading from the US caused the dollar to lose interest, fueling the pair’s rally.

 

  • The USD/JPY pair has displayed a vertical upside move in the Asian session as the US dollar index (DXY) has witnessed a bullish open-drive session. A responsive buying action from a low of 137.06 has driven the asset above the critical hurdle of 137.56 comfortably


                                                    TODAY’S KEY RISK EVENTS

  • A relatively light day of key economic data despite a crucial week for all major currencies.  Bank of Japan monetary policy meeting minutes will be the first key event in focus tomorrow morning.

                                                                                                          

CURRENCY/INDICIES RANGES

Currency Pair Low High
AUD/USD 0.6884 0.69765
EUR/USD 1.0131 1.0255
GBP/USD 1.1918 1.2064
USD/JPY 135.575 137.955
NZD/USD 0.62115 0.63045
USD/CAD 1.28245 1.2928
USD/CNH 6.7480 6.7835
AUD/JPY 94.01 95.38
AUD/NZD 1.1060 1.1105
DXY 106.112 107.359

 

Equity Index Daily % Change Closing Level
ASX 0.0% 6792
SHANGHAI COMP -0.1% 3270
NIKKEI 0.4% 27915
FTSE 0.1% 7276
DAX 0.1% 13254
CAC 0.3% 6217
DOW JONES -0.4% 31899
S&P 500 -0.9% 3962
NASDAQ -1.9% 11834
VIX -0.3% 23.03
Commodity Daily % Change Closing Level
CRUDE OIL -1.5% 94.9
ICE NAT GAS 5.4% 312.2
GOLD 0.5% 1727.0
SILVER -1.3% 18.6
SGX IRON ORE 0.2% 104.0
CMX COPPER 0.8% 332.6
ICE SUGAR -2.5% 17.9
ICE COTTON -0.8% 90.9
CBT WHEAT -6.3% 755.5
BITCOIN -2.5% 22541.0
Rates Markets Yield Daily Change
US 2 YEAR 2.97% -11.4
US 10 YEAR 2.75% -12.6
AUST 2 YEAR 2.74% -8.0
AUST 10 YEAR 3.44% -13.1

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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