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Navigate Global Payments – Markets Today 6th June 2022


MARKET WRAP – 6th June 2022
• Stocks end the week on the backfoot (SPX -16%, NDX -2.7%, RUT -0.6%) whilst also now closing lower on the week after last week’s first rise in seven proved a red herring.

• Equity futures were already dipping lower before the strong US jobs report (+390k vs exp. +325k), with low liquidity emboldening headline risk, to which Elon Musk spooked markets with his holistic economic forecast (has a “bad feeling”), adding to JPMorgan’s Dimon warning this week of an economic hurricane on the horizon.

• NFP headline printed 390k, above the expected 325k, and fell from the prior 436k, whilst the unemployment rate unexpectedly remained unchanged at 3.6% (exp. 3.5%).

• It’s worth highlighting that the headline figure was boosted by a massive 57k rise in government payrolls with the private figure more measured at 333k. Moreover, average hourly earnings printed at 0.3% (prev. 0.3%), beneath the expected 0.4%.

• ING note, “the US economy added more jobs than expected in May, but with nearly two job vacancies available for every unemployed American the numbers would be even stronger if there was a better supply of quality labour.

• Nonetheless, looking ahead, ING states, “a tight jobs market with worker shortages and rising pay is both a constraint on growth and will keep inflation higher for longer. This means there is nothing in this report to deter the Fed from their roadmap of 50bp hikes at the June and July meetings’.
RBA Thoughts & AUD

• Markets are pricing a 25bp rate hike increase after the first hike since 2010. At the May meeting, the RBA took the cash rate to 0.35%. Westpac forecasts a 40bp hike, which would unwind the emergency pandemic rate cuts

• Analysts cite ongoing supply headwinds, a multi-decade low jobless rate, and inflation well above target as reasons for a bigger rate increase. As a reminder, the central bank surprised markets at its last meeting by delivering a larger-than-expected increase of 25bps (exp. 15bps), and stated that further rises in interest rates would be required in the period ahead, adding that it was committed to doing what is necessary to ensure that Australian inflation returns to target over time.

• Governor Lowe has also kept the door open regarding the pace of rate increases, recently stating that he does not preclude bigger or smaller rate moves in the future, and that the Board was not on a pre-set path

Weekly Key Risk Events
• Australian Inflation Gauge, Chinese Caixin Services and Composite PM’s, US CPI, ECB meeting

• Holiday Closures in New Zealand, South Korea, Malaysia, Switzerland, Sweden, Denmark, Norway, Austria, Hungary & Iceland.
Source FX Street

CURRENCY/INDICIES RANGES
Currency Pair Low High
AUD/USD 0.7202 0.72825
EUR/USD 1.07035 1.0765
GBP/USD 1.2486 1.25895
USD/JPY 129.685 130.98
NZD/USD 0.6502 0.6576
USD/CAD 1.25515 1.2596
USD/CNH 6.6170 6.6680
AUD/JPY 94.06 94.56
AUD/NZD 1.1071 1.1096
DXY 101.644 102.225

Equity Index Daily % Change Closing Level
ASX 0.9% 7239
SHANGHAI COMP 0.4% 3195
NIKKEI 1.3% 27762
FTSE -1.0% 7533
DAX -0.2% 14460
CAC -0.2% 6485
DOW JONES -1.0% 32900
S&P 500 -1.6% 4109
NASDAQ -2.5% 12013
VIX 1.1% 25.00

Commodity Daily % Change Closing Level
CRUDE OIL 3.0% 120.3
ICE NAT GAS -13.0% 159.8
GOLD -1.0% 1850.7
SILVER -1.6% 21.9
SGX IRON ORE 1.3% 144.6
CMX COPPER -1.7% 447.6
ICE SUGAR -0.3% 19.3
ICE COTTON -1.8% 117.9
CBT WHEAT -1.6% 1041.0
BITCOIN -2.1% 29591.3

Rates Markets Yield Daily Change
US 2 YEAR 2.66% 2.4
US 10 YEAR 2.94% 3.3
AUST 2 YEAR 2.61% -3.0
AUST 10 YEAR 3.48% -1.6
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.

 

 

 

 

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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