USDIndex rallied to 106.50 to start the week amid fears of a dramatic slowdown China, along with an increasing likelihood of a recession in Europe. The PBoC’s 10 bp rate cut added to fears of a meaningful slowing in activity there, dashing hopes of a pick-up as covid restrictions were eased. US Yields dropped, while US Stocks posted a modest rally. Nikkei index closed almost flat, with energy-related stocks weighing the most. ASX rose 0.6% as upbeat earnings and record dividend from global miner BHP Group buoyed the mining sub-index. UK ILO unemployment remained steady at 3.8% in the three months to June – as expected. Commodities and Oil prices have been pressured by pick-up in risk aversion and concern that China’s recovery may be faltering.
- USDIndex climbed back over the 106.00 level after weaker than expected data out of China weighed on investor sentiment globally, and left the USD looking like the cleanest shirt in the basket. The buck held firm despite the steep drop in the Empire State index and a further slide in the NAHB housing index.
- Equities – USA500 rose 0.40% (4,303), coming off its 4th straight weekly gain, the best stretch this year. The USA100 was 0.62% higher (13,700), and the USA30 was up 0.45% (33,924).
- Yields – 2-year at 3.199% and 10-year at 2.788%, with the curve holding around -42 bps.
- Oil – fell over -4% to a low of $86.75, Copper is off over -2% to $359.20, as the USD strength exacerbated the weakness in key commodities.
- Gold – fell -1.27% to $1772.72.
- Bitcoin steady bellow 24500.
- FX Markets – EURUSD down to 1.0160, USDJPY steady at 133.35 and Cable slumped to 1.2040.
Today – ZEW Economic Sentiment from Germany and Europe. US Housing Starts and Building Permits and Canadian Inflation.
Biggest FX Mover @ (06:30 GMT) NZDUSD (+0.70%) retreating from 2 1/2 month peak (0.6467), currently to 0.6340. MAs aligning lower, RSI 32.66 & falling, Stochastic also down, but MACD lines flattened below 0. H1 ATR 0.00107, Daily ATR 0.00776.
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Andria Pichidi
Market Analyst
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