Daily Market Outlook, July 18, 2022

Daily Market Outlook, July 18, 2022 Overnight Headlines IMF To Cut Global Growth Outlook ‘Substantially’ At The Next Review G-20 Finance Chiefs Blame Russia As Path To Soft Landing Narrows Fed Preparing To Lift Interest Rates By Another 75 Basis Points: WSJ Biden Fails To Secure Major Security, Oil Commitments At Arab Summit Italian Right-Wing Parties Reject 5-Star Movement As Coalition Partner BoE’s Missed Inflation Aim Becomes Topic Of UK Leadership Debate Russia Vows To Ramp Up Military Operations As Rockets Pound Ukraine China Covid Cases Held Above 500 Yesterday; Shanghai In Testing Blitz New Zealand Inflation Outpaces Forecasts At A Fresh 32-Year High Oil Drops As China's Rising Covid Cases Renew Fuel Demand Concerns Asian Equity Markets Mostly Higher To Start The Week; Japan ClosedThe Day Ahead Following Friday’s gains across US and European exchanges, stocks have continued to rally across Asian markets. Equities across China have risen in response to PBoC Governor Yi’s comments that the central bank will step up monetary policy support to the economy, following the weaker-than-expected Q2 GDP report. China equities, however, lag the broad pick-up across Asia as elevated Covid cases continue to weigh on sentiment. The prospect of aggressive monetary policy tightening by the world’s major central banks continues to be a dominant feature for global financial markets. Last week, US annual consumer price inflation increased to a fresh forty-year high of 9.1%, a stronger outturn than predicted. That boosted speculation that the US Federal Reserve could follow the Bank of Canada’s example by lifting rates by a full percentage point despite signs of moderating economic activity. The Fed will provide a policy update on 27 July, ahead of which there a few bits of data in the coming week, primarily housing- market related, that should provide some food for thought. Later today, the National Association of Home Builders (NAHB) survey for July is expected to show a further softening in sentiment. The headline index is forecast to drop to a fresh two-year low of 66 from 67 previously, perhaps weighing against the FOMC hiking rates by 100bp at its meeting next week. In the UK, a similar debate continues to rage with sterling money markets speculating that the Bank of England come start delivering 50bp increases in Bank Rate at its upcoming meetings, starting with the one on the 4th August. This morning, MPC member Michael Saunders – who departs the committee shortly after the August meeting – is due to speak at an event hosted by the Resolution Foundation. He is likely to reaffirm his desire for a 50bp hike at his final meeting. Early tomorrow morning, the latest labour market report kicks off a busy week for key UK data releases, which could prove crucial in determining whether the MPC step up their rate increases from 25bp to 50bp. Despite the slight rise in the unemployment rate in last month’s release, the UK labour market remains tight with the focus on high inactivity rates among the working-age population and unfilled vacancies at a new peak. For the three months to May, expect the unemployment rate to stay at 3.8% and underlying annual pay growth (excluding bonuses) to edge up to 4.3% from 4.2%.CFTC Data IMM: USD spec long rises as EUR, JPY, GBP hit new trend lows versus dollar USD spec long position rose in Jul 6-12 period EUR slid 2.2% in period, spec -8,392 contracts now short 25,244 JPY specs -5,553 contracts now short 59,998; $JPY +0.7% in period GBP$ -0.63% in period, specs -2,881 contracts now short 59,089 Specs +6,021 AUD on RBA rate hike, CAD specs -788 ahead of BoC BTC specs -591 contracts, flip to short 171; BTC - 4.9% in period (Source:Reuters)FX Options Expiring 10am New York Cut EUR/USD: 0.9975 (452M), 1.0000 (1.12B), 1.0100 (583M), 1.0175 (753M)Technical & Trade ViewsEURUSD Bias: Bearish below 1.0350 EUR/USD up 0.15% in Asia as it continues to recover on better risk sentiment Waning fears of jumbo July Fed hike, easing US inflation expectations boost Lifted by S&P E-Mini rally of 0.4% as Fri risk recovery spills over to Asia Asia range 1.0080-1.01145 as traders pare euro shorts ahead of risk events ECB meeting, planned reopening of Nord Stream 1 gas pipeline Thursday eyed Resistance 1.0170-75, support 1.0075-80, 1.0045-50 20 Day VWAP is bearish, 5 Day bearishGBPUSD Bias: Bearish below 1.2150 GBP/USD clings to gains driven by broadly weaker USD Last at 1.1901 from Fri close 1.1870; holding strong But bulls need a harder push to steer out of technical rut Mon close above 1.1905 negates Bollinger downtrend channel That would clear the way for challenge of 1.2000 psych barrier UK property asking prices +9.3% y/y vs +9.7% in June 20 Day VWAP is bearish, 5 Day bearishUSDJPY Bias: Bullish above 134 USD/JPY bounces to 138.37 from 138.03; still below open 138.47 VWAP uptrend channel intact; base at 137.59 Softer USD all around with risk-on picked up from Wall St But outlook hasn't changed much for USD/JPY bulls FOMC ahead the main focus, though 100bps hike less likely Japan financial markets closed Monday; S&P futures +0.4% 20 Day VWAP is bullish, 5 Day bullishAUDUSD Bias: Bearish below .7050 AUD/USD rallies 0.35% as Wall Street's risk recovery spills over to Asia Cooling Fed rate bets, easing US inflation expectations boost risk mood Last week's lowest AU jobless rate since 1974 sparks bigger RBA hikes talk NAB, Goldman Sachs, Nomura and TD Securities expect 75bps RBA hike in Aug Rising COVID cases in China, slowing China economy likely to limit gains Asia range 0.6792-0.6818; resistance 0.6830, 0.6850, support 0.6790, 0.6750 20 Day VWAP test underway 20 Day VWAP is bearish, 5 Day bearishBTCUSD Bias: Bearish below 22k BTC recovers 22K Testing trend channel resistance, bargain hunting scene in nascent rally BTC bulls take solace from FED tempering hawkishness Support seen at 19k then 18300 the base of the daily VWAP bands failure here opens a retest of lows Concerns regarding increasing Crypto player forced liquidations leave BTC vulnerable Additional pressure seen from BTC miners liquidating positions on declining profitability 20 Day VWAP is bullish, 5 Day bearish

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/daily-market-outlook-july-18-2022"
via IFTTT