Daily Market Outlook, July 19, 2022

Daily Market Outlook, July 19, 2022 Overnight Headlines IBM Shares Slide After Hours After Company Trims Cash Flow Forecast Russia's Gazprom Tells Europe Gas Flow Halt Is Beyond Its Control Biden Could Declare Climate Emergency As Soon As This Week: WaPo Oil Prices Fall; Gold Subdued As Firmer US Dollar, Yields Dent Appeal Rishi Sunak Tops Tory Leadership Poll, As Tom Tugendhat Out Of Race House Speaker Pelosi To Visit Taiwan Next Month Amid China Tensions Senate To Vote Today On Slimmed-Down China Semiconductor Bill Russian Missiles Strikes Cities Across Ukraine, Gas Supplies In Focus Chinese Covid Cases Jump To Almost 700 As Shanghai Widens Testing RBA’s Bullock: Households Can Withstand Further Rate Hikes Asian Equity Markets Mostly Lower; US Equity Futures Edge HigherThe Day Ahead Equity markets are mostly lower, led by technology stocks, as the risk tone turned cautious on concerns about the global economic outlook and reports of rising Covid cases in China. Japan’s Nikkei rose, catching up after the long weekend. In Europe, concerns about Russian gas supplies increased. Media reports suggest that the European Commission is preparing voluntary targets for member states to reduce gas consumption. The UK labour market report released this morning were mixed. It showed unemployment unchanged at 3.8% in the three months to May, in line with expectations. Employment rose by a robust 296k in the latest three months, but the timelier payrolled employees measure rose by less than expected at 31k in June and the prior month was revised down as well. Regular pay growth (excluding bonuses) edged up to 4.3% from 4.2%, as expected, while total pay growth was weaker than expected, falling to 6.2% from 6.8%. In real terms after adjusting for inflation, wage growth is falling, including a record fall in real regular wage growth. The number of unfilled vacancies remained high at 1.3 million but appears to have topped out. Later this morning, Eurostat’s final release for Eurozone June CPI inflation is expected to confirm the earlier flash estimate of 8.6%y/y which was stronger than predicted. The release comes ahead of the ECB’s expected announcement on Thursday for the first increase in interest rates for eleven years. The relatively quiet US calendar this week includes housing reports. Housing starts and building permits data will be released this afternoon. Yesterday’s NAHB survey of homebuilders confirmed slowing activity in the sector as interest rates rise. Attention returns to the UK this evening. A further vote in the Conservative leadership contest is expected to whittle down the number of candidates to the three. The scheduled TV debate this evening will not now take place. Markets will be more focused on BoE Governor Bailey’s Mansion House speech, as speculation grows on whether interest rates may be raised by 50bp in early August rather than 25bp. New Chancellor of the Exchequer Zahawi will also address the event. More UK data will be released at 7am tomorrow. Look for an annual headline CPI inflation to increase for a ninth straight month, to 9.3% in June from 9.1%, lifted by higher fuel prices. The core measure (excluding food and energy), however, is expected to fall for a second month, to 5.7% from 5.9%, but it will still be at an elevated level.FX Options Expiring 10am New York Cut EUR/USD: 1.0100 (562M), 1.0150-55 (1.31B), 1.0200-05 (892M) USD/JPY: 136.00 (1.3B), 138.00 (2.72B), 138.50-55 (939M), 138.75 (555M) USD/JPY: 139.25 (537M), 140.00 (1.53B). AUD/USD: 0.6750 (797M) GBP/USD: 1.1900 (534M), 1.2120 (370M), 1.2280 (405M), 1.2310 (324M) GBP/USD: 1.2350 (780M), 1.2395 (520M)Technical & Trade ViewsEURUSD Bias: Bearish below 1.0350 EUR/USD cautious in Asia after failing to sustain rally above 1.0200 Monday Growing concerns that Russia will use energy as weapon against Europe weigh Fears heightened as Gazprom declares force majeure on gas supplies to Europe Planned reopening of Nord Stream 1 gas pipeline, ECB meeting Thursday eyed Cooling Fed rate bets & lower inflation expectations limit EUR downside Resistance 1.0200-05, 1.0225-30, support 1.0100-05, 1.0070-75 20 Day VWAP is bearish, 5 Day bearishGBPUSD Bias: Bearish below 1.2150 Cable rises to 1.1973 intra-day high on better than expected UK jobs data Employment +296k in 3mths to May vs 170k f/c; jobless rate 3.8% vs 3.9% f/c 1.1926-1.1964 was Asian session range (pre-UK jobs data) 1.2034 was Monday's one-week high, before U.S. stocks sagged Strong UK jobs data supports case for 50 bps BoE rate hike on August 4 BoE Governor Bailey to deliver Mansion House speech at 1745 GMT. 20 Day VWAP is bearish, 5 Day bearishUSDJPY Bias: Bullish above 134 USD/JPY steadies after push down yesterday to 137.90 EBS Asia 137.98-138.39, bid into Tokyo fix, off in afternoon trading Below ascending 100-HMA at 138.20 but support to 137.90 Overall bias remains up despite bouts of retracement Underlying support at 137.35 daily Ichi tenkan Nearby option expiries today include massive $2.7 bln at 138.00 Below 137.40-50 $540 mln, above 138.15/30 $717 mln, 138.50-55 $939 mln US yields steady into FOMC next week 20 Day VWAP is bullish, 5 Day bullishAUDUSD Bias: Bearish below .7050 AUD/USD eyes higher levels on Central Bank comments drive rally AUD/USD extends higher as market digests RBA comments Attempting to push past 21 DMA resistance 0.6846 Tues close above will clear the way higher in near term Technical pivot at 0.6903 will inspire bulls to add to bets Closing above engages daily VWAP uptrend channel RBA sees a fair bit more tightening till neutral. 20 Day VWAP is bullish, 5 Day bullishBTCUSD Bias: Bearish below 22k BTC surged as much as 9.4% to reach $22,760, last sub 22k again Sudden strength followed Wall St lead, but US stocks faded Crypto assets broadly higher with tentative risk-on 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

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