Market Update – July 5 – USD Hold Gains, RBA Acts, Stocks Steady

USD holds at highs (USDIndex 104.85), Stocks closed higher in Europe and hold gains in Asia with US FUTS higher too.  Yields are flat but off recent lows. Asian markets buoyed by positive Yellen-Liu He meeting, prospect of Chinese & Australian Fin. Min. meeting this week and better PMI data from Japan & China, all despite action from the RBA. Covid concerns continue to weigh (Hang Seng +0.07%, Nikkei +1.04%) Oil ticks to $110, Gold holds over $1800 & BTC regains $20k. JPY underperforms in Asian. RBA raises rates in line with expectations by 50bp to 1.35%.

Week Ahead – Topped by NFP on Friday, FOMC Minutes on Wednesday and RBA rate decision tomorrow

• USDIndex tested 105.00 Monday before slipping back to 104.85 now. 
• Equities – USA500 closed +39 (3825), Friday  US500FUTS higher at 3854 now.
• Yields 10-year yield lower, closed down Friday at 2.889% , trades at 2.880% now.   
• Oil & Gold had mixed sessions – USOil has rallied to $110.40 earlier from $108.00 Monday. Gold holds between resistance at $1815 and support at $1800, trading at $1808 now. 
• Bitcoin continues to trade around $20K, testing $20.3K today.
• FX Markets – EURUSD remains pressured at 1.0430,  USDJPY rallied  to 136.30 earlier from under 135.00 Monday. Cable trades at 1.2110 now.

Overnight – China Services PMI’s better at 54.3 vs 47.3, Japanese Service PMI also improve at 54.0 vs 52 last time.  

Today – EZ/UK Services and Composite Final PMIs, Speech from BoE’s Tenreyro

Biggest FX Mover @ (06:30 GMT) EURJPY (+0.54%). JPY weaker today. Rallied from under 140.00 Thursday to 142.20 now, next resistance, 142.75 & 143.00. MAs aligning higher, MACD histogram positive & rising, RSI 66.00 & rising, H1 ATR 0.212, Daily ATR 1.402.

Click here to access our Economic Calendar

Stuart Cowell

Head Market Analyst

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

 

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XAUUSD : Weekly Review 04 – 08 July 2022

The prospect of higher interest rates is still driving the US Dollar and Bond buying and has dampened the price of Gold. XAUUSD extended its decline last week for the third week in a row with a total weekly decline of -1.68%. XAUUSD hit a low of $1784.39 in trading on Friday, before closing at $1807.29. Gold is retreating and had its worst quarter in five on the strength of the Dollar and hawkish rhetoric from the central bank.

The increase in import duties in India played a role in the fall in the price of Gold. India, the world’s second-largest consumer of gold bullion, raised the basic import duty on gold to 12.5% from 7.5% in a bid to reduce the trade deficit that is weighing on demand.

Gold’s declining appeal has pushed the US Dollar index to near two-decade highs, posting its best quarter in more than five years, making Gold in dollar terms more expensive for overseas buyers.

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Technical Analysis

XAUUSD,H4 – The brief rebound on Friday after breaking $1800 still looks weak. Strong bears are adding to the bearish short-term outlook as prices continue to trend lower. The trades are zigzagging to the downside, checked only by 1 intraday short-term rally. A break of the $1800 level after several recent failures will add bearish signals from negative intraday technical studies and pave the way for further weakness.

XAUUSD,H4

However, in the short term, the psychological number of $1800 will be the general basis. A stronger downside move is forecast for FE61.8% at $1748 from $1998-$1786 and $1879 pullbacks. On the upside, the rally will be blocked by the 200-day EMA, before it can head for the $1879 resistance.

Overall, the bearish outlook remains strong, although it appears to be tempered by reports of rising inflation. If it turns out that the market is worried about growth slowing due to aggressive rate hikes, gold will likely still be an option going forward. However, the structural support of $1676 will be the reference point for the immediate gold price, either it will remain consolidated in the price range of $1676-$2069 or eventually this structural level will be penetrated to enter the correction era.

 

Click here to access our Economic Calendar

 

Ady Phangestu

Market Analyst – HF Educational Office – Indonesia

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

 

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Investment Bank Outlook 04-07-2022

INGUSD: July has historically been considered a low-volatility month in global markets: this year, this notion may fall quite far from reality. Even if global equities have mostly embedded the new inflation-focused approach by the Fed and other major central banks, the depth of the upcoming global slowdown remains highly uncertain, leaving risk assets in a rather fragile state for now. Stock and bond market volatility is set to continue generating material volatility in the FX market, in our view.It is therefore quite hard to forecast a marked change of direction in the dollar for now, even though recent CFTC data continues to show speculative dollar positions have remained around two-year highs, in theory leaving the greenback at risk of a long-squeeze. The week ahead sees two major releases in the US.The June FOMC minutes (Wednesday) may tilt the balance towards markets fully pricing in a 75bp rate hike at the end of this month, should there be some indication of a growing consensus at the June meeting.All high-beta currencies may remain on the back foot, although we continue to see the Canadian dollar as the least vulnerable of that segment given the still positive commodity story and some jobs data (also on Friday) which may do little to challenge the Bank of Canada’s aggressive tightening plans. Today, markets will keep an eye on the BoC business outlook survey for 2Q, normally an important piece of information for the Bank’s policy decision, while in the US the calendar is very light and markets are closed for the Independence Day holiday.EUR: Last week’s CPI jump in the eurozone had a contained impact on EUR/USD, highlighting the recent lack of sensitivity of the common currency to the inflation numbers as: a) markets are already pricing in 140bp of ECB tightening by year-end; b) global assets seem to be trading more in tandem with recession fears given that aggressive monetary tightening has been largely factored in.Recession fears now appear to be mostly linked to further developments in Russia-EU relations pertaining to gas flows, as fears of Russia halting or further reducing exports to Europe remain quite elevated. The data calendar is rather quiet this week in the eurozone and several ECB speakers - Joachim Nagel and Luis de Guindos today, Christine Lagarde, Philip Lane and others later this week – may still fail to generate any material jitters in EUR/USD.AUD: The Reserve Bank of Australia announces monetary policy before the European open tomorrow (0530 BST), and the main question is whether policymakers will hike by 25bp or by another 50bp. As discussed in our RBA meeting preview, we think another half-point increase is more likely. A larger, 75bp hike, cannot be fully ruled out, but we think it is improbable given that it was not mentioned as a possibility by Governor Lowe at a recent speech and may be an unwarranted move given that the RBA sets its policy monthly and therefore has greater flexibility than others in adjusting its policy path.

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AUDUSD, H4 | Potential For Bearish Continuation

Type: Bearish ReversalKey Levels:Resistance: 0.69616Pivot: 0.68658Support: 0.67208Preferred Case:On the H4, with price moving in a descending trend channel and below the ichimoku cloud, we have a bearish bias that price will drop from the pivot at 0.68658 at the pullback resistance in line with the 100% fibonacci projection and 50% fibonacci retracement to the 1st support at 0.67208 in line with the 78.6% fibonacci projection and 161.8% fibonacci extension.Alternative Scenario:Alternatively, price may reverse off the pivot and rise to the 1st resistance at 0.69616 at the swing high in line with the 50% fibonacci retracement.

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Daily Market Outlook, July 4, 2022

Daily Market Outlook, July 4, 2022 Overnight Headlines Recession Fears Dominate At The Start Of A Holiday Shortened Week China Covid Outbreaks Widen As Mass Testing Finds More Cases UK Tory Rebels Preparing Another Vote To Expel PM This Month Biden Administration Split On Whether To Remove China Tariffs Senate Democrat Urge Biden To Repeal Tariffs To Fight Inflation Biden Weighs Push To Trim Mortgage Costs As Home Prices Rise Russia Claim Full Control Of Luhansk As Ukrainian Forces Retreat ECB Plan To Block Banks From Billion Euro Windfall As Rates Rise Confidence Drains From UK Companies As Economic Woes Grow Germany Risks A Cascade Of Utility Failures, Economy Chief Says IEA Urges Saudi Arabia Pump More Oil In Energy Crisis Red Alert Iran Slashes The Cost Of Its Oil To Compete With Russia In China Tesla’s Deliveries Dropped In Quarter, Snapping Two-Year StreakThe Day Ahead Equities across the Far East are mixed, with gains across Japan and Australia offset by declines elsewhere. Notably, stock markets in China are trading lower on the day as rising Covid infections weigh on sentiment. Flare-ups in infections in provinces near Shanghai are causing some parts of the region to be locked down, although case levels remain well below those seen during April and May. In the UK, the release of the British Chambers of Commerce’s latest Quarterly Economic Survey showed that a record number of UK firms were expected to increase prices in the next three months. Over the past week, fears over a sharper than desired slowdown in global economic activity have been the overarching driver of market moves. Global stock markets slipped, contributing to a torrid first half for equities, while bond yields moderated further from their recent highs as markets increased their expectations that central banks may have to cut policy rates in the second half of next year (although not before raising them significantly to combat elevated inflationary pressures), as ongoing signs of a global economic slowdown continue to be evident. For now, however, the message from policymakers continues to be that they remain most concerned about higher-than-expected inflation. Consequently, they feel the need to tighten policy aggressively to ensure that the present high inflation does not become embedded in longer-term inflation expectations. That means significant further interest rate rises across a range of countries before year end are still expected. Over the coming days, the release of the minutes to the last Fed and ECB policy meetings in June, along with a plethora of central bank policymakers – including from the Bank of England – are likely to continue signalling support for a further tightening in monetary policy. However, any indication that recent signs of slowing economic activity are weighing on their minds will likely see a further shift in interest rate expectations. For today, the focus will be on comments from ECB members Nagel and de Guindos, while on the data front, the Eurozone Sentix investor confidence survey for July is expected to show another decline, reflecting further drops in equity markets. Meanwhile, early tomorrow morning the Australian central bank (RBA) will give its latest update, which is expected to result in a third successive rate rise, this time by 50 basis points.CFTC Data IMM: USD net spec long trimmed amid EUR, GBP bottom – fishing IMM net spec USD long cut in Jun 22-28 period; $IDX +0.16%... EUR$ -0.15% in period, specs +5,009 contracts into dip now -10,596 $JPY -0.37% in period specs +5,884 contracts short cut to 52,570 GBP$ -0.74%, short reduced by 10,129 contract to -53,118 AUD specs sell into dip now short 42,980; CAD specs +4,992 as $CAD -0.3% BTC dipped 2.8% in period, specs add 39 contracts long grows to 1,085(Source: Reuters)FX Options Expiring 10am New York Cut EUR/USD: 1.0440-50 (558M), 1.0470 (249M), 1.0530 (210M) 1.0565-70 (437M), 1.0585 (268M) USD/JPY: 135.00-05 (320M) GBP/USD: 1.2145-50 (378M) AUD/USD: 0.6905-15 (410M)Technical & Trade ViewsEURUSD Bias: Bearish below 1.0650 Bullish above Opens the LDN session trading in the middle of Fridays range Trading in a 25pip range driven by reduced flows due to US holidays Asian trade in general has had a risk off tone driven by ongoing recession fears EUR/USD will likely remain under pressure in the short-term Failure below the base opens a test of 1.0270’s next Initial offers are seen at 1.0530/50 Bids 1.04 stops below to fuel a retest of cycle lows 20 Day VWAP is bearish, 5 Day bearishGBPUSD Bias: Bearish below 1.24 Bullish above. GBP stages a tepid recovery from lows Friday but bias remains lower GBP crosses follow cables lead and recover losses from Friday Headwinds continue to cloud cable outlook, high inflation, PM issues, dovish BoE Market feels heavy below 1.2230/60 resistance Note Friday has GBP810 mln in option expiries at 1.2000 strike Bears targeting a break of YTD lows en-route to a test of 1.18 Resistance sited at 1.2275 1.2150 failure opens a test of bids at 1.2050 20 Day VWAP is bearish, 5 Day bearishUSDJPY Bias: Bullish above 132 Bearish below USD/JPY opens the week with a bid tone in thin holiday trade 60pips of range seen into the Tokyo fixing Desk note short covering in the Asian session Upside traction tricky with US yields continuing to decline US10Y 2.889% Initial offers at 135.55/65 stops above to see retest of cycle highs Option barriers KO’s quoted at 137 remain intact 20 Day VWAP is bullish, 5 Day bullishAUDUSD Bias: Bullish above .7200 Bearish below Aussie lifts from early Asain lows trading middle of Friday’s range break candle Remains under pressure from reduced risk sentiment at the start of the week Iron ore on the back foot losing 5.5% as global growth concerns weigh Resistance is sited at .6900/10 Support seen at the 50% retracement of the 0.5510/0.8007 move at 0.6758 20 Day VWAP remains untested confirming downside 20 Day VWAP is bearish, 5 Day bearishBTCUSD Bias: Bullish above .22000 Bearish below BTC opens the week down 1.32% weighed by souring risk sentiment Three Arrows Capital bankruptcy pressures amid concerns about further liquidations Trend remains down as within broader bearish channel beckons Support seen at 19k then 18300 the base of the daily VWAP bands failure here opens a retest of lows 20 Day VWAP remains bearishly oriented and untested Additional pressure seen from BTC miners liquidating positions on declining profitability 20 Day VWAP is bearish, 5 Day bearish

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Occidental Petroleum Topped the S&P500

Last Thursday, the S&P500 closed out its worst first-half since 1970, with losses more than -20%. On Friday ahead of the long US holiday weekend, the index managed to gain its support and closed above +2% at 3827. On the other hand, recession fears and disappointing economic data have lifted demand for the treasuries, with 10-year treasury yield fell to lowest level since May.

Fig. 1: Best S&P 500 Stocks in First-Half of 2022. Source: Bankrate.

Despite the macroeconomic factors, there are some stocks continued to deliver outstanding results. According to Bankrate, an independent, advertising-supported publisher and comparison service, Occidental Petroleum topped the S&P 500 stocks, with YTD performance over 100%.

Occidental Petroleum is an American oil and gas conglomerate founded since 1920 which operates through three segments: Oil and Gas, Chemical, Midstream and Marketing. Benefited by higher oil prices and the company’s solid fundamentals, Occidental Petroleum in general delivering satisfying results in 2021, with reported sales hit 26.0B, exceeded consensus estimates at 25.4B. Also, Earnings per share (EPS) rose to $2.55, the highest since 2018 ($5.01) [Source: CNN Business].

“For the full year, Wall Street expects Occidental to post US$37 billion in revenue, up 42% from the US$26 billion reported in 2021”. – Matt Miczulski

 

Fig. 2: Institutions and their % Shares Held in Occidental Petroleum. Source: The Wall Street Journal.

Another reason for Occidental Petroleum to outperform its competitors is that the company has always been the “Oracle of Omaha” – Warren Buffet’s favourite. Latest news reported that Buffett’s company, Berkshire Hathaway continued to buy 9.9 million more Occidental shares, now totaled 163.4 millions shares worth about $9.9B. As a result, Berkshire Hathaway now holds 17.4% stake in the oil company. Its aggressive move has sparked speculation that Berkshire might eventually buy Occidental, once the latter’s credit turns to an investment-grade.

Technical Analysis: 

The Daily chart displayed #OccidentalPetr remains supported above the lows seen in 2018 ($56.74). The company’s stock price closed bearish in June following market over-reaction and uncertainties. In general, it remains above 100-day SMA but far below the median estimate of analysts at $75. Nearest resistance lies at $62.70. A successful breakout may indicate possibility for the bulls to extend its gains towards $68.20, $74 and $76.80. On the other hand, the lows seen in 2018 ($56.74, lies near to 100-day SMA) serves as the nearest support. A close below the level may indicate more technical correction into testing support zone $54.30-$55.70, followed by the psychological level at $50.

Click here to access our Economic Calendar

Larince Zhang

Market Analyst

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

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XAUUSD, H4 | Potential Bearish Drop

Type: Bearish BreakoutKey Levels:Resistance: 1830.3Pivot: 1805.8Support: 1783.3Preferred Case:On the H4, with prices moving below the ichimoku indicator and along a descending trendline, we have a bearish bias that prices will drop to our pivot at 1805.8 where the horizontal overlap support is. Once we have downside confirmation, we would expect bearish momentum to carry price to 1st support at 1783.3 in line with swing low support and 127.2% fibonacci extension.Alternative Scenario:Alternatively, price could rise to our 1st resistance at 1830.3 in line with overlap resistance, 61.8% fibonacci retracement and 78.6% fibonacci projection.

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GBPUSD, H4 | Potential Bearish Drop

Type: Bearish ReversalKey Levels:Resistance: 1.2406Pivot: 1.2154Support: 1.19353Preferred Case:On the H4, with prices moving below the ichimoku indicator, we have a bearish bias that price will rise and drop from our pivot at 1.2154 where the horizontal overlap resistance, 100% fibonacci projection and 50% fibonacci retracement are to our 1st support at 1.19353 where the horizontal swing low support and 78.6% fibonacci projection are.Alternative Scenario:Alternatively, price could rise above pivot structure and head to 1st resistance at 1.2406 in line with the swing high resistance.

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Bitcoin and Gold: Potential Drop Ahead?

Bitcoin keeps moving along the broken neckline of the inverted head and shoulders pattern. Currently, the asset is testing the supporting level of 19000. Bitcoin is likely to undergo correction soon. Of course, it can also slightly drop and gain the required support at the level of 18000.Gold has pulled from the supporting level of 1785 and closed above the level of 1800. In this case, gold might jump, targeting the downtrend, although it is noteworthy that gold might potentially break the downtrend and head up.Oil is undergoing a correction and heading down. It is likely to drop to the level of 100 next week, and then only jump.

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Market Update – July 4 – USD & Stocks hold gains, Yeilds slip

USD holds around Fridays close (USDIndex 104.85), Stocks closed higher on Friday (S&P500 +1.06%) but Futs have slipped and Yields are down again (-4.51%).  after no new news from Powell. Asian shares are mixed after Chinese developer Shimao defaults ans Covid concerns rise again.  (Hang Seng -0.30%, Nikkei +0.84%) Oil ticks higher, Gold tests $1815 & BTC tests $19k. European Futs also mixed. Russia claims victory in the “liberated” Luhansk region and accuses Ukraine of shelling Belgorod. AUD outperforms in Asian session.

Week Ahead – Topped bt NFP on Friday, FOMC Minutes on Wednesday and RBA rate decision tomorrow

• USDIndex tested 105.36 Friday before slipping back to 104.85 now. 
• Equities – USA500 closed +39 (3825), US500FUTS lower at 3810 now.
• Yields 10-year yield lower, closed down at 2.889% , trades at 2.880% now.   
• Oil & Gold had mixed sessions – USOil has rallied to $108.70 now from $104.55 Friday. Gold spiked to $1815 earlier from a $1785 low on Friday. 
• Bitcoin continues to trade under $20K, testing $19K today.
• FX Markets – EURUSD tested under 1.0400 Friday following record CPI FRiday (8.6%) yesterday now back to 1.0425,  USDJPY cooled again to 134.75 on Friday back to 135. 40 now. Cable trades at 1.2110 now, from lows at 1.1975 Friday after weak PMI’s. 

Overnight – Australian Building Approvals jumped to surprisingly to 9.9% vs -2.0%.  German Trade Balance, missed significantly, turning negative at -1.0b vs. 4.2b & Swiss CPI,

Today –  EZ PPI, Speeches from ECB’s Elderson, Nagel & de Guindos, and US Independence Day holiday.

Biggest FX Mover @ (06:30 GMT) AUDJPY (+0.60%). AUD out performed today. Rallied from 91.40 test on Friday to 92.64 now and a key resistance. MAs aligning higher, MACD histogram negative but rising, RSI 58.3 & rising, H1 ATR 0.251, Daily ATR 1.432.

Click here to access our Economic Calendar

Stuart Cowell

Head Market Analyst

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

 

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Energy transition is easier said than done

We are on a path to “net zero” carbon emissions, says Edward Chancellor, but fossil fuels will be with us for some time yet.

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Changpeng Zhao: Binance founder undaunted by the crypto winter

Changpeng Zhao, the founder of controversial cryptocurrency exchange Binance, has been severely battered by carnage in the sector. But the future is bright, he insists.

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Ray Dalio’s shrewd $10bn bet on the collapse of European stocks

Ray Dalio’s Bridgewater hedge fund is putting its money on a collapse in European stocks. It’s likely to pay off, says Matthew Lynn.

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Just how powerful is artificial intelligence becoming?

An uncannily human response from an artificial intelligence program sparked a minor panic last month. But just how powerful are machines getting – and should we be worried?

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