Babcock International: a turnaround play in a growing sector

Britain’s defence spending is set to rise and Babcock International could soon return to favour, says David J Stevenson.

from Moneyweek RSS Feed https://moneyweek.com/investments/stocks-and-shares/share-tips/605070/babcock-international-company-analysis
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Hong Kong’s crown slips as Singapore takes over

As international sentiment sours on Hong Kong, other Asian financial hubs – primarily Singapore – are snapping up business.

from Moneyweek RSS Feed https://moneyweek.com/economy/asian-economy/605076/hong-kongs-crown-slips-as-singapore-takes-over
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Live Video Analysis ahead of FOMC Minutes

It is a busy week of data, as along with the key June NFP report, the FOMC minutes on Wednesday will be scrutinized, not so much for the outlook, but more to gauge the Committee’s general degree of hawkishness. Join Andria for a Live Commentary in the middle of the week before the FOMC minutes.

Click here to access our Economic Calendar

Andria Pichidi

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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Market Spotlight: Amazon Shares Rebounding

Amazon Shares ReboundingAmazon shares are turning higher today with the company’s stock price once again attempting to break out above the bear channel from YTD highs. The move comes amidst news that Amazon has agreed to take a 2% stake in US food-delivery service Grubhub. As part of the deal, Amazon prime users in the US will get a free month with the service. The deal has been compared to a similar partnership in the UK between Amazon and Deliveroo.Shares in Amazon have stabilised over recent months following a sharp drop over Q2, fuelled in part by the weaker-than-expected set of Q1 earnings the company released. Amazon is next due to report earnings at the end of July with shareholders hoping for a better set of results to help lift the company’s stock out of the doldrums.Technical ViewsAmazonWith the stock developing a firm base of support along the 100.55 level, Amazon shares are now threatening to break out above the top of the bear channel from YTD highs. The key level to focus on will be the 123.79 highs. If price can break above this level, this will confirm the shift in sentiment, putting focus on 137.81 next.

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Market Spotlight: CADJPY Reversal on Watch

CADJPY on WatchPrice action in CADJPY is starting to looking interesting here to the short-side. The pair has been trending steadily higher this year. However, over the last month, we are starting to see signs that the pair might be topping out. Currently, the pair is at risk of putting in a double top (with lower top) formation, suggesting room for a break of the bull trend line and a deeper move lower. The key level to watch will be 102.17 support. Bears can trade a break of this level looking for 99.09 initially. Retail positioning is still heavily short but reducing so it will likely take a move through that support to confirm the shift in sentiment.Keep an Eye OnThe current drop in risk assets, particularly oi, is hitting CAD while driving JPY higher on better safe-haven demand. While the theme continues, we can expect CADJPY to continue lower near-term. Tonight’s FOMC minutes might well provide the catalyst for the next leg in this move is we see USD trading higher in response to the minutes.

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GBP Falls As Key UK Cabinet Members Quit & BOE Warns Ove Economic Outlook

Political Instability Rocks PoundThe British Pound is undergoing a sharp shift in sentiment this week. News of major political resignations yesterday have exacerbated the atmosphere of uncertainty and fear among UK investors. While the current UK administration has been no stranger to adversity, scandal and in recent times, almost falling apart, news yesterday of Rishi Sunak and Sajid Javid quitting cabinet was truly unexpected.The moves, which were announced in protest at the PM’s involvement in scandal after scandal, are just the latest in a string of events pointing to a loss of confidence in the UK. The first of these events being the very literal vote-of-no-confidence held against the PM last month. With dark clouds gathering over the current government traders are increasingly concerned as to the near-term path of UK politics and what this will mean for the economy during such as difficult time.BOE Issues Warning in Financial Stability ReportAlong with the unexpected political developments we saw yesterday, we also had the latest Financial Stability Report update from the BOE. The report made sobering reading and saw the bank warning over the deteriorating economic outlook, both globally and domestically. The BOE warned that a spiralling global inflationary environment was having a harsh impact on businesses and consumers alike and looks likely to continue that way for some months to come.Citing the impact of the war in Ukraine, BOE’s Bailey warned that current conditions will also make households and businesses more vulnerable to further shocks going forward. Bailey said “These higher prices, weaker growth and tighter financing conditions will make it harder for households and businesses to repay or refinance debt.” The BOE chief went on to say: “Given this, we expect households and businesses to become more stretched over coming months. They will also be more vulnerable to further shocks,”BOE Raises CCyB RateGiven the dire outlook, the BOE raised its capital requirements for British lenders yesterday. The BOE has told banks to raise their countercyclical capital buffer rate to 2% from 1%, as of July 2023. On this, Bailey noted that “Given considerable uncertainty around the outlook, the FPC will continue to monitor the situation. We stand ready to vary the UK CCyB rate — in either direction — depending on how risks develop.”Rate Hike Expectations SlipNotably, BOE rate hike expectations have since been scaled back a little into year end as traders judge that the BOE will opt to move at a more cautious pace. It’s a tricky time for the bank as it juggles the need to support the economy with the need to combat inflation. This dilemma has been clearly reflected in the volatility we’ve seen in the FTSE and GBP recently.Technical ViewsGBPUSDThe sell off in GBPUSD this year has seen the market grinding steadily lower within a well-defined bear channel. Price is now sitting on support at the .1934 level. With both MACD and RSI bearish, there are risks of a further breakdown below this level towards the 1.1474 level next. However, it wis worth noting we are seeing bullish divergence on momentum studies. Bulls will need to see a break of the 1.2355 level to alleviate near-term bearishness.

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/gbp-falls-as-key-uk-cabinet-members-quit-and-boe-warns-ove-economic-outlook"
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Investment Bank Outlook 06-07-2022

INGUSD: Macro themes continue to drive financial markets.One does not have to look too far beyond the inverted US yield curve or the collapse in copper to understand that investors continue to re-price global growth prospects lower. Bank of England Governor Andrew Bailey yesterday said that the global growth outlook has 'deteriorated markedly'. The big question for financial markets is whether this deterioration in growth prospects is enough to curtail tightening cycles - especially that of the Fed. It was instructive in yesterday's risk asset sell-off that only 6bp was priced out of this year's Fed tightening cycle compared to 12bp taken out of both the ECB and BoE cycles. Driving that is probably: a) European activity is more exposed to the Russian energy supply shock and b) the US economy entered this global tightening cycle with more momentum and a positive output gap.EUR: Parity beckonsWhen it came, the break of EUR/USD to a new cycle low was unexpected. If anything, driving yesterday's market activity was the continued rise in European natural gas prices as Russian supplies ebb. Already running at only 40% of capacity, Russia's Nordsteam 1 pipeline will be closed for maintenance 11-21 July (when will it reopen?) and exposes the friction of continuing European dependency on Russian gas at a time when it ideally would be shunning it completely. One year ahead Dutch natural gas prices have risen around 30% over the last week and back to the December spike highs. And the German government is now being dragged into state bailouts of major gas utility giants such as Uniper.GBP: Big hitters quit the cabinetSterling has tended to ignore the indiscretions of Boris Johnson's government - largely because the Conservatives have a large majority. But the resignations of the big-hitters in charge of the Treasury and Health will leave the PM rocking and effectively sees sterling hit as hard as the euro. It is not clear whether the new chancellor, Nadim Zahawi, will represent a shift in economic policy, although he may be tempted to loosen up fiscal policy earlier than expected.EUR/GBP can continue to trade near 0.8600, but a 2% dollar advance puts cable down near the 1.17 area. Additionally, we have been saying over recent months that sterling has been exhibiting more of the characteristics of a growth currency. A tough summer for equities suggests cable remains vulnerable to the 1.14/15 area.

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/investment-bank-outlook-06-07-2022"
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Daily Market Outlook, July 6, 2022

Daily Market Outlook, July 6, 2022 Overnight Headlines UK PM Scrambles To Save Himself, Reshuffles Top Cabinet New Chancellor Zahawi Inherits Faltering Economy, Inflation Tory Rebels Plan Rule 1922 Change To Expel UK's Johnson Biden Prepares Action To Reshape Trump's Tariffs On China US Pushes ASML To Stop Selling Chipmaking Gear To China Blinken Plans A ‘Candid Exchange’ With China Over Ukraine US Call For Russia Pressure To Open Grain Delivery Lanes Shanghai Mass Testing Fuel Fear Another Lockdown Looms ECB Policymakers Unwavering In Support For Tighter Policy BoE's Tenreyro: Gilt Sales Unlikely To Have Economic Affect Goldman Say Oil Has Overshot As Global Deficit Unresolved Europe Gas At Near 4-Month High, Focus On Tight SuppliesThe Day Ahead Global recession fears continued to dominate the mood in financial markets, despite reports suggesting that US-China talks may lead to lower trade tariffs. European equities closed lower yesterday after a constructive start to the week, while their US counterparts ended in the red after the return from a public holiday. Asian stock markets followed through with widespread sell-offs. Brent crude oil dropped to a low of $101.10 yesterday but is slightly higher overnight. US 10-year Treasury yields has declined to 2.80%. The release of the minutes of the US Federal Reserve’s June policy meeting will be closely parsed as markets assess how policymakers respond to the trade-off between a weakening economic outlook and still uncomfortably high inflation. The Fed upped the ante and hiked rates by 75bp last month, with Chair Powell indicating that a similar rise is in play later this month. Powell indicated that evidence of rising longer-term inflation expectations among consumers partly justified the bigger hike. However, that measure of inflation expectations has since been revised lower. Nevertheless, given the Fed’s imperative to meet its inflation objective, the tone of the minutes is still likely to be ‘hawkish’ with the likelihood of further aggressive tightening flagged. In the UK, political uncertainty has increased after the resignations of the Chancellor and the Health Secretary yesterday. PM Johnson has indicated he is determined to stay on, while reports suggest his party’s MPs may seek to amend the rules over leadership changes. PMQs take place today. Meanwhile, Bank of England Chief Economist Pill is scheduled to give a keynote address entitled ‘The role of Central Banks in a Transforming World’ at a Qatar conference. Earlier this morning, BoE Deputy Governor Cunliffe said UK growth will be ‘essentially flat’ over the coming year, but the Bank will act to bring down inflation. Data wise, the UK construction PMI for June will be released and is expected to show continued expansion in activity in the sector. Yesterday’s UK services PMI was revised up to 54.3. Financial markets, nevertheless, are focused on softening business expectations. This morning’s Eurozone retail sales figures are likely to attract limited attention. Broader concerns remain about the curtailment of energy supplies from Russia and the impact on the Eurozone economy. The US data focus will be the ISM services survey. Look for a fall to 54.5 in June from 55.9, which would be the weakest pace of expansion for two years.FX Options Expiring 10am New York Cut EUR/USD: 1.0230 (570M), 1.0250 (471M), 1.0300-10 (374M) 1.0400-10 (350M) USD/JPY: 133.97-00 (682M), 134.50-60 (710M) 135.00 (615M), 135.00 (615M), 136.00 (506M) GBP/USD: 1.2250 (204M) AUD/USD: 0.6675-85 (487M). NZD/USD: 0.6200 (392M) 0.6410 (1.18BLN). AUD/JPY: 89.30 (1.1BLN), 93.49 (773M) USD/CAD: 1.2830 (566M), 1.3000 (380M), 1.3050-60 (270M)Technical & Trade ViewsEURUSD Bias: Bearish below 1.05 Consolidates after big losses on Tuesday’s increasing recession fears EUR/USD prints 20 year lows sub 1.0250 Huge 17% increase in European natural gas prices raise recession alarms Lack of co-ordination on ECB support to indebted Eurozone states sours sentiment June Eurozone business growth adds further pressure to Euro Fed June meeting minutes released later as market eyes potential 75bps hike in July Bears eyeing a parity test; offers seen at 1.0340/60 20 Day VWAP is bearish, 5 Day bearishGBPUSD Bias: Bearish below 1.2150 GBP pressured by political developments and weakening economy GBP/USD sitting at you year lows after losing 1.25% yesterday Fin Min & Health Sec quit Johnson Government decrying poor leadership New Fin Min Zahawi left to manage weak econ & cost of living crisis Energy price inflation and recession fears weigh on GBP Bears breach YTD lows en-route to a test of 1.18 Offers seen at 1.2130/60 Bids 1.1770 20 Day VWAP is bearish, 5 Day bearishUSDJPY Bias: Bullish above 134 JPY demand rises on recession fears USD/JPY off another leg, 135.90 to 135.13 EBS Japanese importer bids seen at 135 Traders betting on 134/137 range trade US10Y 2.84 trading firmer by just under 1% seen as supportive for USD/JPY Initial offers seen at 136.55/65 stops above to see retest of 137 Option barriers KO’s quoted at 137 remain intact 20 Day VWAP is bullish, 5 Day bullishAUDUSD Bias: Bearish below .7050 Recovers .68 handle as LDN opens up Commodity crush continues to weigh on AUD Oil and Index futures in the US recover lost ground supporting nascent AUD bid Offers seen towards .6900 AUD likely to take its lead from commodity trade ahead of FOMC minutes later 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: Bearish below 22k BTC continues to rotate around 20K weighing by recession fears Testing the 20 day VWAP which remains bearish 20 VWAP band contracting ready for next directional drive 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

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/daily-market-outlook-july-6-2022"
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Market Update – July 6 – Dollar Dominates on Global Recession Fears

USD moves to 20-year highs (USDIndex 106.34), US Stocks fell 2% on open but closed positively (NASDAQ +1.75%). Global PMI data overall in line. European markets fell 2%+ & Asian markets are negative (Hang Seng -2.38%, Nikkei -1.2%).  Yields closed down -2.77%. Oil tanked -8.2% trading under $100, Gold closed under $1765 & BTC rotates at $20k. EUR fell to new 20-year lows with parity in sight. Heavy fighting in Donetsk adds to the sombre mood. UK PM lost two cabinet ministers adding to woes for Johnson and Sterling.

• USDIndex tested 106.55 and remains on Bid at 106.25 now. 
• Equities – USA500 closed +6.0 (3831), after a weak day, US500FUTS at 3818 now.
• Yields 10-year yield lower, closed at 2.808% , trades at 2.802% now.   
• Oil & Gold had weak sessions – USOil tanked under $100.00 to $97.30 lows, back at $100 now. Gold fell to 1762 earlier, 1768 now. 
• Bitcoin continues to trade around $20K, testing $20.1K today.
• FX Markets – EURUSD remains pressured at 1.0260,  USDJPY rallied from under 135.00 to 135.80 now. Cable trades at 1.1932 now.

Overnight – German Factory Orders better at 0.1% from -1.8%.

Today – EZ Retail Sales, US ISM Services PMI, FOMC Minutes, Speeches from Fed’s Williams & BoE’s Pill.

Biggest FX Mover @ (06:30 GMT) CADJPY (-0.42%). CAD JPY weaker today. Fell from allied from under 106.00 Tuesday to 103.50 today before recovering.  MAs aligning lower, MACD histogram positive & rising, RSI 63.00 & rising, H1 ATR 0.216, 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.

 

from HF Analysis /490663/
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Is inflation about to drop as recession takes hold?

Central banks are raising interest rates in an attempt to curb soaring inflation. But will that push the economy into recession? John Stepek looks at how we got here and where things might go next.

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Market Spotlight: AUD Falls Following Further .5% RBA Rate Hike

RBA Hikes A Further .5%It’s been a volatile day for AUD traders. On The back of yet another RBA rate hike overnight, the Aussie was initially leading the G10 currency pack today. However, resurgence in the US Dollar and the subsequent drop in risk sentiment has weighed sharply on the Aussie, sending the currency lower as we move through the European morning.The RBA delivered on expectations for a .5% hike overnight, taking rates back up to 1.35% there. Additionally, the RBA noted that it will now adopt a data-dependent approach to further rate hikes meaning that, should inflation continue to run above target, further rate hikes will be appropriate. Similarly, if CPI is seen cooling, the RBA has the optionality to pause hikes as it sees fit.Commenting on the current state of the Aussie economy, the RBA chief Phillip Lowe said: “The recent spending data have been positive, although household budgets are under pressure from higher prices and higher interest rates. The Board will be paying close attention to these various influences on household spending as it assesses the appropriate setting of monetary policy.”Technical ViewsAUDCHFThe sell-off in AUDCHF has seen the pair breaking down through the rising trend line off YTD lows and the .6677 support level. Though price is currently holding at deeper support, while the market holds below the broken trend line, focus is on a further breakdown towards .6419, in line with bearish RSI and MACD readings.

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/market-spotlight-aud-falls-following-further-5-rba-rate-hike"
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The IndeX Files 05-07-2022

Equities Slide Back Down on Fresh USD StrengthBenchmark global equities indices have been broadly lower across the European open on Tuesday. Resurgent strength in the US Dollar has quelled an earlier lift in risk assets which came on the back of reports yesterday that President Biden is looking at some of Trump’s trade-tariffs against China. Biden is said to be considering lifting tariffs on a basket of around $300 billion worth of Chinese goods. On the back of the lengthy trade war between the US and China and the disruption caused by the pandemic, such move would be welcomed by businesses in both countries.Better-than-expected China data overnight also helped set a positive risk tone initially today. The China Caixin services PMI was seen rebounding firmly last month, helping offset fears of a slow-down in China. While the country appears to be bouncing back firmly from recent lockdowns, there are fears that further restrictions might return given the resurgent COVID outbreak the country is experiencing currently.Despite the better start for risk assets today, equities have ultimately rolled over as USD enjoys a fresh wave of buying. US traders will return today following the holiday there yesterday and with hawkish expectations ahead of tomorrow’s FOMC minutes, USD looks set to rally further, creating additional pressure for risk assets.Technical ViewsDAXThe index continues to trade lower, travelling within the bear channel once again following an earlier attempt at a topside break. Price is now very close to testing the YTD lows around the 12462.59 mark. Given the bearish MACD and RSI signals, a break of these lows will put the focus on a move down to 11590.13 next. Bulls will need to see a break above the 13067.45 level to alleviate near-term bearishness.S&P 500Price recently failed at the latest retest of the 3910 level, with the market turning lower. Price is now sitting on support at the 3814.25 level creating plenty of two-way risk. Unless bulls can quickly get back above the current, local highs, focus is on a further push lower and an eventual downside break of the 3613.50 level.FTSEThe rebound off the 6990.4 lows in the FTSE has seen the market trading back up to retest the underside of the broken bull channel. With the area holding as resistance for now, price has since turned lower and, while below the 7362.6 level, focus is on a rotation back towards current lows. Should we break above said level, however, 7558.7 is the next level to watch.NIKKEIFor now, the index continues to trade around the mid-point of the large, falling wedge pattern which has framed price action over the year so far. To the downside, 25595.3 is the main support to note, a break of which is need to encourage fresh bearish momentum. To the topside, 27422.9 is the level bulls need to break to gather topside drive.

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/the-index-files-05-07-2022"
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Investment Bank Outlook 05-07-2022

BoFAFed leads the way, USD to follow The key message from last week’s ECB central bank forum in Sintra has been the belief that the global economy is entering into a new paradigm of higher inflation which requires a further policy response. For now, taming inflation remains the number one policy objective for all central banks despite further evidence this week of a slowing global economy. Whilst German inflation data was slightly weaker than expectations, the trend throughout the region remains one of rising inflationary pressures. This will, in all probability, elicit a policy response next month but in a world where 50bps rate hikes is the new norm, the ECB (and BoE to a lesser extent) are failing to read the room. This week has seen the Riksbank hike rates by 50bps; we expect the RBA to hike by a similar quantum on 5th July and both the Bank of Canada and RBNZ are also likely to deliver 50bps in tightening. The ECB is being left behind.ECB President Lagarde’s once again reiterated the ECB’s preference for a 25bps rate hike on 21st July and since hitting the highs through mid-June, German 10yr yields are now 40bps lower. Of more relevance to EUR is the fact that European front-end yields are sharply lower versus G10 counterparts (weighted terms). As the market continues to pair back its expectations for the scale of ECB rate hikes this year, we think EUR is increasingly being left behind in the global rate hiking cycle. Much will obviously depend on the forthcoming Eurozone inflation print but we think that the path of least resistance remains for a weaker EUR through the summer.Higher USD/JPY remains the ultimate manifestation of the policy divergence trade and this week the pair hit its highest levels since 1998. Shusuke Yamada argues that worst may not be over for JPY as an intransient Bank of Japan remains steadfast in its commitment to Yield Curve Control. He argues that JPY is likely to succumb to further tactical pressure through summer as well as medium-term secular weakness. For now, it seems that Japanese authorities seem content with verbal interventions rather actual. Whilst central banks remain resolute in their desire to rein in inflation, the past week has seen further deterioration in the global macro outlook.A host of US lead indicators continue to point to a further slowdown in US growth and notwithstanding a beat in China non-manufacturing PMI, global macro data surprises are in negative territory for the first time since last 2021. The Sintra comments suggest that central banks remain on course for further policy tightening through much of this year, but the decline in commodity prices is perhaps a precursor to a more intense debate within central bank circles on the trade-off between combatting inflation and slowing growth. That still seems some ways off which compels us to retain a constructive view towards USD versus much of G10.

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Daily Market Outlook, July 5, 2022

Daily Market Outlook, July 5, 2022 Overnight Headlines China's Liu Discusses Tariffs With Yellen As US Look To Ease Chinese Services Activity Expands At Fastest In Almost Year BoJ Likely To Raise Price Forecast, Ex-Chief Economist Warn Japan Service Sector Activity At Fastest Rate In Over 8 Years RBA Hikes Rates A Third Time, Fastest Tightening On Record Canadian Inflation Outlooks Bolster Case For Supersize Hike Lagarde’s Task Toughens As Nagel Fires Salvo On Crisis Tool PM Johnson Call On Saudi Arabia To Increase Oil Production Germany Drafts Law Taking Struggling Gas Importers Stakes Norway Oil, Gas Workers To Strike On Tuesday, Cuts Output Chip Giants Threaten To Delay US Expansion Without Grant Germany's Uniper In Talks Over Bailout To Fill $9.4Bln HoleThe Day Ahead Asian equity markets are mostly up this morning, but Chinese indices are down despite a rise in the Caixin services index to 54.5 in June from 41.4 in May. Reports suggest that US President Biden may scrap some import tariffs on Chinese consumer goods this week in an attempt to combat inflation. In Australia, the central bank as expected raised interest rates by 50 basis points, its third consecutive rate hike. Today’s economic data calendar is dominated by PMI services reports for June. However, most of these are second readings that are not expected to be revised from their initial estimates. In the UK, that first reading showed the headline index for June unchanged from May at 53.4, still some way above the 50 expansion/contraction level but the lowest since February 2021. While services activity is holding up a little better than manufacturing, it nevertheless seems to be slowing as the post-Omicron rebound fades. Meanwhile, inflationary pressures remain elevated but may have peaked. In the Eurozone, the first reading for the headline index fell to its lowest since January confirming a marked loss in momentum in the sector over the past two months. The equivalent service sector measures for the US have been delayed until tomorrow because of yesterday’s holiday. In the meantime, factory goods orders for May will be watched for further signs that manufacturing activity is decelerating. However, already released data for durable goods orders showed a solid monthly rise of 0.7%. The Bank of England will produce its Financial Stability Report and hold a press conference today. At the time of the last report in March, the BoE failed to undertake its usual stress tests on banks citing uncertainties related to the Ukrainian situation, so an update on its intentions will be expected. There will also be interest in the BoE’s thoughts about the impact of higher interest rates and other economic uncertainties on the financial system. The BoE MPC’s Tenreyro is scheduled to speak today. She is considered to be one of the members of the Monetary Policy Committee that was least convinced of the need to raise interest rates. Indeed, she was the only one not to vote in favour of the first hike back in December. However, she has voted for all four subsequent increases. She will be speaking today as part of a conference on the interaction between monetary and fiscal policy.FX Options Expiring 10am New York Cut EUR/USD: 1.0450 (764M), 1.0500-05 (600M), 1.0520 (357M) 1.0570 (235M), 1.0600 (508M) USD/JPY: 134.95-00 (1.44BLN), 135.40-45 (338M), 136.05 (265M) 136.40 (235M), 136.75 (240M), 137.00 (1.68BLN) GBP/USD: 1.2280 (231M). EUR/GBP: 0.8670-80 (927M) AUD/USD: 0.6850 (204M), 0.6875 (390M), 0.7030 (316M) USD/CAD: 1.2900 (675M)Technical & Trade ViewsEURUSD Bias: Bearish below 1.0650 Bullish above Opens the LDN rotating around 1.04 Trading in a tight range reduced flows due to US holidays Asian trade has seen support for USD on firmer US yields 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 being eroded at 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. GBPJPY provides some support for the GBP 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 remains sited at 1.2275 1.2150 failure opens a test of bids at 1.2050 ahead of 1.11950 20 Day VWAP is bearish, 5 Day bearishUSDJPY Bias: Bullish above 132 Bearish below USD/JPY retinas a bid tone driven by firmer US yields Short covering driving the pop higher US10Y 2.94% adding support Initial offers seen at 136.55/65 stops above to see retest of 137 Option barriers KO’s quoted at 137 remain intact 20 Day VWAP is bullish, 5 Day bullishAUDUSD Bias: Bullish above .7200 Bearish below AUD retreats after brief pop on RBA 50bps move RBA implied further hikes to come, will remain data dependant China tariff news not sufficient to give further support as LDN opens 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 lifts over 4% on better risk sentiment overnight trading above 20k Tested the 20 day VWAP which remains bearish 20 VWAP band contracting ready for next directional drive 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

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/daily-market-outlook-july-5-2022"
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