Events to Look Out for Next Week

A very dismal week is now over, with a pretty gloomy political and economical outlook. Markets were rattled by news News that former Japanese Prime Minister Abe was shot to death during a campaign event. This week also, Boris Johnson’s government imploded and the PM was forced to resign. Weeks of leadership contest in the Conservative party are now likely to follow, and in the meantime the economic situation is likely to get worse. That also means any important fiscal decisions will be delayed.

Have a look at the most important events of the coming days in our usual weekly publication.

Tuesday – 12 July 2022

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• German ZEW (EUR, GMT 09:00) – The key topic for the Eurozone’s biggest and most important economy. Data is expected to show July’s ZEW econoomic sentiment is seen contracting at -37.5 from -28.
• BoE’s Governor Bailey speech (GBP, GMT 17:00)

Wednesday – 06 July 2022

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• Rate Statement & Interest Rate Decision (NZD, GMT 02:00) – The RBNZ is seen boosting rates another 50 bps on the heels of the 50 bp hike in July. The RBNZ had increased rates 50bps in June and another 50bps in May. It will be the third consecutive rate hike while the markets anticipate also a fourth one.
• Gross Domestic Product, Industrial & Manufacturing Production and Trade balance (GBP, GMT 06:00) – A plethora of data from the UK should confirmed a continued stuttering recession. UK GDP growth for May is expected to finalised at -0.3%. Regardless of the slight growth, the downside risks to the growth outlook remain. Industrial Production for May is expected at 0.2% from -0.6% last month.
• Consumer Price Index (USD, GMT 12:30) – The US inflation surged 1.0% in May with the core rate climbing 0.6%, hotter than forecast, following April gains of 0.3% and 0.6%, respectively. The 12-month rates showed an acceleration to 8.6% y/y on the headline from 8.3%, and is the highest since late 1982, with the ex-food and energy component slipping to 6.0% y/y versus 6.2%, with the 6.5% y/y from March the 40-year high. Prices increases were broadbased and across every major category. In June is expected to ease a bit to 0.5% m/m and 5.9% y/y.
• Interest Rate Decision, Monetary Policy Statement and Press Conference (CAD, GMT 14:00) – The BOC remains on course for further rate hikes. It is expected to hike rates by 75bp to 2.25%. This is in line with market expectations and should have a contained impact on the Canadian Dollar. At the June policy meeting, the bank warned that “the risk of elevated inflation becoming entrenched has risen” and there was a clear need to “keep inflation expectations well anchored”.

Thursday – 07 July 2022

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• Employment and Unemployment Rate (AUD, GMT 01:30) – The Australian jobs market is expected to show a positive employment report, with 40k jobs in April and unemployment anticipated to tick lower to 3.9% from 4.0%.

Friday – 08 July 2022

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• Gross Domestic Product & Retail Sales (CNY, GMT 02:00) – GDP for Q2 is expected show further detoriation of the Chinese economy as it is expected at 0.6% q/q from 1.3% q/q and at 4.4%y/y from 4.8% y/y, clearly showing the impact of supply chain disruption, the energy crisis etc. Headline Retail sales should be contracted at -7.1% y/y from -6.7% y/y.
• Retail Sales (USD, GMT 12:30) – May US retail sales swings of -0.3% for the headline and 0.5% ex-autos followed downward revisions that left a much weaker trajectory than we had assumed for retail sales. US retail sales for June are expected to grow to 0.8% m/m and at 0.6% for ex-Auto number.

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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FOMO Friday: Gold Breaks Down to New 2022 Lows

Gold Prices PlungeIt’s been an interesting week across the board in markets with many noteworthy moments; hawkish minutes releases from the Fed and ECB, the UK PM resigning, oil falling and rising, there’s been plenty of action. However, talking with traders today ahead of the weekend it seems the main focus for most has been the breakdown in gold prices which has seen the metal falling to fresh 2022 lows. So, let’s take a look at what caused the move and, as ever, if you caught it? Well done! If you missed it? There’s always next week.What Caused the Move?USD Breaks OutThe main driver behind the drop in gold prices this week was the fresh wave of buying in USD. The greenback broke out to 20 year highs (Dollar Index) as a combination of Fed hawkishness and global recession fears drove the Dollar higher. Despite concerns over growth prospects in the US, the Fed continues to reaffirm its commitment to pushing ahead with planned tightening and the market is now looking for a further .75% hike at the upcoming July meeting. With USD prone to further upside risks, gold prices look vulnerable to further downside in the near-term.Additionally, given the weaker risk-backdrop as traders mull recessionary fears, gold prices don’t seem to be attracting the same safe-haven inflows they once did. With the Fed and the SNB embarking on monetary tightening, USD and CHF have overtaken gold as safe-havens of choice, creating additional pressure on gold prices during times when asset markets are falling.Looking ahead, today’s US labour data will be closely watched. Should we see any further upside surprises in the data this will likely feed into higher prices for USD. In particular, traders will be looking at the average hourly earnings data. If wages are seen rising over the last month, this will feed into near-term inflation expectations, keeping Fed hawkishness firmly entrenched.Technical ViewsXAUUSDGold prices are continuing to travel lower within the large, bearish channel. The breakdown this week has seen price moving below main support at the 1791.63 level. Price is now on course to test the 1722.37 level support next. To the topside, if there is any break of the channel top, the main level to watch will be the 1871.04 level.

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/fomo-friday-gold-breaks-down-to-new-2022-lows"
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USDJPY, H4 | Potential Bullish Rise

Type: Bullish BreakoutKey Levels:Resistance: 141.384Pivot: 136.701Support: 134.271Preferred Case:On the H4, with price moving along an ascending trendline and bouncing off the ichimoku support, we have a bullish bias that price will rise to our pivot at 136.701 in line with the swing high resistance and 100% fibonacci projection. Once there is upside confirmation of price breaking pivot, we would expect bullish momentum to carry price to 1st resistance at 141.384 in line with 61.8% fibonacci projection and 100% fibonacci projection.Alternative Scenario:Alternatively, price could drop to 1st support at 134.271 in line with the swing low support, 100% fibonacci projection and 23.6% fibonacci retracement.

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AUDUSD, H4 | Potential Bullish Continuation

Type: Bullish BreakoutKey Levels:Resistance: 0.69618Pivot: 0.68302Support: 0.6729Preferred Case:On the H4, with price recently breaking out of the descending trendline and RSI moving in an ascending trendline, we have a bullish bias that price will continue to rise from the pivot at 0.68302 in line with the pullback support and 61.8% fibonacci projection to the 1st resistance at 0.69618 at the swing high in line with the 100% fibonacci projection and 78.6% fibonacci retracement.Alternative Scenario:Alternatively, price may reverse off the pivot and drop to the 1st support at 0.6729 at the swing low in line with the 61.8% fibonacci projection

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Investment Bank Outlook 08-07-2022

USD: NFP unlikely a game-changerThe dollar has remained close to its recent highs, feeling very little pressure from the recovery in risk assets seen yesterday. Today, the futures market points to another negative open in the US stock market, with the highlight of the day being the release of June’s nonfarm payrolls in the US. Our economics team expects a 270k increase in the headline employment figure (in line with consensus), with the unemployment rate staying at 3.6% and wage growth continuing to tick higher. This would mark a slowdown in hiring compared to May, warranted by rising recession fears and higher rates, along with the longstanding issue of a lack of suitable workers despite a large number of job openings.We think, however, that only a very weak reading today can trigger a sizeable re-pricing in the market’s Fed rate expectations given the Bank’s explicit strong focus on fighting inflation and CPI numbers next week will surely carry a much bigger weight. The Fed minutes released this week also seemed to point to rather muted concerns about the worsening economic outlook, and we heard further support for a 75bp increase in July by FOMC members Christopher Weller and James Bullard. Today, we’ll hear from New York Fed President John Williams.EUR: Still looking vulnerableThe euro received very little support from the recovery in sentiment in the eurozone (EuroStoxx up 2%) yesterday. It feels like markets are now recalibrating the ranges for EUR/USD based on a narrative now more focused on the diverging magnitude of downside economic risks in Europe compared to the US. Concerns about a gas crunch in the EU remain elevated, as the Nord Stream 1 pipeline is due to shut for 10 days of annual maintenance on Monday and some fear Russia may not resume flows at the end of that period.On the data side, the eurozone calendar remains very quiet, while some focus will be on European Central Bank speakers today. President Christine Lagarde will deliver a speech in France, and will be followed by Francois Villeroy. Ignazio Visco and Madis Muller are also due to speak. We expect to hear more on euro weakness from ECB members, but the predominance of external downside risks still suggests a somewhat limited ability for hawkish rhetoric to lift the currency.GBP: Politics not the main concern for the PoundThe pound was moderately bid after Prime Minister Boris Johnson announced a well-telegraphed resignation yesterday, with markets likely welcoming a change in leadership after a very turbulent period for the ruling Conservative party. Johnson will remain in power until a new Tory leader is elected. Firstly, a series of votes will allow Conservative MPs to whittle down the list of leadership candidates to the two most popular, which will then be put to a vote of Conservative party members across the UK. When Johnson became leader, this process took roughly six weeks. We could probably see a new prime minister at some point in September.For now, given the high uncertainty around possible candidates, drawing conclusions about the future implications for the pound is quite premature. If anything, some are speculating that most potential candidates – with the possible exception of Liz Truss – may have a less hawkish approach to Brexit and the trade relationship with the EU.

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Daily Market Outlook, July 8, 2022

Daily Market Outlook, July 8, 2022 Overnight Headlines Japan Ex-PM Rushed To Hospital After Apparent Shooting Johnson’s Plan To Drag Out His Departure Under Pressure New UK PM To Be Selected Early September After Recess UK Labour Demand Growth At Slowest Pace In 16 Months Fed Hawks Support 75Bps July Hike, Still See Soft Landing Biden To Meet With Advisers To Discuss China Tariffs Cuts Dems Aim To Close Tax Loophole On Pass-Through Firms Shanghai Outbreak Persists As Shandong Infections Jump Japan Household Spending Slips For Third Straight Month Germany See Energy Markets Intervention To Revive Coal Elon Musk’s $44Bln Deal To Buy Twitter In Peril Over Bots Rolls-Royce Playing Long Game On 787, Final Fix DelayedThe Day Ahead Asian equity markets are mostly up this morning, but gains are generally smaller than those seen in Europe and the US yesterday. Chinese indices are down slightly, despite speculation of more fiscal stimulus before year end, possibly due to further reports of more Covid cases. Japanese PM Abe has reportedly been shot while campaigning. Upper House elections are scheduled for Sunday. US President Biden will consult on lowering tariffs on some Chinese goods today as he is said to have not yet made up his mind. Meanwhile, the timetable to choose the next Conservative Party leader will reportedly be revealed early next week. Today’s US labour market report for June will be seen as important gauge of economic conditions. US Federal Reserve policymakers have repeatedly stressed that the tight labour market is reinforcing their concerns about inflation. This is the last labour market update before the Fed’s next monetary policy announcement on 27th July so it is likely to be watched particularly closely. Monthly reports so far this year have confirmed that the labour market remains buoyant as they have shown strong employment growth, a fall in the unemployment rate below its pre-Covid low and an acceleration in wage growth. There have been tentative signs in recent weekly unemployment benefit claims data that the market may now be turning. However, while weaker employment growth than in May, markets expect a sizeable rise and a further decline in the unemployment rate. Average earnings growth will also be watched closely to see if it confirms recent indications that wage growth may have peaked. Canada’s labour market for June will also by a key input into the Bank of Canada’s next policy decision. As in the US, the concern is that a tight labour market will add to inflationary pressures. The BoC’s latest update is due next Wednesday and it is widely expected to raise interest rates by another 50 basis points taking them to 2%. A hike next week seems almost certain whatever is in today’s report, but a strong outcome will probably lead to calls for the BoC to consider an even bigger rise. There are no major data releases elsewhere but there are some central bank speakers. Both European Central Bank President Lagarde and Bank of France head Villeroy are speaking at a conference in France. Neither seems likely to offer anything new on the immediate interest rate outlook for the Eurozone but they may touch on some of the risks. Meanwhile in the US, comments from Fed policymaker Williams, a pivotal figure on the rate-setting committee, may provide further insight int the size of the interest rate increase that can be expected this month.FX Options Expiring 10am New York Cut USD/JPY: 133.50 (355M), 134.00 (559M), 135.00 (1.2BLN) GBP/USD: 1.1930 (203M) EUR/GBP 0.8585 (328M), 0.8600 (498M) USD/CHF: 0.9500 (250M), 0.9650 (205M), 0.9670 (330M) AUD/USD: 0.6800-10 (591M), 0.6850 (305M), 0.6900-05 (455M) 0.7100 (2.18BLN) USD/CAD: 1.2800 (771M), 1.3000-05 (535M) USD/ZAR: 16.3100 (300M)Technical & Trade ViewsEURUSD Bias: Bearish below 1.05 Retains offered tone trading towards 1.01 EUR/USD weighed further by EURJPY flows driven by Abe shooting news ECB/FED policy divergence remains in focus, NFP’s next catalyst Soaring energy costs, inflation and recession concerns pile on the pressure Bids eyed at 1.0070 offers sitting above 1.02 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 pop on UK PM resignation is short lived back below 1.20 now Political power void likely to constrain BoE action in August GBP languishing at 2yr lows Energy price inflation, recession fears and political unknowns weigh on GBP Bears breach YTD lows en-route to a test of 1.18 Offers seen at 1.20 Bids 1.1770 20 Day VWAP is bearish, 5 Day bearishUSDJPY Bias: Bullish above 134 JPY buy backs driven by shock shooting of former PM Abe Japanese importer bids seen at 135 Traders betting on 134/137 range trade US10Y 2.94 giving back over 1% overnight supporting JPY bid Initial offers seen at 136.55/65 stops above to see a retest of 137 Option barriers KO’s quoted at 137 remain intact 20 Day VWAP is bullish, 5 Day bullishAUDUSD Bias: Bearish below .7050 AUD weighed by JPY cross flows Commodities rolling over again Nickel falling as much as 3% Offers seen towards .6900 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 briefly tests 22k but quickly rejected FTX CEO says the exchange has more than USD 2bln to backstop the crypto industry if needed; the worst appears to be over for the liquidity crunch in the industry 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 Additional pressure seen from BTC miners liquidating positions on declining profitability 20 Day VWAP is bullish, 5 Day bullish

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Market Update – July 8 – Stocks Rise, USD holds, Johnson Resigns, Abe Shot

USDIndex tested 107.00 again following safe haven bids for USD & JPY following shooting of former Japanese PM Shinzo Abe (he remains in a critical condition). US Stocks US Stocks rallied into close (NASDAQ +2.28%), lifting on hopes of less restrictive FED despite the tone of the minutes.  Asian markets were positive before shooting closing flat. (Hang Seng +0.22%, Nikkei +0.1%). European FUTS positive too. Yields closed up +3.85%. Oil rallied 4.3%, Gold flat up 0.2% & BTC rallied to $22k. UK PM Johnson resigned but will remain caretaker PM for now (FTSE100 gained 1.14%, Cable recovered to 1.2000).

• USDIndex holds the bid at 107.00  
• Equities – USA500 closed +1.50% 57.54pts (3902), US500FUTS at 3899 now.
• Yields 10-year yield higher, closed at 2.85%, trades at 3.05% now. 
• Oil & Gold had volatile sessions – USOil traded up to $104 from $96.60 lows and remains over $100.00 at $102.00. Gold fell to $1742, and rotates their currently. 
• Bitcoin rallied from $20K, testing $22.4K today on chatter of major investments coming.
• FX Markets – EURUSD remains pressured at 1.016, USDJPY capped by 136.00 traes at 135.50 now. Cable traded to 1.2050 at 1.2000 now.

Overnight – A weak set of data from Japan – Household spend -0.5% vs 2.2%, Econ. Watchers Sentiment 52.9 vs. 55.0

Today – US & Canadian Labour Market Reports, US Wholesale Inventories, Speeches from ECB’s Lagarde & Fed’s Williams.

Biggest FX Mover @ (06:30 GMT) GBPJPY (–0.39%). JPY safe haven bid following ABE shooting stemmed the rally to 164.00 from 160.40 on Wednesday. Down to 162.80 now.    MAs crossed lower, MACD histogram positive but falling, RSI 44 & falling, H1 ATR 0.319, Daily ATR 1.983.

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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Commodities & Dollar both in focus

In general, the factors driving the sharp weakening of the commodity landscape are Fed tightening, a strengthening US Dollar and geopolitical concerns. This has raised fears of recession and deflation, but a more volatile Europe has lifted the US Dollar, which in turn has put further pressure on commodity prices.

The US Dollar Index on Wednesday rose +0.55% to trade at 106.79 after testing the 107.00 price level and setting new 2-decade highs. A stronger-than-expected US ISM services index and the May JOLTS jobs report continue to support the Dollar. The June ISM services index fell -0.6 to 55.3, higher than expectations of 54.0, and the May JOLTS jobs fell -427,000 to 11.254 million, suggesting a stronger-than-expected labor market of 11.000 million.

The minutes from the June FOMC meeting say the bank sees significant risks from entrenched inflation and that tighter policy is possible if needed in due course. Fed officials see the possibility of a 50 or 75 bp rate hike at the July FOMC meeting.

Commodity trading this week saw a sharp decline. Although the precious metals did not come close to oil’s -10% fall, gold lost -4%, silver -3.5%, copper -4.9%, palladium – 3.4%, platinum -3.2%. In terms of agricultural products, cotton lost -9% (down more than -40% since May’s peak) and coffee -5.7%.

Sensitive commodities such as crude oil, metals and crops were hit. Copper, the underdog, entered a bear market, down more than 30% from its peak in March. This is important because it has happened at the beginning of every recession in the last thirty years.

Prolonged inflation and a looming recession are weighing on consumers’ minds. Many employers are beginning to cancel job offers, which indicates a gap in the labour market whose strength has so far prevented a recession. Inflation has reached all sectors of the economy.

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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10-YEAR T-NOTE FUTURES (ZN1!), H4 Potential For Bullish Bounce

Type: Bullish BounceKey Levels:Resistance: 120'30'5Pivot: 118'07'0Support: 116'17'0Preferred Case:On the H4, with price moving in an ascending trend channel and moving above the ichimoku cloud , we have a bullish bias that price will bounce off the pivot at 118'07'0 in line with the overlap support and 38.2% fibonacci retracement to the 1st resistance at 120'30'5 at the swing high.Alternative Scenario:Alternatively, price may break the support structure at the pivot and drop to the 1st support at 116'17'0 at the overlap swing low in line with the two 61.8% fibonacci projections.Fundamentals:US indexes moved moderately higher with better-than-expected US economic reports on Wednesday. Hence, we have a bullish view on the 10-year t-note futures.

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/10-year-t-note-futures-zn1-h4-potential-for-bullish-bounce"
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GBPUSD, H4 | Potential Bearish Drop

Type: Bearish ReversalKey Levels:Resistance: 1.19745Pivot: 1.19338Support: 1.18223Preferred Case:On the H4, with prices moving below the ichimoku indicator and within the descending channel, we have a bearish bias that price will drop from our pivot at 1.19338 where the horizontal pullback resistance is to our 1st support at 1.18223 where the 161.8% fibonacci extension, -61.8% fibonacci expansion and 61.8% fibonacci projection are.Alternative Scenario:Alternatively, price could rise to 1st resistance at 1.19745 in line with the pullback resistance, 100% fibonacci projection and 38.2% fibonacci retracement.

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Investment Bank Outlook 07-07-2022

Societe GeneraleStorm coming, but not today” was a poor choice of title yesterday! ¢ I’m not sure why everything went wrong yesterday, rather than waiting for the week’s more important data. Still, here we are, with recession fears firmly to the fore, UK monetary policy in a pickle, the UK government in a crisis that rolls on and on to an inevitable conclusion. The big drivers of markets are evolving slowly. Europe’s energy dependency on Russia is falling, but not fast enough to avoid recession if the pipeline is closed. If that happens, EUR/USD will likely lose another 10% or so and how do we handicap that risk? The best I can offer is that there is far, far more discussion of this possibility now than there was a month ago. There is more geopolitical risk priced in, and that’s a good thing. At the start of April, EUR/USD above 1.10 despite a 2-year rate differential that was 20bp wider than it is today.Take away the gas risk and the euro would be a lot stronger, but we can’t do that, any more than we can take away concerns about the ECB’s anti-fragmentation policy. The BTP/Bund spread is back under 2%, the 10year BTP yields 3.2%, more than 1% of its peak, but the damage is done. The euro-supportive power of rate hikes is eroded by the fact that the bond market isn’t trusted to stand on its own two feet, and the ECB’s credibility is damaged by having over[1]reacted to a spike yields and spreads that was nothing more than a normal response to higher US yields and wider credit spreads globally. The euro loses out, remains effectively unbuyable this summer. It’s so unbuyable that a major political crisis in the UK isn’t enough to drive EUR/GBP higher!Today’s main event will be the US services ISM report this afternoon. The manufacturing report sent out recession warnings, but services are in better shape, facing a hiring challenge more than a demand challenge. We’ll look at the orders-inventories gap, which has diverged from manufacturing of late (see below). But strong data might highlight the divergence from Europe, while soft data increase global recession concerns. Meanwhile, Olivier published a long AUD/NZD trade idea this morning, as the RBA looks set to hike faster than the RBNZ going forwards.INGUSD: June FOMC minutes as hawkish as expectedThe dollar remains close to recent highs as recessionary fears mount, while central banks remain very much in hawkish mode. On that latter point, last night's release of the June Federal Open Market Committee (FOMC) minutes showed a Fed very much concerned by upside risks to inflation and prepared to take rates into restrictive territory (above 2.5%). Concerns about downside risks to growth featured very little and the Fed's risk management approach is clearly in favour of front-loaded tightening on the risk that inflation is more persistent than expected.On that subject, EUR/USD one-week traded volatility is climbing back to recent highs near 12%. That is not a surprise given the event risks of the June US jobs numbers tomorrow, but particularly the US June CPI release next Wednesday, where any upside surprises could again cause havoc in global financial markets.

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/investment-bank-outlook-07-07-2022"
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EURUSD，H4 | Potential Bearish Continuation Type

Type: Bearish ReversalKey Levels:Resistance: 1.03551 Pivot: 1.0231Support: 1.00075Preferred Case:On the H4, with price moving below the ichimoku cloud and in a descending trendline, we have a bearish bias that price will continue to drop from the pivot at 1.0231 in line with the 161.8% fibonacci extension and 100% fibonacci projection to the 1st support at 1.00075 in line with the 100% fibonacci projection and -61.8% fibonacci expansion.Alternative Scenario:Alternatively, price may reverse off pivot and rise to the 1st resistance at 1.03551 at the pullback swing low in line with the 61.8% fibonacci projection.

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Daily Market Outlook, July 7, 2022

Daily Market Outlook, July 7, 2022 Overnight Headlines Defiant UK PM Johnson Refuses To Quit, Fires Gove On Betrayal UK Tory MPs Fear Snap Election In Trumpian Survival Attempt Fed Sees ‘More Restrictive’ Rates Likely If Inflation Persists US Intelligence Warns China Influence Effort Against States Asia Manufacturers Sweat As US Mulls Tougher Tariff Rules China Data Show Economy Shrinking In Challenge To Target Shanghai Cases Rise To May Highs, Fuelling Lockdown Fear BoJ Seen Likely To Raise Price Forecasts, Slash Growth View Tokyo’s Governor Says City To Discuss Possible Covid Curbs Poll: Dollar Continues Dream Runs, Nothing Stands In Its Way Samsung’s Run Of Record Results Stall As Tech Boom Fades Merck In Advanced Talks To Buy Seagen In $40Bln PaymentThe Day Ahead Concerns about global recession risks and inflation remained elevated, although tech stocks led a more constructive tone in equity markets overnight in the Asia-Pacific region. Last night, the minutes of the Fed’s 14/15 June meeting reaffirmed that ‘even more restrictive policy could be appropriate’ to tackle inflation. Following June’s 75bp increase, markets have almost priced in a further 75bp rise by the Fed later this month. In the UK, PM Johnson remains in power despite a wave of government resignations yesterday and more this morning. A new executive of the 1922 committee, representing backbench Conservative MPs, will be elected next week and could decide to amend the rules on leadership changes. The Bank of England’s ‘Decision Maker Panel’ survey of businesses due at 09:30BST could draw some attention today. The results, particularly around inflation expectations, may have a significant impact on the Monetary Policy Committee’s deliberations in August, as speculation mounts on whether they deliver a larger 50bp hike rather than a 25bp increase. Policymakers will be looking for signs that inflation expectations remain well anchored and indications that pressures may be easing. The last survey in May showed an expectation that inflationary pressures would eventually ease. Speeches from MPC’s Pill and Mann may provide further insights into the outlook for monetary policy. At the last meeting, Mann voted in the minority for a 50bp hike while Pill voted for 25bp. Both have emphasised the need to lean against the risk of inflationary pressures becoming embedded. In the Eurozone, the ECB will release the ‘account’ (minutes) of its 8-9 June policy meeting. Officials have given strong hints that interest rate lift-off – the first increase since 2011 – will occur later this month with a 25bp rise expected. The ‘account’ will be parsed for indications of a potential 50bp increase in September and discussions on measures to counter fragmentation in the Eurozone. Figures earlier this morning revealed a small rise of 0.2% in German industrial production, but significant concerns remain around supply bottlenecks and restrictions in energy. US economic data include the May trade balance and weekly jobless claims. The trade data should support expectations for net exports to contribute positively to Q2 GDP growth. There are indications, however, of some softening of the labour market. Initial jobless claims remain low but have ticked higher in June. The June labour market report on Friday is this week’s key release. Fed speakers include Governor Waller and St Louis Fed President Bullard.FX Options Expiring 10am New York Cut EUR/USD: 1.0100 (1.08BLN), 1.0185 (408M), 1.0215-25 1.46BLN) 1.0275 (830M), 1.0290-00 (1.14BLN), 1.0325 (578M) 1.0350 (1.1BLN) USD/JPY: 133.95-05 (1.64BLN), 134.15 (220M), 135.00 (1.07BLN) 136.00 (1.07BLN) 136.15-20 (433M), 137.00 (760M) EUR/JPY: 144.00 (1.65BLN), 146.00 (1.6BLN) GBP/USD: 1.1800 (203M), 1.1950 (316M), 1.2000 (850M) EUR/GBP: 0.8575-85 (300M), 0.8600 (333M) AUD/USD: 0.6800 (363M), 0.6845-50 (670M), 0.6920 (305M) NZD/USD: 0.6270-80 (632M) USD/CAD: 1.2915 (200M), 1.2950 (390M), 1.3000 (681M) USD/CHF: 0.9700 (450M)Technical & Trade ViewsEURUSD Bias: Bearish below 1.05 Retains offered tone, USD trading 20yr highs EUR/USD prints 20 year lows sub 1.0 ECB/FED policy divergence in focus China rise in Covid cases boosts USD safe haven bid ECB minutes up next 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 pantomime playing out in the UK Over 50 ministers and political aids have resigned from the UK Government GBP languishing at 2yr lows New Fin Min Zahawi among others urge PM to go Energy price inflation and recession fears weigh on GBP Bears breach YTD lows en-route to a test of 1.18 Offers seen at 1.20 Bids 1.1770 20 Day VWAP is bearish, 5 Day bearishUSDJPY Bias: Bullish above 134 Lack of directional flow with US Yields still sub 3% Large options 134/35/36/37 Japanese importer bids seen at 135 Traders betting on 134/137 range trade US10Y 2.94 trading firmer 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 bounce supports with Copper +3% & Iron Ore +5% Offers seen towards .6900 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 air above the 20 day VWAP which has flipped bullish 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 Genesis Exchange said Wednesday it had been exposed to 3AC but mitigated losses Additional pressure seen from BTC miners liquidating positions on declining profitability 20 Day VWAP is bullish, 5 Day bullish

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Market Update – July 7 – Fed focused on Inflation, USD bid, Stocks flat Gold tumbles

USD moves from new to 20-year highs at 107 (USDIndex 106.64), US Stocks flat on close (NASDAQ +0.35%). FED Minutes leaned to the hawkish side. – ‘more restrictive’ policy as likely if inflation fails to come down. Asian markets are mostly positive (Hang Seng -0.13%, Nikkei +1.4%).  Yields closed up +3.3%. Oil fell another -1.0%, Gold plummeted again to $1735 & BTC rotates at $20k. UK PM Johnson has now lost over 40 members of his government but refuses to resign. AUD outperforms overnight.

Yesterday US ISM Service PMIs were better than expected but still at 25-mth low & JOLTS showed 11.25m job vacancies (1.9 jobs for every unemployed person).

• USDIndex tested 107.00 and remains on Bid at 106.65 now. 
• Equities – USA500 closed +0.36% 13.69pts (3845), US500FUTS at 3854 now.
• Yields 10-year yield higher,  closed at 2.92% , trades at 2.90% now. Yield curve inverted again yesterday.  
• Oil & Gold had weak sessions – USOil traded down to $95.10 lows and remains under  $100.00 at $98.48. Gold fell to 1732, next support at 1725, trades at 1745 now. 
• Bitcoin continues to trade around $20K, testing $20.3K today.
• FX Markets – EURUSD remains pressured at 1.0200, USDJPY rallied from under 135.00 to test 136.00 now. Cable trades at 1.1950 now.

Overnight – German Industrial Output missed at 0.2% from 1.3%. Australian Trade Balance much better at 15.97b vs 10.7b & 13.25b prior.

Today – US ADP Employment & International Trade, ECB Minutes, EIA Oil Inventories, Speeches from Fed’s Waller & Bullard, ECB’s Lane & Enria, BoE’s Pill. 

Biggest FX Mover @ (06:30 GMT) AUDJPY (+0.42%). AUD lifted by trade data. Rallied form allied from under 106.00 Tuesday to 103.50 today before recovering.  MAs aligning lower, MACD histogram negative but flat, RSI 41.00 & rising, H1 ATR 0.291, Daily ATR 1.378.

Click here to access our Economic Calendar

Stuart Cowell

Head Market Analyst

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