FOMO Friday: USDJPY Hits 20-Year Highs

Well, we’re getting nicely into the summer months now buttrading is far from the typical quiet action we see over the summer. This weekwe’ve had plenty of noteworthy moves once again and, talking with traders aheadof the weekend, it seems the big move everyone is focused on is the breakout inthe US Dollar. In terms of specific pairs, the breakout to 20-year highs inUSDJPY has been the focus point. So, let’s take a look at what caused the moveand, as ever, if you caught it? Well done! If you missed it? There’s alwaysnext week!What Caused the Move?US CPI Runs HotThe US Dollar started the week strong on the back of astronger-than-expected US jobs report the prior Friday. With the headline NFPcoming in well above expectations, focus was kept firmly on Fed tighteningexpectations for July with traders looking for a .75% hike, same as June.However, into the middle of the week USD was boosted higher still by the JUNECPI report which, again, came in above expectations.Increased Fed Tightening ExpectationsAnnual US CPI was seen hitting forty-year highs in June of 9.1%.With both core and headline readings seen rising above estimates on the monthlydata, Fed tightening expectations were further amplified with traders now jugglingthe prospect of a larger 1% hike, as we saw from the BOC on Wednesday. The USDollar was sent firmly higher on the back of the data which was also seen asquashing any prospect of a post-July rates pause from the Fed. The fresh uptickin US CPI was seen as a new catalyst for USD demand and has rejuvenated buyingin the greenback.BOJ Committed to Maintaining EasingAt the same time that Fed tightening expectations are blowingup, the market’s expectations with regards to the BOJ remain firmly anchored ineasing territory. The BOJ continues to reaffirm its commitment to easing andits view that the Japanese economy is not yet strong enough to withstandmonetary policy tightening. With clear divergence in the monetary policyoutlook (and expectations) between the Fed and the BOJ, USDJPY has taken off ona fresh rally.Looking ahead, the market will now be waiting to assess thestrength of today’s US retail sales data. We heard from Fed’s Waller yesterdaythat he would likely support a larger than .75% hike if today’s retail data wasstrong also and so for now, all eyes are on the data. A further strong releaseshould see USDJPY continue higher into next week while even a miss will likelyallow JPY some room to breathe ahead of the FOMC.Technical ViewsUSDJPYThe breakout in USDJPY this week has seen the pair trading abovethe 136.88 highs. With the market still moving within a clear bullish channel,while this level holds as support, the focus is on a continuation higher with146.97 the longer-term goal. To the downside, the channel lows and the 134.39level are the key supports to note.

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/fomo-friday-usdjpy-hits-20-year-highs"
via IFTTT

NZDCAD, H4 | Potential Bullish Continuation

Type: Bullish BounceKey Levels:Resistance: 0.81056Pivot: 0.80283Support: 0.79355Preferred Case:On the H4, with prices moving above the ichimoku indicator and has broken out of the descending trendline, we have a bullish bias that price will rise from the pivot at 0.80283 where the pullback support is to the 1st resistance at 0.81056 in line with pullback resistance, 50% fibonacci retracement and 127.2% fibonacci extension.Alternative Scenario:Alternatively, price could break pivot structure and drop to 1st support at 0.79355 where the swing low support is.

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/nzdcad-h4-or-potential-bullish-continuation"
via IFTTT

Market Update – July 15

USD steady at 108.50, Oil holds above 200 DMA,  Stocks and bonds weaker poor earnings news and on bearish spillover from Europe on recession fears and political turmoil, and dove on the initial PPI print. PPI report which kept the door open for a hefty 100 bp rate hike from the FOMC at the upcoming July 26-27 meeting. China bourses were under pressure after weaker than expected data that included 0.4% y/y rise in GDP, which clearly missed expectations for a 1.0% y/y rise.

Equity Market: JPMorgan and Morgan Stanley missed earning forecasts. Net income at both lenders fell nearly 30% in second quarter as work on IPOs and Spacs dried up. It was the first earnings miss from either JPMorgan — the largest US lender by assets and an industry bellwether — or Morgan Stanley since the start of 2020. Alibaba Group Holding Ltd. dragged Chinese tech shares lower as concerns about a crackdown on the sector resurfaced after company executives were reported to be facing an inquiry linked to the theft of a vast police database.

• USDIndex garnered strong early support and rose to 109.29 diverging central bank stances and political uncertainties before drifting to 108.55.
• Yields: the10-year was 2.8 bps higher at 2.961%, versus a 3.02% intraday peak
• Stocks: In China, fresh worries of regulatory pressure adding to a decline in tech stocks. The ASX also struggled and corrected -0.7%, but the Nikkei found a footing and lifted 0.5%, GER40 gaining nearly 1%, the UK100 0.4%, and a 0.2% rise in the USA100.
• USOIL traded at $95.50 holding above 200-day SMA.
• Gold near 5th concecutive weekly loss. Currently down to $1,704.73.
• FX Markets: EURUSD slumped below parity to 0.9952 before it bounced to 1.0023, USDJPY is still at a very high level to 138.70, Cable at 1.1820. 
• Today – US Retail Sales. Earnings: UnitedHealth Group, Wells Fargo, Blackrock , Citigroup etc

Biggest FX Mover @ (06:30 GMT) CHFJPY (+0.56%) breached 141.66. MAs aligned higher, MACD histogram & signal line extend further northwards, RSI above 70 but falling. H1 ATR 0.212, Daily ATR 1.404.

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.

from HF Analysis /493694/
via IFTTT

Investment Bank Outlook 15-07-2022

USD: Balance of risks tilted to upsideGlobal risk sentiment continues to be challenged by adverse developments across the world. The US banking earning season has kicked off on the wrong foot, China reported the weakest growth numbers (0.4% YoY, vs 1.2% expected) in more than two years, new Covid variants are boosting infection and hospitalisation numbers globally, Italy is facing a new political crisis and markets keep flirting with the idea of a 100bp Fed hike in July.With fears of global recession adding pessimism to the overall picture, we struggle to see a material recovery in sentiment for now. European equity futures are showing signs of a rebound this morning, but that seems largely related to hopes that Mario Draghi may stay as Italian Prime Minister. US stocks could continue to feel the strains of multiplying downside risks today.Equity instability may continue to put a limit to any dollar correction for now, and further upside risks to the greenback may come from a further repricing higher in Fed’s rate expectations. Our view is that there isn’t enough reasoning to back a 100bp move in July, but the Fed’s Chris Waller (a known hawk) suggested that this is not off the table, and we cannot exclude that markets may continue to speculate on such prospect. We’ll hear from another big FOMC hawk, James Bullard, today, as well as from the more moderate Raphael Bostic and normally more dovish Mary Daly.GBP: TV debate for Tory candidatesIt will be interesting to see the first TV debate between the remaining five candidates in the Tory leadership contest today, mainly to start gauging what positions on policy and Brexit can be associated with each contender. Rishi Sunak has remained the front runner, while the potentially most pro-Brexit of the leading group, Liz Truss, looks set to receive a vote boost from the endorsement of Suella Braverman, who dropped out of the race yesterday. This could put Truss as the second-most voted candidate, ahead of Penny Mordaunt, in the next ballot scheduled for early next week.Away from political developments, the UK data calendar is very quiet and there are no scheduled Bank of England speakers today. Cable looks at risk of moving to 1.1600-1.1700 in the coming days on the back of USD strength, while EUR/GBP may keep hovering in the 0.8400-0.8500 area for longer – unless EUR-specific woes trigger another break lower.EUR: Italian political crisis in focusEUR/USD continued to hover around parity, and to show elevated intra-day volatility. This looks unlikely to change for now unless we see the pair rebound decisively above 1.0150 (safely away from parity) or drop to the 0.9800-0.9900 area. We think the latter scenario is more likely given the still grim macro picture (yesterday’s revised EU Commission estimates were a case in point) and lingering uncertainty around the Russia-EU spat on gas supply.

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/investment-bank-outlook-15-07-2022"
via IFTTT

A 100bp Fed Outlook Continues to Weigh

The GBPUSD hit its weakest point since March 2020 at 1.1759 on Thursday as risk aversion made investors more confident in the US Dollar and they dumped currencies deemed riskier due to their uncertain outlook. Even though the BOE has raised interest rates repeatedly, the Pound has remained weak so far this year. The spike in interest rates in various parts of the world to contain inflation has created concerns for traders and investors, who ultimately prefer the reserve currency, the US Dollar, as a more liquid hedge.

This week’s higher-than-expected US inflation reading has fueled speculation on the possibility of a 100bp rate hike this month, creating a market shock. The potential shift to a 1% hike from the Fed caused by the recent CPI data, coupled with energy-driven geo-politics, is enough to push the US Dollar higher. This will slow economic growth in the world’s largest economy while raising the cost of money worldwide.

Atlanta Federal Reserve Bank President Raphael Bostic said “everything is in the game” when asked about a 100bp hike later this month. San Francisco Federal Reserve Bank President Mary Daly said that she favored a 75bp hike, but that 100bp would now be on the table given the inflation shock. Federal Reserve Bank of Cleveland President Loretta Mester said she was unwilling to rule out a 100bp move. Federal Reserve Bank of Richmond President Tom Barkin said inflation should be the Fed’s full concern and he wants to see positive real interest rates in the next few years.

Commodities dragged lower and equity bleeding has not stopped, reflecting recession expectations. Traders are also concerned about the UK and European economic outlook with inflation rising steadily higher than elsewhere. The soaring price of natural gas and its impact on the regional economy has affected the exchange rate of the Pound and the Euro simultaneously. Plus uncertainty about who will replace Boris Johnson and the economic policies they will pursue still looms over the exchange rate.

The Euro exchange rate has fallen below parity (touched 0.9950 yesterday) amid surging US Dollar demand and capitulation of buy orders around 1.0000. The Euro is under special scrutiny, as ongoing concerns over the future of gas supplies from Russia increase. JP Morgan this week revised its EURUSD forecast in response to recent market developments and said the single eurozone currency will remain under pressure amid Europe’s gas crisis which is far from over.

If Russia implements its threat to end exports of gas to the EU, the Euro could suffer heavy losses given that JP Morgan anticipates the Euro-Dollar exchange rate reflects a 20% to 25% chance of a total close. ⌊1⌋

Click here to access our Economic Calendar

 

Ady Phangestu

Market Analyst – HF Educational Office – Indonesia

Source : (1) financial times

 

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 /493696/
via IFTTT

Daily Market Outlook, July 15, 2022

Daily Market Outlook, July 15, 2022 Overnight Headlines China’s Economy Expands At Slowest Pace Since Wuhan Outbreak China Renews Medium-Term Policy Loans, Rate Unchanged Fed Hawks Say They Want 75 Basis Point Rate Hike In July Fed’s Waller Says 75bps Rate Hike Is His Base Case For July Fed's Bullard Favours 75bps Hike At July Meeting - Nikkei New Zealand Manufacturing Activity Contracts In Month Of June Dollar Pares Gains As Odds Of 100 bps Fed Rate Hike Drop U.S. Yield Curve Inversion Shrinks As Markets Pare Back 100-bps Bet Oil Set To End Volatile Week Below $100 On Slowdown Concern Asian Shares Mixed After China Says Growth Weakened In Q2 Rio Tinto’s Boosts Iron Ore Shipments But Warns Of Headwinds SK Hynix Is Said To Weigh Slashing Spending By A Quarter In 2023 UBS, Citi Among Banks Hit By Pullback From Asia’s Rich Clients Amazon Has Been Slashing Private-Label Selection Amid Weak SalesThe Day Ahead Asian equity markets are mixed this morning. China Q2 GDP growth was weaker than expected at only 0.4% yr-on-yr, reflecting the impact of the latest lockdowns. However, June data was more upbeat as both industrial production and retail sales strengthened. The New Zealand manufacturing PMI posted its first sub-50 reading for 10 months in June signalling that activity may now be contracting. Italian PM Draghi offered his resignation as divisions emerged in the governing coalition. However, the Italian President instead asked for a vote of confidence in parliament. There are now five left in the Conservative leadership contest with Sunak and Mordaunt still leading. The first televised debate will take place today. With the calendar elsewhere sparse, the focus today seems set to be on a potentially significant set of US data releases. The Federal Reserve’s next interest rate announcement on 27th July is now less than two weeks away. Another sizeable rise seems almost certain, but its size remains unclear. Following a solid June labour market report and another new high for the year with June CPI inflation, markets see a second successive rise of at least 75 basis points as likely and now regard a 100bp rise as a possibility. However, a weak set of outturns today could yet see the focus switch back to a smaller rise of 50bp. it would also lend weight to growing concerns about downside risks for economic growth. June retail sales will probably get the most attention today. US retail sales were weaker than expected in May and overall so far in Q2 have disappointed after a strong start to the year. Expect a rebound in June but after adjusting for inflation the numbers may again be down. Industrial production is also expected to post only modest growth in June. Finally, look for no change in the University of Michigan consumer sentiment index at 50 which is already a very weak level. That survey’s inflation expectations data will also be closely watched. Last month’s rise in longer-run inflation expectations was cited by Federal Reserve Chair Powell as one of the reasons why rates were raised by 75bp. However, the increase was subsequently revised away. Any comments from Fed policymakers will also be of interest. Fed policymakers Bostic and Bullard are scheduled to speak. Both have previously signalled likely support for a 75bp hike but it will now be interesting to see how open they are to a 100bp rise. The Fed is supposed to enter its pre-meeting silent period after this weekend, although in the runup to the June meeting a signal of an intention to hike more aggressively was seemingly sent during the ‘blackout’.FX Options Expiring 10am New York Cut EUR/USD: 0.9950 (553M), 1.0070 (200M), 1.0100 (404M) 1.0150 (813M), 1.0200 (1.08BLN) USD/JPY: 137.00 (360M), 137.5 (440M) EUR/JPY: 138.00 (351M) GBP/USD: 1.1890-00 (694M) AUD/USD: 0.6800-10 (515M), 0.6900 (1.08BLN) USD/CAD: 1.3000-05 (1.3BLN), 1.3075 (510M) 1.3100 (1.15BLN), 1.3150 (751M), 1.3180 (470M)Technical & Trade ViewsEURUSD Bias: Bearish below 1.0350 EUR/USD doing very little in Asia after push below parity this week Overall bias remains down, especially on Italy political woes Low of 0.9952 yesterday before bounce, Asia so far 1.0012-27 Specs seem to be taking sell-rally, buy-on-dip approach Option expiries today - 0.9950 E693 mln, 1.0100 E404 mln Bids eyed below parity .9950 offers sitting above 1.0050 20 Day VWAP is bearish, 5 Day bearishGBPUSD Bias: Bearish below 1.2150 Muted action in Asian session, pressure remains to the downside GBP off lows although upside seems capped by Dollar dominance BoE back in the frame after better growth data Energy price inflation, recession fears and political unknowns weigh on GBP Option expiries today - total GBP644 mln 1.1890-1.1900 above Offers seen at 1.20 Bids 1.1720 20 Day VWAP is bearish, 5 Day bearishUSDJPY Bias: Bullish above 134 Capped at 139.50 ahead of long holiday weekend in Tokyo Mild retreat in market pricing of FED hike expectations Market eyes large option strikes on Tuesday at 138 & 140 Traders favour betting on 135/140 US10Y trading sub 3% Offers seen at 139.55 bids 136.75 20 Day VWAP is bullish, 5 Day bullishAUDUSD Bias: Bearish below .7050 AUD weighed by CHina GDP data miss adding to growth concerns China econ plunges in Q2 markets look for policy support Commodity losses, metals meltdown Iron Ore down over 7% adding further pressure Offers seen at .6830’s with bids tipped at .6685 20 Day VWAP remains untested confirming downside 20 Day VWAP is bearish, 5 Day bearishBTCUSD Bias: Bearish below 22k BTC recovers 20K BTC bulls take solace from FED tempering hawkishness Trend remains down within broader bearish channel Support seen at 19k then 18300 the base of the daily VWAP bands failure here opens a retest of lows Concerns regarding increasing Crypto player forced liquidations leave BTC vulnerable Additional pressure seen from BTC miners liquidating positions on declining profitability 20 Day VWAP is bullish, 5 Day bearish

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/daily-market-outlook-july-15-2022"
via IFTTT

Markets Brace for 100 bp July Rate Hike and the Room for Dovish Surprise Grows

EURUSD volatility around the round 1.00 level remains elevated which creates ripple waves in other USD cross-pairs. After yesterday's "shocking" CPI release, markets shifted expectations of the upcoming July rate hike from 75bp to 100bp. Earlier, the Bank of Canada surprised markets with a front-loaded 100 bp rate hike, highlighting seriousness of the inflation threat and the need for decisive response. European currencies are set to remain in the shadow of a strong dollar for a while as the factor of interest rate differential, until the Fed's policy stance is clarified on July 27, should keep these currencies under pressure. EURUSD consolidation near the 1.00 level with very weak attempts to rebound indicates a growing risk of a bearish breakout with a target of 0.98-0.99.At least one Fed official signaled that a 100 bp rate hike at the upcoming meeting is on the table. Speaking yesterday, Atlanta Fed chief Rafael Bostic said that “everything is at play”. Bank Nomura made a 100 bp outcome as a baseline scenario for the upcoming FOMC meeting.However, there is a risk that the market reaction to the upside surprise in the CPI report was excessive and may be prone to correction. Looking at the details, one can see a strong heterogeneity of inflation by components: prices in two categories, gasoline and utility gas, rose significantly more than others:In other categories, monthly price growth in most cases did not exceed 1%.The fact that gasoline prices jumped in June was known long before the release of the inflation report, so the surprise on the upside, in truth, does not look so unexpected. Due to the high dispersion in component price increases and the fact that the prices of goods known for their high volatility were the main contributors to the "shocking" June figure, a decline in inflation in subsequent months could be quite rapid. There is already information that gasoline price inflation began to slow down in July, so from this point of view, too sharp Fed tightening, and even more so a 100 bp step may be unreasonable and do more harm to the economy than good. It is also important to keep in mind that inflation generated by fuel prices growth is not the kind of inflation that can be effectively regulated by raising interest rate (via demand destruction), moreover, the pass-through effect of gasoline inflation into other categories, judging by the numbers, is not so strong. Considering that futures on the Fed rate price in the 100 bp outcome at the upcoming meeting with an 84% chance, the decision to raise the rate by 75 bp may be regarded as dovish surprise and eventually lead to an overdue downward correction of USD.

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/markets-brace-for-100-bp-july-rate-hike-and-the-room-for-dovish-surprise-grows"
via IFTTT

Market Spotlight: July FOMC Rates Pricing Increases Following June CPI Beat

July FOMC Pricing Favours 1% HikePricing for the upcoming July FOMC has swung in favour of a fullpercentage point hike following yesterday’s US CPI report. June CPI was seenrising to 9.1% annually, marking the hottest US inflation reading in 40-years. Looking at the monthly data, headline CPI wasseen coming in at 1.3% in June, up from 1% prior and well above the 1.1% themarket was looking for. Additionally, core CPI was seen at 0.7% on the month,up from 0.6% prior and, again, well above the 0.5% the market was looking for.With the latest US inflation data putting rest to any idea ofconsumer prices cooling near-term, the pressure on the Fed has increased. Withthe Fed opting for a larger .75% hike last time, the market is now anticipatingthe Fed to take further action this month, opting for a larger 1% hike, such aswe saw from the BOC yesterday. With this in mind, USD is seeing renewed demandinto the end of the week. Traders will now be looking to tomorrow’s retail salesdata for the next key insight into the US economy. If retail sales are seeingrising on the month, as forecast, this should keep USD higher into the FOMCmeeting.Technical ViewsNASDAQThe NASDAQ has been grinding steadily lower this year in awell-defined bear channel. Price is currently sitting on support along the11240.8 level, capped by resistance at 12269.1. With the channel the broaderfocus, the preference is for a downside break towards the channel lows and9801.1 level next. To the topside, bulls need to see a break of 12269.1 toshift momentum higher.

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/market-spotlight-july-fomc-rates-pricing-increases-following-june-cpi-beat"
via IFTTT

JAPANESE YEN FUTURES (6J1!), H4 Potential For Bearish Momentum

Type: Bearish MomentumKey Levels:Resistance: 0.007362Pivot: 0.007296Support: 0.007126Preferred Case:On the H4, with price moving below the ichimoku cloud and in a descending trend channel and trendline, we have a bearish bias that price will continue to drop from the pivot at 0.007296 in line with the pullback resistance, 61.8% fibonacci projection and -27.2% fibonacci expansion to the 1st support at 0.007126 in line with the -61.8% fibonacci expansion and 100% fibonacci projection .Alternative Scenario:Alternatively, price may reverse off the pivot and rise to the 1st resistance at 0.007362 at the overlap resistance in line with the 50% fibonacci retracement .Fundamentals:Japanese Finance Minister Suzuki said that the Japanese government is concerned about the Yen’s recent rapid weakening, giving us a bearish bias on the Japanese Yen.

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/japanese-yen-futures-6j1-h4-potential-for-bearish-momentum14"
via IFTTT

Market Spotlight: BOC Announces Largest Rate Hike in 24 Years

BOC Raises Rates 1%The Bankof Canada took markets by surprise yesterday, announcing a full percentagepoint increase in interest rates. Taking its headline cash rate from 1.5% to2.5%, the BOC surpassed expectations for a .75% hike, marking the largest ratesincrease among G10 central banks over this current tightening cycle. Along withthe rate hike, which was the largest by the BOC in over 20 years, the bank alsosignalled the likelihood of further hikes to come."Exceptional Circumstances"Commenting on the move during the post-meeting press conference,BOC governor Macklem told reporters "We had indicated we wereprepared to be more forceful. Today was more forceful." Questioned overwhether the move was unusual for the bank, Macklem said "Yes, it is a veryunusual move to increase by 100 basis points at one decision and that reallyreflects the very unusual, exceptional circumstances that we find ourselvesin."Looking ahead and answering questions over-growth prospects inCanada, Macklem said "Our forecast is for soft landing. As I said, thepath to that soft landing has narrowed, and that is an important reason why wetook stronger action today to front-load policy interest rates."Technical ViewsEURCADDespite the move, CAD is weaker today, mostly due to lower oilprices. EURCAD failed to break lower yesterday and price is now moving higheroff the 1.3031 level. While this level holds as support, the focus is on a retestof the broken 1.3384 level next and the bear channel top, which should offerbears a better short entry.

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/market-spotlight-boc-announces-largest-rate-hike-in-24-years"
via IFTTT

The Crude Chronicles - Episode 144

Oil Traders Scale Back LongsThelatest CFTC COT institutional positioning report shows that oil traders reducedtheir net long positions by almost 20k contracts last week. Taking total upsidebets from 299.5k down to 280k contracts, this was the sharpest pairing ofupside exposure we have seen in months and well reflects the growing concernover the demand outlook for oil.Recessionary FearsCrudeprices have been under steady pressure recently as mounting global recessionconcerns have begun to weigh on demand projection into year end. With inflationstill soaring globally, as evidence yesterday by 40-year highs in US June CPI, andcentral banks pressing ahead with aggressive tightening, growth forecasts arebeing sharply reduced across the board. Just this week we saw the IMF downgradingits global growth forecasts for the year ahead as a result of the conditions mentioned.Weaker Demand OutlookA slower pace of global economic activity isexpected to translate into weaker demand for fuel products. Additionally, thereturn of lockdowns in China this week, as well as fears of further lockdownsto come, is also weighing on demand expectations for oil. While oil prices havebeen well supported by the rebound in demand from the aviation sector thisyear, there is growing speculation around the risk of travel restrictionsreturning post summer in response to surging COVID cases in Europe, againcontributing to weaker demand expectations.Higher US DollarThe freshupside in the US Dollar this week is also weighing on oil prices. With US CPIcoming in well above forecasts for June, any likelihood of the Fed easing up onrate hikes after this month has been heavily reduced. With the Dollar likely tocontinue higher near term, oil prices are vulnerable to further downside in theshort-term. This is especially true given that over this month and next OPEChas stepped up its production output from around 400k extra barrels a month to roughly650k extra barrels per month. The additional supply coming at a time of reduceddemand expectations is further surpassing oil prices currently.EIA SurplusThelatest report from the EIA this week added further pressure to oil prices. TheEIA reported an almost 4-million-barrel inventory surplus last week, in starkcontrast to forecasts for a 1.5 million barrel drawdown. Potentially a sign ofthe growing supply/demand imbalance, the data has created further headwinds foroil into the end of the week.TechnicalViews Crude oilThebreakdown in oil prices below the rising trend line from YTD lows has seen themarket advancing steadily lower. Price has blown through several key supportlevels and is currently sitting on support at the 95.93 level. With both MACDand RSI bearish here, the focus is on a further break lower and a test of the83.75 level next.

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/the-crude-chronicles-episode-144"
via IFTTT

Earnings Season: CitiGroup & BlackRock

CitiGroup Inc.

Citigroup is a bank with a capitalization of 91,498 mln. CitiGroup Inc is expected to report its Q2-22 earnings and EPS results on Friday, July 15, before the market opens. Zacks ranks CitiGroup a Rank 3 “Hold” at #160 in the Regional Major-Bank Industry. For this earnings data an EPS of $1.63-$1.65 is expected with an ESP of 0.78% and earnings of $18.29B. In the last 3 months there have been 3 upward revisions and 8 downward revisions.

Due to the pandemic and global shrinkage, CitiGroup shares have fallen 23.5% so far this year.

Technical analysis

Citigroup is coming off a downtrend since July of last year, falling over 70% from a high of 80.28 to a price of 45.55 today. Support is at the 78.6% Fibo at 42.33 until the psychological level of 40.00, then until the 88.6% Fibo level at 37.50 and until the April 20 low at 36.66 and to close the cycle it would need to reach the March 20 lows right at the psychological level from 32.00. Resistance is at the latest highs at 54.24, then the psychological level of 58.00 and until the low of July last year at 64.36 to go to the highs of February this year at 69.10.

ADX at 24.79 with bullish bias, DI+ at 12.23 DI- at 29.51 possible bearish continuation.

---

BlackRock Inc.

BlackRock, which has a capitalization of 93,432 mln, is the world’s largest asset management company and a leading provider of financial technology with assets under management exceeding $10B.

BlackRock Inc. is expected to report its Q2-22 earnings and EPS results on Friday, July 15, before the market opens. The company has beaten estimates for the last 8 quarters with an average of 7.7%, despite the company’s increased expenses as it wants to improve its workforce and operational efficiency. However, this quarter is expected to see an increase in revenue year-over-year but a cut in earnings.

Zacks positions BlackRock a Rank 5 “Strong Sell” at position #218 in the Finance-Investment Management Industry. For this key earnings data an EPS of $7.72-$8.83 is expected with an ESP of -12.57% and earnings of $4.73B. In the last 3 months there have been 9 downward revisions and no upward revisions.

The company’s investment advisory performance fees are forecast at $190M, an increase of 93.9% q/q. Total income from investment advice, administration fees and securities lending stands at $3.86B giving a marginal sequential increase. The outlook for distribution rates is $394M, this being an increase of 3.4% q/q.

BlackRock said in a public note on Monday that the company cut its exposure to developed market stocks, following central banks and their aggressive inflation control.

“Right now, we think the Fed has boxed itself in responding to political pressures to control inflation.”

“Eventually, the damage to growth and jobs from fighting inflation will become apparent, in our view, and central banks will live with higher inflation.” -Jean Boivin, BlackRock Strategist

In addition, a quarterly cash dividend of 4.88 per common share has been declared payable on 23/09/22 to shareholders according to Zacks.The company has been a leader in the ETF market given its iShare. iShares is a collection of exchange-traded funds (ETFs) managed by BlackRock, which acquired the brand and business from Barclays in 2009. iShare inflows have been strong which would increase the company’s AUM balance giving a positive impact.

Technical analysis

BlackRock has been in a strong downtrend since Nov. 21, when the price started to fall from its highs at 972.63. YTD has given a close to Fib. 61.8% discount at 570.15 and it is currently trading at 596.36. Supports are set at the low of September 20 at 530.00, followed by the psychological level of 500.00, the Fib. 78.6% at 460.73 until the low of May 20 at 488.01, and the cycle would close after the psychological level of 400.00. Resistances are at the latest Fib. 50% highs at 647.00 followed by previous highs at 689.10-700.00 assuming it breaks the channel’s downtrend.

ADX at 25.49 with bullish bias, DI+ at 11.06 DI- at 33.47, downtrend resumption after pullback.

 

Sources: 

1. https://www.zacks.com/stock/quote/BLK
2. https://www.zacks.com/stock/quote/C
3. https://www.zacks.com/research/get_news.php?id=b4vgqbaadb
4. https://www.zacks.com/stock/news/1951263/blackrock-blk-to-report-q2-earnings-whats-in-store?art_rec=quote-stock_overview-zacks_news-ID03-txt-1951263

Click here to access our Economic Calendar

Aldo Zapien

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 /493251/
via IFTTT

Market Update – July 14 – Focus on PPI & Earnings

It was all about June CPI and the report did not disappoint. Risk was for a hot report and the Administration warned of rising pressures. The most dramatic movers were the hot CPI report and the BoC’s 100 bp hike. Those open the door for an outsized Fed move and in turn heightened risk for a recession. A bearish curve inversion play as the data nail the coffin for a 75 bp hike on July 27, with nontrivial risk of more aggressive action, either with a 100 bp increase which the BoC just effected, or with consecutive 75 bp moves in July and September. USD sustained gains, Oil settled at 200 DMA and the Stocks traded mixed. Stocks were up 0.6% and 0.4% in Japan and Australia, the latter helped by a record low unemployment report (50-year low) while Chinese imports continue to linger as the country’s Covid policy keeps a lid on activity. The AUD rallied on the numbers, as traders boosted speculations for a 75 bp rate hike from the RBA in August.  

• USDIndex held above 108.00 level, but failed to break 3-day resistance.
• Yields: the 10-year ended over 7 bps lower at 2.89%, reflecting credibility in the FOMC’s policy stance. Fed funds futures priced in a 54% chance for a 100 bp rate hike on July 27 with rising odds for 170 bps in hikes from here.
• Stocks: USA100 tumbled -0.15%. The USA500 is off -0.45%, and the USA30 has slid -0.67%.
• USOIL traded at $95 holding above 200-day SMA.
• Gold found a bid but gains were trimmed. Currently down to $1,706.
• FX Markets: EURUSD hold fractionally above parity 1.0002, USDJPY skyrocket to 139.28, Cable fell to 1.1856. AUD and to a lesser extend the NZD gained. 
• Today – US calendar has jobless claims and PPI, but the earning releases are in the spotlight with JPMorgan Chase & Co., Morgan Stanley, First Republic Bank, Cintas etc.

Biggest FX Mover @ (06:30 GMT) NZDJPY (+1.62%) breacked 85.20. MA’s aligned higher, MACD histogram & signal line extend further northwards, RSI above 701 but falling. H1 ATR 0.193, Daily ATR 0.975.

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.

from HF Analysis /493225/
via IFTTT

Investment Bank Outlook 14-07-2022

INGUS Inflation Shows Fed Has More to DoJune US inflation came in at 1.3%MoM/9.1% YoY for headline and 0.7%MoM/5.9% for core. Both readings are 0.2pp higher than the consensus was expecting and should all but confirm a 75bp hike on July 27th following the firm June jobs print. This is the fastest rate of headline inflation since November 1981 with the only crumb of comfort being that it didn’t come in as high as the fake report doing the rounds yesterday suggesting a 10% headline reading.While the core rate did at least slow from 6% to 5.9%, there is not much here that will relieve the pressure on the Federal Reserve to do more to get a grip on inflation. Food prices rose another 1% month-on-month (10% year-on-year), gasoline was up 11.2% MoM (59.9% YoY) while shelter, the biggest component of CPI with a weight of 32%, is up 0.6% MoM. There were also upside surprises from apparel (+0.8% MoM) and used cars (+1.6%), which we thought might have actually dipped marginally. The only major component to see a fall was airline fares (-1.8%), but this does follow three consecutive months of double-digit monthly rises.We are hopeful that this marks the peak for headline inflation, especially with gasoline prices down around 5% from their June peak, but we can’t rule out another supply shock. In any case we suspect the descent will be slow given the ongoing upward pressure on food prices and the long time it takes for turning points in house price appreciation to feed through into the shelter components of CPI. There is still a lot of pent-up demand in the economy, especially around leisure, hospitality and tourism, as people appear prepared to run down accumulated savings and pay higher prices to do things they missed out on over the past couple of years. Hence why service sector inflation is looking so strong right now.Pressure on RBA Following Aussie Unemployment DropUnemployment rate falling to new all-time low heaps pressure on the Reserve Bank of Australia (RBA) to "go large" with upcoming rate hikesIn the accompanying statement to its 5 July Monetary policy meeting, the RBA noted that "...The size and timing of future interest rate increases will be guided by the incoming data and the Board's assessment of the outlook for inflation and the labour market".2Q22 inflation is due on 27 July, but in the meantime, this latest labour data suggests that the RBA will not be able to drop back to the 25bp hikes it started this cycle with, and may even have to consider hikes above 50bp.A drop in the unemployment rate was expected this month, but not of the magnitude recorded. The previous all-time low was 3.8%, so a drop to 3.5% really does look quite alarmingly tight.On the employment side of the report, the gains were also higher than expected. An 88,400 gain in employment was mainly (52,900) driven by full-time jobs, which implies a greater impact on disposable incomes than part-time jobs (p-t jobs rose 35,500). But part-time jobs often convert to full-time jobs, so we certainly are not ruling out their relevance for the outlook for wages growth and inflation.

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/investment-bank-outlook-14-07-2022"
via IFTTT