Daily Market Outlook, July 27, 2022

Daily Market Outlook, July 27, 2022 Overnight Headlines Asian Stocks Follow Wall Street Ahead Of Likely US Rate Hike Microsoft Posts Slowest Sales Growth Since 2020 On Strong Dollar Google Parent Alphabet's Small Sales Miss Eases Recession Worries Australia Headline Prices Miss Forecast, Easing Rate-Hike Bets Biden Will Speak To Xi On Thursday As US-China Ties Worsen Italy Outlook Revised To Stable From Positive By S&P Spain Slashes 2023 Growth As Inflation Weighs On Economy UK Retailers Report Prices Rising At Sharpest Pace Since 2005 Asian Currencies Weaken As Markets Remain Cautious Ahead Of Fed China's Overnight Repo Rate Falls Below 1% For First Time Since Jan 2021 Oil Steady As Demand Concerns Offset U.S. Crude Stock DrawdownThe Day Ahead Asian equity performance is mixed this morning. In China, the overnight repo rate fell below 1% for the first time since January 2021, a signal that China will keep monetary policy loose to support growth. Reports suggest that US President Biden will speak with Chinese President Xi tomorrow. Annual Australian consumer price inflation rose to 6.1%. That was its highest rate in 21 years but less than expected, causing some forecasters to scale back their expectations for next week’s rate decision. Conservative Party leadership candidate, Rishi Sunak, promised to temporarily scrap VAT on energy bills. Today’s US monetary policy update is the key event of the week for markets. The announcement of a fourth successive interest rate increase is seen as a near certainty. The three previous hikes since March have all seen the Federal Reserve up the ante with an initial increase of 25bp, followed by rises of 50bp in May and 75bp in June. Markets briefly discounted a 100bp hike following a larger than expected rise in June CPI to a new high for the year of 9.1%. However, subsequent comments from some officials that they are more likely to opt for a 75bp hike and signs that longer-term inflation expectations remain under control have led markets to price in the same sized hike as in June. Also of interest will be any signals that the Fed sends about its future policy intentions. Markets continue to price in further rate rises of just over 100bp by early 2023. However, rising concerns about downside risks to growth are reflected in just over 50bp of rate cuts now priced in for later in 2023. This is not one of the meetings where Fed policymakers update their forecasts, but both the press statement and Fed Chair Powell’s press conference will be watched closely for clues on whether these expectations are still justified. Most Fed officials are still indicating that they think the US economy looks strong. However, recent activity data has mostly surprised on the downside, and this will be acknowledged to some extent today. Powell’s key message is likely to remain that getting inflation under control is the number one priority, but he is bound to be quizzed on what would cause the Fed to hold off from further rate rises and on the risks of a ‘hard landing’ for the economy. Prior to the Fed’s policy decision, durable goods orders and the advanced trade report will provide further insight into whether growth is slowing. Elsewhere, it’s a quiet day for data with only Eurozone Money Supply of note.FX Options Expiring 10am New York Cut EUR/USD: 1.0000 (1.18B), 1.0100 (1.84B), 1.0125 (650M), 1.0150 (497M) EUR/USD: 1.0200-10 (1.63B), 1.0250-55 (2.13B), 1.0270 (532M), 1.0300 (1.06B) USD/JPY: 136.24-25 (755M). EUR/JPY: 142.40 (1.42B). EUR/CHF: 1.0015 (477M) GBP/USD: 1.2200 (404M). AUD/USD: 0.6945-50 (451M), 0.7040-50 (687M) USD/CAD: 1.2850-55 (900M), 1.2870-80 (604M), 1.2910 (498M), 1.3000 (392M)Technical & Trade ViewsEURUSD Bias: Bearish below 1.0350 EUR sold off across the board due to more bad news regarding energy flows A further cut to supplies from Russia have heightened EZ recession fears Pair looks vulnerable ahead of FOMC decision during US Wednesday session Resistance 1.0250/60, support 1.0100-05, 1.0070-75 Price testing the 20 Day Bearish VWAP 20 Day VWAP is bearish, 5 Day bearishGBPUSD Bias: Bearish below 1.2150 Pair moved successively lower from Asia session high Fed +75bp Wednesday in focus GBP traders unsure of +25 or +50 at Aug 4 MPC GBP needs help from the Fed, BoE to make run at mid-June hig Offers sited at 1.21 bids 1.1890 20 Day VWAP is bullish, 5 Day bullishUSDJPY Bias: Bullish above 134 USD/JPY up with US yields on FOMC 75 bp hike view, Japan buys on dips USD/JPY ratcheting gradually higher from 135.58 EBS low last Friday Japanese importer, other bids on almost every dip, likely will continue USD/JPY moves up matching moves back up in US Treasury 2s, to 3.065% o/n FOMC looking to hike Fed funds 75 bps tonight, 50 bps in September Offers sited 137.30/50 bids at 135.10 20 Day VWAP is bearish, 5 Day bearishAUDUSD Bias: Bearish below .7050 Edges lower after Aus CPI soft print AUD/USD slipped from 0.6950 to 0.6930 in initial reaction to Aus CPI Weighted mean & headline slightly lower than forecast - trimmed mean slightly higher Impact on AUD/USD likely to be fleeting as the numbers lined up with expectations AUD to take its lead from USD response to FOMC Offers sited .7000/10 AUD/USD support is at Friday's 0.6876 low and break targets 0.6840/45 20 Day VWAP is bullish, 5 Day bullishBTCUSD Bias: Bearish above 22k Risk appetite fragile leading up to FOMC decision Possibility of 100bps hike can't be ruled out Falls out of VWAP uptrend channel Closing below 21k will be a meaningful downside development If below 20.5k, downtrend channel back in play 20 Day VWAP is bearish, 5 Day bearish

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/daily-market-outlook-july-27-2022"
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Market Update – Big Tech lifts the mood on Fed Day

USDIndex ticked up to 107.00, as EUR slipped over 1% before recovering following the Russian announcement of further cuts to European gas supplies. FX markets subdued ahead of FED later today. US Stocks declined (NASDAQ -1.87%), Walmart -7.6% (profits warning) Coinbase -21% AMZN -5.23% Shopify -14%. However after hours GOOGL & MSFT up 5% & 4% after Earnings. Unilever, Coke & McDonald’s all warned of higher prices. Asian markets mixed  (Hang Seng -1.2%, Nikkei +0.23%). European FUTS higher. Yields up again +0.56%, but 2/10yr curve remains inverted. Oil holds $95, Gold slipped to lower and BTC holds under $22k.

• USDIndex up, to resistance at 107.00 – holds at 106.80. 
• Equities – USA500 closed -45.79 pts (-1.15%) (3921), US500FUTS at 3957 now. 4th 8%+ rally of the year, previous 3 have resulted in lower lows..bottom in or dead cat bounce? 
• Yields 10-year yield recovered to close at 2.787%, trades higher again at 2.8068% now. 
• Oil – in–focus rallied to $98 the news from from Russia, since declined to $95. 
• Gold  had another weak session $1727 to $1714 now up to $1718. 
• Bitcoin sank again to trade at $21.1K now. 
• FX Markets – EURUSD remains pressured came with 7 pips of 1.0100 and trades at 1.0225, USDJPY tests to 137.00 now. Cable holds over the key 1.2000, capped at 1.2080. 

Overnight – AUD CPI in-line (21-yr high) at 1.8% & German GfK missed -30.6 vs -27.7. 

Today – US Durable Goods, FOMC announcement and Chair Powell’s press conference Earnings from Airbus, BASF, Deutsche Bank, Equinor, BATS, GSK, Lloyds, Rio Tinto, Credit Suisse, Meta, T-Mobile, Boeing.

Biggest FX Mover @ (06:30 GMT) AUDCAD (-0.30%). Rejected 0.8950 again earlier and tested to .0.8900 a key support. MAs aligned lower, MACD histogram negative & falling, RSI 38 & falling,  H1 ATR 0.00127, Daily ATR 0.00697.

 

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Stuart Cowell

Head Market Analyst

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from HF Analysis /496995/
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GBPUSD, H4 | Potential Bullish Continuation

Type: Bullish BreakoutKey Levels:Resistance: 1.21593Pivot: 1.20546 Support: 1.1931Preferred Case:On the H4, with prices moving within an ascending channel and above the ichimoku indicator, we have a bullish bias that price will rise to the pivot at 1.20546 where the pullback resistance is. Once there is upside confirmation of price breaking pivot structure, we would expect bullish momentum to carry price to 1st resistance at 1.21593 where the pullback resistance, 127.2% fibonacci extension and 61.8% fibonacci retracement are.Alternative Scenario:Alternatively, price could drop to 1st support at 1.1931 where the pullback support and 50% fibonacci retracement are.

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/gbpusd-h4-or-potential-bullish-continuation27"
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BCOUSD，H4 | Potential Bearish Continuation

Type: Bearish DropKey Levels:Resistance: 108.94Pivot: 103.92Support: 95.905Preferred Case:On the H4, with price moving in a descending trend channel and RSI showing a descending trendline, we have a bearish bias that price will continue to drop from the pivot at 103.92 at the pullback support to the 1st support at the 95.905 at the swing low in line with the 61.8% fibonacci projection.Alternative Scenario:Alternatively, price may reverse off the pivot and rise to the 1st resistance at 108.94 at the overlap resistance in line with the 38.2% fibonacci retracement.

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/bcousd-h4-or-potential-bearish-continuation"
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The best packaged bank accounts

Packaged bank accounts can offer great value with useful additional perks – but get it wrong and you could be out of pocket. Ruth Jackson Kirby outlines the best packaged bank accounts on the market today.

from Moneyweek RSS Feed https://moneyweek.com/personal-finance/bank-accounts/605159/the-best-packaged-bank-accounts
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EU Gas Supply’s Theme Overshadows ECB in Driving EURUSD Short-Term Moves

Safety plays prevail in FX, equity and bond markets on Tuesday, as evidenced by lower prices for risk assets, a strengthening USD and increased demand for long-term bonds. Reports about Russia gas flows to the EU are becoming almost the only driver of short-term sentiment for the Euro and the British pound, overshadowing even the policy of central banks. For example, reports that Russia restored gas supply via the Nord Stream 1 at 40% of normal capacity after the completion of maintenance, helped investors to price out worst-case scenario of EU’s energy crisis, causing the EURUSD to rise from 1.00 to 1.0250. However, the optimism did not last long, today's reports that gas flows decreased from 40% to 20% sent the European and British currencies into a nosedive. The EURUSD traded below 1.0150 and the GBPUSD broke the 1.20 foothold.The European Commission, together with the countries of the bloc, developed a plan to “proactively reduce gas consumption” due to the risks of a complete halt in gas flows from Russia through the Nord Stream 1 pipeline. Reduced energy consumption will most likely cause a recession in the EU and these apprehensions cause risk premia on European risk assets to build up. The German DAX is down by 0.9% today, the index of Europe's largest companies STOXX 500 fell by 0.5%.Mounting EU recession risks force investors to buy more long-term bonds: the yield to maturity of 10-year German bonds fell by approximately 10 bp from yesterday to 0.94%, the lowest level since the end of May:Oil prices rose on expectations of rising demand as a substitute to gas, although the gains were moderate. Brent spot price climbed above $107 per barrel.The situation is likely to continue to escalate as the EU seeks ways to reduce consumption while Russia continues to cut supplies. That is, the tug-of-war continues. Accordingly, the outlook for an EU economic damage is poised to deteriorate further, which will likely drive the European currency lower. The risk that the EURUSD will soon test parity is set to increase and speculative pressure will likely contribute as well on the presence of a clear-cut bearish factor.From a technical point of view, the EURUSD left the short-term range and entered the bearish channel, which increases the odds that the pair will retest parity:The set-up in the GBPUSD is similar: theprice failed to break through the upper bound of the trend corridor and maysoon halt the recovery within the short-term upward channel. In this case, thenext target may be the level of 1.18:

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/eu-gas-supply-theme-overshadows-ecb-in-driving-eurusd-short-term-moves"
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Chinese stocks are cheap – but for good reasons

Chinese stocks are trading at an “undeniably cheap” 11.9 times earnings. But they are cheap for good reasons, and this may not be the buying opportunity it appears to be.

from Moneyweek RSS Feed https://moneyweek.com/investments/stockmarkets/china-stockmarkets/605158/chinese-stocks-are-cheap-but-for-good-reasons
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Collecting rare whisky: a £16m tipple served with froth

The market in rare whisky is looking very bubbly, says Chris Carter, with a 1975 cask of recently selling for £16m.

from Moneyweek RSS Feed https://moneyweek.com/spending-it/wine/605153/collecting-rare-whisky-gpb16m-tipple
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Gold Futures ( GC1! ), H4 Potential For Bearish Continuation

Type: Bearish MomentumKey Levels:Resistance: 1738.4Pivot: 1721.1Support: 1679.3Preferred Case:On the H4, with price moving within a descending channel and RSI moving in a descending trendline, we have a bearish bias that price will drop from pivot at 1721.1 where the pullback resistance is to 1st support at 1679.3 in line with 100% fibonacci projection and swing low support on the daily timeframe .Alternative Scenario:Alternatively, price could break pivot and rise to 1st resistance at 1738.4 where the 38.2% fibonacci retracement and swing high resistance are.Fundamentals:As major markets released weaker than expected PMI data, ringing alarm bells for further economic slowdown and increasing the risk of an unavoidable global recession, investors shift their attention toward Gold as a safe haven alternative.

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/gold-futures-gc1-h4-potential-for-bearish-continuation"
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Micro GBP/USD Futures (M6B1!), H4 Potential For Bullish Rise

Type: Bullish RiseKey Levels:Resistance: 1.2181Pivot: 1.2061Support: 1.1955Preferred Case:On the H4, with prices moving within an ascending channel and above the ichimoku indicator, we have a bullish bias that price will rise from the pivot at 1.2061 where the pullback support is to the 1st resistance at 1.2181 where the overlap resistance, 61.8% fibonacci retracement and 127.2% fibonacci extension are.Alternative Scenario:Alternatively, price could break pivot structure and drop to the 1st support at 1.1955 where the pullback support, 50% fibonacci retracement and 61.8% fibonacci projection are.Fundamentals:Due to the current political uncertainty in the UK, rampant inflation and relatively modest interest rate increases, we have a bearish bias on the GBPUSD . We'll need to exercise caution for this setup because our fundamentals and technicals are not completely aligned.

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/micro-gbp-usd-futures-m6b1-h4-potential-for-bullish-rise26"
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MICRO E-MINI S&P500 INDEX FUTURES (MES1!), H4 Potential For Bearish Drop

Type: Bearish MomentumKey Levels:Resistance: 4091.00Pivot: 3998.25Support: 3738.00Preferred Case:On the H4, with price moving in a descending trendline and RSI also showing a descending trendline, we have a bearish bias that price will continue to drop from the pivot at 3998.25 at the swing high in line with the 61.8% fibonacci retracement to the 1st support at 3738.00 at the multiple siwng lows.Alternative Scenario:Alternatively, price may rise above the support structure at the pivot and rise to the 1st resistance at 4091.00 at the overlap resistance in line with the 78.6% fibonacci retracement.Fundamentals:US indexes moved moderately higher with better-than-expected US economic reports. Hence, we have a bullish view on the micro e-mini S&P500 index.

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/micro-e-mini-s-and-p500-index-futures-mes1-h4-potential-for-bearish-drop26"
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NEW ZEALAND DOLLAR FUTURES (6N1!), H4 Potential For Bullish Rise

Type: Bullish RiseKey Levels:Resistance: 0.63185Pivot: 0.62470Support: 0.61850Preferred Case:On the H4, with prices moving within an ascending channel and above the ichimoku indicator, we have a bullish bias that price will rise from the pivot at 0.62470 where the overlap support is to the 1st resistance at 0.63185 where the swing high resistance, 78.6% fibonacci retracement and 127.2% fibonacci extension are.Alternative Scenario:Alternatively, price could break pivot structure and drop to the 1st support at 0.61850 where the overlap support, 50% fibonacci retracement and 61.8% fibonacci projection are.Fundamentals:No Major News

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/new-zealand-dollar-futures-6n1-h4-potential-for-bullish-rise26"
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Micro CAD/USD Futures (MCD1!), H4 Potential For Bullish Rise

Type: Bullish MomentumKey Levels:Resistance: 0.7863Pivot: 0.7795Support: 0.7728Preferred Case:On the H4, microwith price moving in an ascending trendline and moving above the ichimoku cloud, we have a bullish bias that price will rise from the pivot at 0.7795 at the multiple swing high in line with the 50% fibonacci retracement to the 1st resistance at 0.7863 at the pullback resistance in line with the 78.6% fibonacci projection.Alternative Scenario:Alternatively, price may reverse off the pivot and drop to the 1st support at 0.7728 at the overlap swing low.Fundamentals:No major news

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/micro-cad-usd-futures-mcd1-h4-potential-for-bullish-rise26"
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Live Cattle Futures (LE1!), H4 Potential For Bullish Rise

Type: Bullish RiseKey Levels:Resistance: 141.125Pivot: 138.275Support: 135.500Preferred Case:On the H4, with prices moving along an ascending trendline and above the ichimoku indicator, we have a bullish bias that price will rise to the pivot at 138.275 where the swing high resistance, 61.8% fibonacci retracement and 78.6% fibonacci projection are. Once there is upside confirmation that price has broken the pivot , we would expect bullish momentum to carry prices to 1st resistance at 141.125 where the pullback resistance, 78.6% fibonacci retracement and -27.2% fibonacci expansion.Alternative Scenario:Alternatively, price could drop to the 1st support at 135.500 where the overlap support is.Fundamentals:Due to the strong cattle prices and fears about demand settling down, we have a bullish view on live cattle.

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/live-cattle-futures-le1-h4-potential-for-bullish-rise"
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