Posted at 23 June 2022 / Categories Market Roundups
Market Roundup
• Canada May Core CPI (MoM) 0.8%, 0.4% forecast, 0.7% previous
• Canada May Core CPI (YoY) 6.1%,5.9% forecast,5.7% previous
• Canada May CPI (YoY ) 7.7%,7.4% forecast, 6.8% previous
• EU Jun Consumer Confidence -23.6,-20.5 forecast, -21.1 previous
• US 20-Year Bond Auction 3.488%, 3.290% previous
Looking Ahead Economic Data(GMT)
• 00:30 Japan Jun Manufacturing PMI 53.3 previous
• 00:30 Japan Services PMI 52.6 previous
• 00:30 Japan 05:00 BoJ Core CPI (YoY) 1.4% previous
• 05:00 Japan BoJ Core CPI (YoY) 1.4% previous
Currency Summaries
EUR/USD: The euro strengthened on Wednesday after testimony from Fed Chair Jerome Powell added little to his recent pledges to get inflation under control, encouraging a sharp retreat in Treasury yields that reversed earlier safe-haven buying of the U.S. currency. Yields have dropped from more than decade highs reached before last week’s Fed meeting on concerns that rapid rate hikes will dent the economy. Bonds also got a boost on Wednesday as oil prices tumbled on news of a plan by U.S. President Joe Biden to cut fuel costs for drivers and as recession fears dented demand. Immediate resistance can be seen at 1.0604(38.2%fib),an upside break can trigger rise towards 1.0617(21DMA).On the downside, immediate support is seen at 1.0525 (5DMA), a break below could take the pair towards 1.0464(23.6%fib).
GBP/USD: The British pound eased on Wednesday after hot UK consumer inflation data raised new worries over an economic slowdown, just as the Bank of England looks set for more interest rate hikes in the coming months. Soaring food prices pushed consumer inflation to a new 40-year high of 9.1% in May, the highest rate in the Group of Seven countries and underlining the severity of the cost-of-living crunch in the world's fifth-largest economy. Sterling dipped against the U.S. dollar but later recovered as the greenback lost strength. It was down 0.1% at $1.2250 following two days of gains .Immediate resistance can be seen at 1.2318(38.2%fib),an upside break can trigger rise towards 1.2398 (21DMA).On the downside, immediate support is seen at 1.2079(23.6%fib), a break below could take the pair towards 1.2016(Lower BB).
USD/CAD: The Canadian dollar weakened against its U.S. counterpart on Wednesday as oil prices fell, but the currency pared its decline as domestic inflation data bolstered bets for a supersized interest rate hike by the Bank of Canada next month. Canada's annual inflation rate unexpectedly accelerated to 7.7% in May, the highest since January 1983, while the average of the Bank of Canada's three core measures rose to 4.7% from an upwardly revised 4.4%. The price of oil, one of Canada's major exports, fell as investors worried that rate hikes by the Federal Reserve could push the U.S. economy into a recession. U.S. crude prices settled 3% lower at $106.19 a barrel. The loonie was trading 0.1% lower at 1.2930 to the greenback, after trading in a range of 1.2913 to 1.2996. Immediate resistance can be seen at 1.2974(23.6%fib), an upside break can trigger rise towards 1.3000 (Psychological level).On the downside, immediate support is seen at 1.2907 (Daily low), a break below could take the pair towards 1.2871(38.2%fib).
USD/JPY: The dollar dipped against Japanese yen on Wednesday as U.S. Treasury yields slid on fears the U.S. economy could slide into recession after Federal Reserve Chair Jerome Powell said higher rates are painful but are the means the U.S. central bank has to slow inflation. The Fed is not trying to engineer a recession to heel inflation but is fully committed to bringing prices under control even if doing so risks an economic downturn, Powell said at a hearing of the U.S. Senate Banking Committee. Investors worry that aggressive interest rate hikes by major central banks to tame inflation risk causing a sharp global slowdown or recession. The Japanese yen strengthened 0.29% versus the greenback at 135.91 per dollar. Strong resistance can be seen at 136.94 (23.6%fib), an upside break can trigger rise towards 138.51(Higher BB).On the downside, immediate support is seen at 135.15(5DMA), a break below could take the pair towards 134.36(38.2%fib).
Equities Recap
European stocks fell sharply on Wednesday as inflation and interest-rate worries returned to haunt investors.
UK's benchmark FTSE 100 closed down by 0.88 percent, Germany's Dax ended down by 1.11 percent, France’s CAC finished the day down by 0.81 percent.
Wall Street's main indexes ended with slim losses on Wednesday after choppy trading as energy shares weighed and investors digested Federal Reserve Chair Jerome Powell's comments on the central bank's aim to bring down inflation.
Dow Jones closed down by 0.15 percent, S&P 500 closed down by 0.13 percent, Nasdaq closed down by 0.15 % percent.
Treasury Recap
U.S. Treasury yields fell to almost two-week lows on Wednesday as fears grew that the Federal Reserve will cause a recession by aggressively tightening monetary policy as it tackles soaring inflation.
Benchmark 10-year yields were at 3.156%, after reaching 3.498% on June 14, the highest since April 2011.
Commodities Recap
Gold prices rose on Wednesday as a retreat in U.S. Treasury yields and the dollar bolstered bullion’s appeal amid growing recession concerns.
Spot gold rose 0.4% to $1,840.39 per ounce by 1:59 p.m. ET (1759 GMT), and U.S. gold futures settled at $1,838.4.
Oil prices tumbled around 3% on Wednesday as investors worried that rate hikes by the Federal Reserve could push the U.S. economy into recession, dampening demand for fuel.
Brent crude futures fell $2.91, or 2.5%, to settle at $111.74 a barrel. The global benchmark hit a session low of $107.03, its lowest since May 19.
U.S. West Texas Intermediate (WTI) fell $3.33, or 3%, to settle at $106.19 a barrel. The session low was $101.53, its lowest since May 11.