Posted at 28 July 2022 / Categories Market Roundups
Market Roundup
• Fed announces rate hike in unanimous decision
•Federal Reserve raises rates 75 basis points
• U.S. crude inventories fell 4.5 million barrels last week –EIA
• U.S 10-yr Treasuries yield falls
•US Wholesale Inventories (MoM) 1.9%, 1.8% previous
•US Jun Durable Goods Orders (MoM) 1.9%,-0.5% forecast, 0.8% previous
•US Jun Goods Trade Balance -98.18B, -104.04B previous
•US Jun Goods Orders Non Defense Ex Air (MoM) 0.5%, 0.2% forecast, 0.6% previous
•US Jun Core Durable Goods Orders (MoM) 0.3%, 0.2% forecast, 0.7% previous
•US Jun Retail Inventories Ex Auto 1.6%, 0.8% previous
•US Jun Durables Excluding Defense (MoM) 0.4%,-0.5% forecast, 0.7% previous
•US Jun Pending Home Sales (MoM) -8.6%, -1.5% forecast, 0.7% previous
•US Cushing Crude Oil Inventories 0.751M, 1.143M previous
•US Crude Oil Inventories -4.523M, -1.037M forecast,-0.446M previous
•US Fed Interest Rate Decision 2.50%, 2.50% forecast,- 1.75% previous
Looking Ahead - Economic Data (GMT)
• No data ahead
Looking Ahead - Economic events and other releases (GMT)
•No significant events
Currency Summaries
EUR/USD: The euro edged higher against dollar on Wednesday after the U.S. Federal Reserve raised interest rates by 75 basis points, as was widely anticipated, and comments from Fed Chair Jerome Powell spurred hopes for a slower hiking path. The central bank raised rates by three-quarters of a percentage point for the second straight meeting as it attempts to rein in inflation, but noted that while the labor market remains strong, other economic indicators have softened. The central bank raised rates by three-quarters of a percentage point for the second straight meeting as it attempts to rein in inflation, but noted that while the labor market remains strong, other economic indicators have softened. The dollar index fell 0.756% to 106.310, with the euro up 0.8% to $1.0188 . Immediate resistance can be seen at 1.0212(July 27th high), an upside break can trigger rise towards 1.0263(38.2%fib).On the downside, immediate support is seen at 1.0182(38.2%fib), a break below could take the pair towards 1.0135 (14DMA).
GBP/USD: The British pound rose higher on Wednesday as dollar lost ground as investors bet the Federal Reserve would slow interest rate hikes following its announcement on Wednesday of an increase in rates in line with expectations. The Fed raised rates by three-quarters of a percentage point in an effort to cool the most intense breakout of inflation since the 1980s.Fed Chair Jerome Powell said the lack of clear visibility into the future trajectory of the economy means the central bank can provide reliable guidance about where its policy is headed only on a “meeting by meeting” basis. Immediate resistance can be seen at 1.2232(50%fib), an upside break can trigger rise towards 1.2265(38.2%fib).On the downside, immediate support is seen at 1.2084(5DMA),a break below could take the pair towards 1.20101(23.6%fib).
USD/CAD: The Canadian dollar strengthened to a six-week high against its U.S. counterpart on Wednesday as investors weighed prospects of the Federal Reserve slowing the pace of interest rate hikes following its latest outsized increase. U.S. stock markets jumped and the U.S. dollar fell against a basket of major currencies after the Fed raised interest rates by 75 basis points, as was widely anticipated, but noted signs of a softening economy. The loonie was trading 0.5% higher at 1.2820 to the greenback, or 78.00 U.S. cents. It touched its strongest level since June 13 at 1.2809. Immediate resistance can be seen at 1.2862 (5DMA), an upside break can trigger rise towards 1.2891 (50%fib).On the downside, immediate support is seen at 1.2816 (38.2%fib), a break below could take the pair towards 1.2772(Lower Bollinger Band).
USD/JPY: The dollar declined against the Japanese yen on Wednesday as the dollar fell after a widely-expected interest rate hike by the U.S. Federal Reserve, while stocks gained as a slew of earnings from the region's two largest economies lent support. The U.S. central bank raised its benchmark overnight interest rate by 75 basis points in an effort to tame soaring inflation. The dollar slid 0.7% to 106.35 following the decision and Powell's news conference. Bets of a super-sized U.S. rate hike of 100 basis points (bps) had pushed the dollar to a 20-year-high of 109.29 earlier this month. Strong resistance can be seen at 135.20 (38.2%fib), an upside break can trigger rise towards 137.50(14DMA).On the downside, immediate support is seen at 134.57 (Lower BB), a break below could take the pair towards 134.05 (50%fib).
Equities Recap
European stocks closed higher on Wednesday, lifted by some fairly encouraging earnings updates from top U.S. and European companies, and positive lead from Wall Street.
The UK's benchmark FTSE 100 closed up by 0.57 percent, Germany's Dax ended up by 0.53 percent, and France’s CAC finished the up by 0.75 percent.
The Nasdaq jumped more than 4% on Wednesday in its biggest daily percentage gain since April 2020 as the Federal Reserve raised interest rates as expected and comments by Fed Chairman Jerome Powell eased some investor worries about the pace of rate hikes.
Dow Jones closed up by 1.37 percent, S&P 500 ended up 2.62 percent, Nasdaq finished the day up by 4.06 percent.
Treasuries Recap
Treasury yields edged lower on Wednesday after the Federal Reserve hiked interest rates by 75 basis points as it tightens monetary policy further in an effort to curb inflation while trying to steer the U.S. economy away from a hard landing.
The two-year yield rose 1.8 basis points to 3.061% as the 10-year fell 1.8 basis points to 2.769%. Yields on shorter-term notes normally are lower than long-term notes.
The yield on the 30-year Treasury bond US30YT=RR was down 0.4 basis point to 3.004%.The breakeven rate on five-year U.S. Treasury Inflation-Protected Securities (TIPS) was last at 2.608%.
Commodities Recap
Gold inched up on Wednesday helped by a fall in the dollar, but caution over the Federal Reserve's policy tightening plan kept bullion prices range-bound.
Spot gold rose 0.2% to $1,720.57 per ounce by 1100 GMT. U.S. gold futures were little changed at $1,719.60.
Oil settled up more than $2 on Wednesday as a report of lower inventories in the United States and cuts in Russian gas flows to Europe offset concern about weaker demand and a U.S. interest rate hike.
Brent crude rose $2.22, or 2.1%, to $106.62 a barrel. U.S. West Texas Intermediate (WTI) crude gained $2.28, or 2.4%, to $97.26.