Dollar had a small rebound after positive economic data
The hawkish tone and global bond tantrum unleashed by central bankers at the Sintra ECB forum two weeks ago is now a distant memory, and after Janet Yellen surprised markets with an unexpectedly dovish (in the market’s interpretation) testimony yesterday, overnight global shares hit their fourth all-time high in less than a month as concerns about the tightening Fed were laid to rest, sending September and December rate hike odds sliding.
EU Equity markets trade mixed on the day, as futures were bullish following Yellen’s dovish tone Wednesday, with markets seemingly taking a breather from a busy day’s trade on Wednesday. Sector specific is also mixed, as oil lags the energy sector. Materials are the noticeable outperformer, as metal markets trade the vast majority in the green amid the risk tone and dampening dollar sentiment.
The number of individuals filing for initial jobless benefits in the week ending July 8 decreased by 3,000 to a seasonally adjusted 247,000 from the previous week’s revised total of 250,000, the U.S. Department of Labor said.
Gold trades in an ascending price channel according to the Bloomberg 1H Chart.
If there is a continuation of the bullish momentum, the commodity could break out above 1223.93 and possibly extend more gains toward 1227.46.
In the case of a bearish reversal, Gold could retreat toward the 1217.44 and extend losses through the 1214.48.
In currencies, the BOC made more waves after its head Poloz sees modest overshoot in inflation in 2019; says policy not on a predetermined path, further stating, the Central Bank must target future inflation. FX markets have taken a back-foot yesterday morning, as much slow down following the volatility seen in the majors Wednesday. GBP has been the most interesting mover on the day, following an overnight article from BoE’s McCafferty, cementing his hawkish tone, and his vote for a hike in August. USD/JPY continued its bearish pressure into Asian trade; not looking back since rejecting 114.50, taking another spike below 113.00 in Asian trade, the pair has consolidated around this level throughout European trade, with any clear break possibly set to result in a test of the 109.50 range.
In commodities, OPEC crude output rose by 340 kb/d in June to 32.6 Million Barrels per Day after Saudi flows increased and Libya and Nigeria, spared from cuts, pumped at stronger rates. As this news was digested, oil saw selling pressure, with WTI trading through USD 45.00. Precious metals benefitted from Yellen’s tone Wednesday, as Gold rose for the fourth successive day.
The euro failed to sustain an early advance against the dollar and retreated to trade below the $1.14 level as investors unwound long positions on the currency to take profit.
EURUSD – Janet Yellen’s testimony to Congress Wednesday was far from hawkish, yet her remarks about the balance sheet reduction and inflation matched market expectations. The common currency has since they failed to move above Wednesday’s high of 1.1489.
GBPUSD – Sterling was among the day’s best performers and rose as much as 0.5% to 1.2952 high, before paring gains. Offers above 1.2940, absorbed buying pressure, while leverage accounts saw to sell rallies near 1.3000.
USDJPY – USDJPY was rather volatile with whipsaw kind of move for the day so far. It rose higher only to be faced by sellers as Safe Haven Demand still is in the demand.
USDCAD – Some demand seen Thursday to fade the drop in CAD implied volatilities. One month slightly higher at 6.78%, compares to Wednesday high of 7.35% before the BOC decision.
Dow Jones – More Upward pressure was found in the Dow Jones which moved higher towards the 21,500 before capping around that area where it currently trades.
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***Information contained in this news letter are gathered from third parties and should not be regarded in any way as trade advice or recommendations by CM Trading. CM Trading does not recommend or advise traders or investors in their decision making, but merely provides information from the market for its clients as additional information being made available as per the events occurring in the financial markets.
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