Market Update – July 11 – Stocks pressured, USD gains

The NFP report was slightly disappointing overall (372k June payroll gain  & -74k in downward revisions). USD & Yields spiked, with USDIndex 107.59. Fed funds futures are dropping as the jobs report gives no reason for the FOMC to slow its policy trajectory, keeping a 75 bp hike at the July 26-27 FOMC intact and 50 bp move at the September 20-21 meeting. Stocks remain under pressure. Asian stocks struggled further overnight, with China bourses once again hit by lockdown concerns. Chinese CPI hotter at 2.5% vs 2.1%, but PPI cooler 6.15 vs 6.4%. COT report shows long positions on USD were reduced.

China discovered its first case of a highly transmissible Omicron subvariant in Shanghai and that new cases jumped to 63 in the country’s largest city from 52 a day earlier.

USDIndex is heading for a new 20 year high – eased a bit at 107.23.
Yields: The 2-year rate is up over 3.119%, 3-year at 3.165% & 10-year higher at 3.095%.
Stocks : USA30 was down -0.15%, while the USA500 was off -0.08%. The USA100 rose 0.12%.  In Europe, the picture is not much better and GER40 and UK100 futures are down -1.4% and -1.0%. Twitter fell 5% (with more to come) after MUSK withdrew the $44bln offer. The market mood will be tested by earnings from JPMorgan and Morgan Stanley on Thursday, with Citigroup and Wells Fargo the day after.
Oil prices fell slightly today reversing some gains amid lockdown fear in China, i.e. concerns about tight supply. USOIL at $102.96 – New mass COVID testing in China potentially hitting demand.
Gold steady for a 3rd day at $1,732-$1,750.
FX Markets: USDJPY at 137.26 – 24-month high. Japan’s ruling conservative coalition’s strong election showing indicated no change to lose monetary policies.

Today – Fed’s Williams speech.

Biggest FX Mover @ (06:30 GMT) EURUSD (0.62%) down to 1.0105. MAs aligning lower, MACD histogram negative & declining, RSI 31, H1 ATR 0.0014, Daily ATR 0.01032.

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Andria Pichidi

Market Analyst

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