Market Update – July 18 – Stocks Rally, Dollar Dips, Biden Fist Bump

USDIndex continued last week’s slip to test 107.60. US data on Friday (Retail Sales, Empire State & UoM Con. Sentiment) all better than expected. Bullard talked 75bp not 100bp for July.  US Stocks rallied into close (DOW +2.15%), despite misses from Wells Fargo & BlackRock. Asian markets positive, (Hang Seng +2.42%, Nikkei +0.43%). European FUTS positive too. Yields closed down -1.25% but the rate curve is still inverted. Oil up to $98, Gold up to $1714 BTC has rallied to $22k. Biden fist bumped Crown Prince Mohammed bin Salman but got little from visit, Yellen pushes minimum global corporation tax, IMF are “exceptionally uncertain” over global growth & Reuters report on 12 countries on brink of default.

Week Ahead – ECB & BOJ Rate Decisions, RBA Mins, a raft of CPI & Retail Sales data and Earnings Season gets into full swing including Banks & IBM today, Netflix, Tesla, Twitter and Johnson & Johnson later in the week.

USDIndex slides further from Thursday’s 109.00 to 107.60 now as expectations of a 100bp rate hike next week recedes.   
EquitiesUSA500 closed +1.92% 72.54pts (3863), US500FUTS at 3897 now. Citi BIG Earnings beat  +13.2%, Wells Fargo profits fell 50% but stock closed +6.2%, United Health +5.4%, BlackRock +2%, Netflix +8.2%, BAC +7.04%. 35 companies have reported; 80% have beat estimates.
Yields 10-year yield higher, from close +2.92%, trades at 2.935% now. 
Oil & Gold had volatile sessions last week – USOil trades up back to $100 from $90.90 lows last week, following inconclusive Biden visit to Mid-East; OPEC next meet Aug 3. Gold fell under $1700, last week but back to $1714 now on weaker USD. 
Bitcoin rallied from $19K, testing $22.2K today on more chatter of major investments coming.
FX MarketsEURUSD remains pressured at 1.0100 but moving up today, USDJPY down from 139.30 to  138.20 now. Cable trades back to 1.1900 from 1.1760 lows last week. Race to be new PM is reduced to two contenders this week. New PM Sept 5. 

Overnight – NZ CPI hotter than expected (1.7% (32-year high at ) vs. 1.5%). NZD jumped too.

Today – Little economic data, speech BOE’s Saunders. Earnings – Bank of America, IBM, Goldman Sachs & Charles Schwab.

Biggest FX Mover @ (06:30 GMT) EURUSD (+0.68%). EUR rallying ahead of ECB this week ? From under Parity (0.9951) on Thursday to 1.01400 now. MAs aligned higher, MACD histogram positive but flat, RSI 69 & rising, H1 ATR 0.00172, Daily ATR 0.01088.

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Stuart Cowell

Head Market Analyst

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