Market Update – July 19 – USD & Stocks Cool ahead of Central Banks

USDIndex continued last week’s slip and tested 106.80, before recovering. US Stocks dropped into close following +1% on open (NASDAQ -0.81%) after a plunge in the NAHB home builder index. Goldmans & Bank Of America, beat expectations but saw profits down -47% & -37%, respectively. IBM beat after hours, but shares fell -4.32%. Apple (-2.06%) warned of hiring freeze. Asian markets are choppy, (Hang Seng -0.82%, Nikkei +0.70%). European FUTS also mixed. Yields are up +1.72% & the rate curve is still inverted. Oil holds $100, Gold down to $1710 BTC holds at $22k. Gazprom warns of European supply issues and 700 new Covid cases reported in China, weigh on sentiment.

Week Ahead – ECB & BOJ Rate Decisions, RBA Mins, a raft of CPI & Retail Sales data and Earnings Season still has more Banks, Johnson & Johnson & Netflix today,with Tesla, Twitter & Snap later in the week.

USDIndex slides further to test 106.80 and rotates around 107.00 now as expectations of a 100bp rate hike next week evaporate. AUD outperforms in Asian session.   
EquitiesUSA500 closed -0.84%, 32.31pts (3830), US500FUTS at 3850 now. A strong +1% opening rally was wiped out following weak Housing data and the Apple news.
Yields 10-year yield higher, into close at 2.986%, trades at 2.96% now. 
Oil & Gold had volatile sessions last week – USOil trades up back under $100 now from a test of $102.00 yesterday. Gold tested to $1724 yesterday but back to $1707 now. 
Bitcoin rallied to $22.8K yesterday and holds $22k now, on more chatter of major investments coming.
FX MarketsEURUSD remains pressured but tested 1.0200 yesterday & back to 1.016 now and USDJPY is down again to 137.85 now. Cable tested back to 1.2000 from 1.1760 lows last week. Race to be new PM is reduced to two contenders this week. New PM Sept 5. 

Overnight – RBA Minutes – “committed to doing what is necessary on inflation” no new insight, UK Earnings (6.2% vs. 6.8%) & Payrolls are weaker and CHF Trade Balance lifted 70 bln CHF.

Today EZ CPI (Final), Speech from BoE’s Bailey. Earnings – J&J, Lockheed & Netflix.

Biggest FX Mover @ (06:30 GMT) AUDUSD (+0.60%). AUD continues to recover from last weeks 0.6680 low and no surprises today from RBA Minutes. Next resistance 0.6850 & 0.6900. MAs aligned higher, MACD histogram & signal line higher, RSI 67 & rising, H1 ATR 0.00124, Daily ATR 0.00908.

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Stuart Cowell

Head Market Analyst

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