Spreadex Market Update
Markets Await US CPI and Earnings Season as Equities Close in the Green
Global equities closed on a positive note as the anticipation builds up for the release of US CPI figures and the unofficial start of earnings season. Lower bond yields put pressure on the dollar, setting the stage for an intriguing day in the financial markets.
Key factors for today
- Global equities closed in the green, with the dollar facing downward pressure due to lower bond yields.
- The eagerly awaited US CPI figures are set to be released today, offering insights into inflation trends.
- The unofficial start of earnings season at the end of the week adds to the market anticipation.
Market movers
- UK unemployment rate rises while wages increase, boosting the chances of a Bank of England (BOE) hike.
- RBA Governor expresses openness to further tightening, but no announcement on the new governor yet.
- Disappointing Japan data contributes to USD/JPY losing streak.
- WTI prices surge on speculation of production cuts and EIA demand revision.
- RBNZ leaves rates unchanged, and Kiwi swings despite USD impact.
Economic calendar
- Spain CPI Inflation
- MBA 3-Year Mortgage Rate
- US CPI Inflation
- BOC Interest Rate Decision
- EIA Crude Oil Stock Change
- BOC Goc Rogers Speech
- BOC Gov Macklem Speech
- WASDE Report
- Fed Bostic Speech
- Fed Mester Book
- NZ Food Inflation
- RICS House Price Balance
The big news
UK Wages Increase Boosts Chance of BOE Hike In May
The UK's unemployment rate rose to 4.0%, while the claimant count increased by a positive 25.7K—a detrimental figure for the economy. However, average weekly earnings surpassed expectations, reaching 6.9% and keeping labor markets tight. This development raises concerns about the "second-level" effects of inflation. The probability of a 50bps hike from the BOE at the upcoming meeting rose to 74%, up from 66% prior to the data release. The pound, edging closer to the $1.30 level, displayed a 4-day winning streak, settling at $1.2933 the previous day, and even reaching as high as $1.2971. As the pound encounters major support at $1.2850, critical resistance awaits at $1.3160.
RBA Open to Further Tightening, No News on New Governor
RBA Governor Philip Lowe highlighted the possibility of additional tightening measures, noting that the full effects of the tightening implemented so far have yet to be fully experienced. The decision regarding a new RBA governor remains undisclosed, with Australia Treasurer Jim Chalmers mentioning that the Cabinet will meet soon to discuss reappointment. The Australian dollar ended the session with marginal gains, struggling to surpass $0.67. However, it experienced a breakout to $0.6743 early on Wednesday.
Japan Data Disappoints, USD/JPY Continues Losing Streak
June's Japan PPI Change fell short of expectations, slowing to 4.1% compared to the projected 4.4%. Furthermore, May's core manage orders witnessed a decline of -7.6% rather than the expected 1.0% growth. Consequently, USD/JPY remained shy above 140.00, marking its lowest level since mid-June. However, it broke through this barrier early on Wednesday, extending the downtrend to 139.40. This development potentially sets the stage for a 5-day losing streak.
WTI Prices Surge on Speculation of Production Cuts and EIA Demand Revision
The American Petroleum Institute (API) reported a surprising jump of 3.0 million barrels in US inventories, exceeding the forecasted growth of 0.2 million barrels. Additionally, the Department of Energy (DOE) released 0.4 million barrels from the Strategic Petroleum Reserve (SPR), marking the 15th consecutive week of releases. JPMorgan issued a note suggesting that OPEC+ might further cut production by 700,000 barrels per day throughout the rest of the year.
RBNZ Leaves Rates Unchanged, Kiwi Swings Amid USD Impact in Line
With near-unanimous consensus the Reserve Bank of New Zealand (RBNZ) opted to maintain interest rates at their current levels. The accompanying statement adopted a dovish tone, shifting from the expectation of core inflation remaining under pressure to anticipating its decline. As a result, the Kiwi experienced fluctuation, reaching a 3-week high of $0.6240 on its ascent and maintaining support at $0.6190. The weakening dollar played a significant role in these movements. Should the Kiwi lose the 62-cent handle, further declines towards $0.6162 may be observed.
It's easy to open an account
- Fill in our simple online application form
- Fund your account
- Start trading the global markets instantly!
SEARCH FOR AN ARTICLE:
Enter a keyword and search for all relevant articlesMARKET ANALYSIS
RECENT POSTS
DISCLAIMER
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 64% of retail investors lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work and whether you can afford to take the high risk of losing your money. For professional clients, spread betting and CFD trading can also result in losses larger than your initial stake or deposit.
Spreadex Ltd is authorised and regulated by the Financial Conduct Authority, provides an execution only service and does not provide advice in any way. Nothing within this update should be deemed to constitute the provision of investment advice, recommendations, any other professional advice in any way, or a record of our trading prices. This update does not constitute or form part of an offer of, or solicitation for a transaction in any financial instrument, nor shall it or the fact of its distribution form the basis of, or be relied on in connection with, any contract therefore. Any persons placing trades based on their interpretation of the comments or information within this update does so entirely at their own risk.
No representation, warranty, or undertaking, express or limited, is given as to the accuracy or completeness of the information or opinions contained within this update by Spreadex Ltd or any of its employees and no liability is accepted by such persons for the accuracy or completeness of any such information or opinions. As such, no reliance may be placed for any purpose on the information and opinions contained within this update.
The information contained within this update is the intellectual property of Spreadex Ltd and is protected by UK and International copyright laws. All rights reserved. Users may however freely download, distribute and reproduce extracts of the contents, subject always to accrediting Spreadex Ltd as the source and providing a hyperlink to www.spreadex.com.
