Spreadex Market Update
Stocks go into meltdown, USD Hit a Fresh 2022 high
USD saw strong gains yesterday on hawkish Fed expectations. USD index hit fresh 2022 highs, though Dollar a little softer this morning. Equities firmer following heavy selling yesterday. US PPI data today could spell more trouble. EUR rallies on softer USD, GBP falls on further data weakness. Metals recovering following heavy losses. Oil prices stable.
Key Factors for Today
- USD softer following breakout to fresh 2022 highs – US PPI next today
- Equities stabilise following heavy losses yesterday
- GBP hit by further data weakness, EUR rallies
- Gold and silver stabilise following heavy losses yesterday
- Oil prices stable despite stronger USD
Coming Up
Quiet data schedule today following UK data this morning
- CAD Canadian manufacturing sales
- USD US PPI & core PPI
- NZD New Zealand current account
Traders Waiting on US PPI Next
The US Dollar index broke out to fresh YTD highs yesterday on the back of an almost 1% rally. While USD is seen a little softer across the European open on Tuesday, sentiment remains strong and traders are now looking to today’s US PPI reading as the next potential catalyst for further upside. On the back of Friday’s bumper CPI reading, PPI is expected to be similarly strong, which should keep USD supported into the FOMC tomorrow.
Risk Markets Stabilise Following Heavy Losses
Equities markets are bouncing back a little today amidst a weaker start for the Dollar. Across the board yesterday we saw indices tumbling with several key markets plumbing fresh 2022 lows including the S&P and the ASX. Despite a better tone so far today, any fresh USD strength in response to today’s data will likely see this dynamic reverse and equities sent lower again.
EUR Leads the Way, GBP Falls on Further Data Weakness
In FX, we’re seeing quite a mixed European open on Tuesday. Weakness in the US Dollar so far today is allowing EUR and CHF to emerge as the strongest currencies while GBP and JPY are sitting at the bottom of the pack. Today’s US data holds the potential to reverse this setting, however, if we see a further upside surprise. GBP has come under pressure again today from yet further data weakness. UK employment indicators were seen deteriorating over the last three months with the unemployment rate ticking back up to 3.8% from 3.6% prior.
Gold & Silver Slip on USD Strength
Gold and silver have started the day with better demand. However, both metals are coming on the back of heavy losses yesterday as a stronger USD took its toll. Gold prices fell to their lowest levels since mid-May with silver prices tracking the drop. Traders now look to today’s US data as the next key input for price direction.
Oil Prices Shrug Off Firmer US Dollar
Oil prices appear to have weathered the storm of a stronger US Dollar much better than other instruments. Crude futures are holding in a tight range near recent highs as the broader focus on supply issues and soaring demand helps underpin price. While a stronger USD creates a drag it seems that the bigger macro issues at play are taking centre stage for oil traders today.
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