Spreadex Market Update
Dollar Correction Continues – Brainard to Speak Today
The US Dollar continues to slip lower on Tuesday, following steady selling yesterday. The Dollar index has now corrected more than 2% lower from the recent highs as traders adjust their rate hike expectations for the upcoming July FOMC meeting next week. Traders had been mulling the likelihood of a larger 100bps hike on the back of record inflation in June. However, following pushback from some Fed members, these chances now appear reduced. Traders will now be waiting for further insight from Fed’s Brainard who speaks later today.
Key Factors for Today
- USD lower again as traders adjust rate hike expectations ahead of next week – Brainard speaks later today
- Risk sentiment improving further, US stocks wobbled by Apple news
- AUD leads in FX following hawkish RBA minutes
- UK labour market tightens further, wages fall, Bailey to speak later
- Gold and silver muted
- Oil rebounding firmly
Coming Up
- EUR Eurozone final CPI
- USD US housing starts & building permits
- GBP BOE governor Bailey speaks
Risk Sentiment Firmer, US Stocks Rocked by Apple News
The fall-back in the US Dollar has been broadly positive for stock markets this week. However, US stocks were seen giving back gains yesterday on disappointing news from Apple. The US tech giant announced plans to slow hiring and spending into next year, following similar comments from Google owner Alphabet last week. The news has been taken as a worrying indicator of the trajectory of the US economy, resharpening the focus on recession concerns. UK and European stocks, meanwhile, continue to trade in the green today, as did Asian stocks overnight.
AUD Higher on Hawkish RBA Minutes
In FX, the reversal in the US Dollar this week has caused a broader reversal in recent themes. Risk currencies are firmly on the front foot this week with AUD leading the pack. Overnight, a hawkish set of RBA minutes gave the Aussie a further boost, revealing the bank’s focus on pressing ahead with further hikes in the coming months. Safe havens CHF and JPY have been weaker again today, losing demand amidst the uptick in risk sentiment.
UK Labour Data Improves, Bailey Up Next
UK data this morning showed the unemployment rate falling to 3.7%, its lowest level since 1974 while average earnings were seen slipping back to 6.2% from 6.8%. Traders now wait on BOE governor bailey who speaks later today as traders attempt to gauge the size of the next anticipated tightening from the BOE.
Gold & Silver Flat on Tuesday
It’s been a rather flat start to trading for gold and silver prices today, though silver has been a little more lively than gold it’s fair to say. Both metals are sitting at the base of the recent declines and, despite the pullback in USD, have been unable to recover much of the lost ground. The uptick in risk sentiment is weighing on metals here as is the rise in global yields, keeping investor attention elsewhere.
Oil Recovery Continues
Oil prices are rallying again today, following strong upward action yesterday. Crude futures are now almost 10% up off the lows printed last week as the drop in USD continues to foster a recovery here. Oil is being helped also by the broad recovery In risk sentiment which looks set to continue today.
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