Spreadex Market Update
Markets Navigating Optimism Amidst Economic Data Anticipation
Amidst a backdrop of cautious optimism, global markets displayed a mix of fortunes, with US indices advancing and European equities showing a more varied response. Key data releases loom large on the horizon, guiding investor sentiment for the week ahead.
Key Factors for Today
- US indices show signs of renewed optimism, anticipating the upcoming CPI report.
- Gold prices take a dip as used-car prices offer a glimmer of hope amidst inflation concerns.
- Japanese yen experiences a decline as wage data falls short of expectations.
- China's significant drop in imports exerts pressure on global commodity currencies.
- The Bank of England (BOE) maintains vigilance over inflation, bolstering the British pound.
Market Movers
- Equities in Europe exhibit mixed results, while US indices forge ahead in a subdued session.
- Yields on US debt experience an uptick, strengthening the dollar and impacting gold prices.
- Gold prices decline by 0.33% to $1936 per ounce, potentially setting the stage for further retreats.
- Japanese yen loses ground by 0.60% against the US dollar, echoing concerns over wage data.
- China's trade balance sees unexpected growth, but the crash in imports shakes commodity currencies.
- WTI closes 0.45% lower at $82 per barrel due to China's import woes.
Economic Calendar
- Fed Harker Speech
- US Trade Balance
- Fed Barkin Speech
- IBD/TIPP Economic Optimism
- API Crude Oil Stock Change
The Big News
Used-Car Prices Offer Glimpse of Hope
The US Manheim wholesale used car index records a 1.6% decrease in the past month, accumulating to an 11.6% drop over the year. This downward trend, though slowing, fuels optimism that the impending US CPI report may defy forecasts. FOMC Voter Michelle Bowman underscores the potential for rate hikes, hinging on labour market dynamics, while FOMC Voter John Williams hints at potential rate cuts next year, as inflation eases.
Japanese Yen Takes a Hit
June's labour cash earnings report reveals a 2.3% increase, falling short of the anticipated 3.0%. This marks the 15th consecutive decline in real cash earnings, highlighting the strain on Japanese consumers and bolstering the case for prolonged low rates. Consequently, the yen weakens by 0.60% against the US dollar.
China's Imports Shake Commodity Markets
China's trade balance defies expectations, expanding to $80.6B with a sharp decline in imports. Exports dip by 14.5%, and imports plummet by 12.4%, significantly affecting commodity currencies linked to China's demand. WTI experiences a 0.45% decrease, closing at $82 per barrel.
BOE's Inflation Concerns and Sterling's Rise
BOE's Chief Economist Huw Pill acknowledges persistently high inflation and predicts a decline to 5% by year-end, aiming for a target return by H1 2025. UK's July Halifax house prices slip by 2.4%, while the British pound gains 0.37% against the dollar, triggering speculation for further upward momentum.
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