Spreadex Market Update
Dollar At Highs Ahead of June Retail Sales Today
The US Dollar broke out to further fresh highs yesterday, spurred on by hawkish comments from Fed’s Waller on the back of Wednesday’s hot inflation report. Waller said that he backed a 75bps hike in July but was open to a larger hike if retail sales and housing data come in strong also. Waller called the June cpi report a “major league disappointment” and said the fed must remain “utterly focused” on its efforts to tame consumer prices. With this in mind, traders will now be looking to today’s retail sales data as a gauge for whether the fed is likely to push ahead with a 75bps hike or a larger 100bps hike.
Key Factors for Today
- USD continues higher ahead of retail sales
- Fed’s Waller supports > 75bps hike is retail sales strong also
- Risk sentiment weaker on USD rally and china GDP miss
- JPY leading FX on safe-haven flows
- GBP under pressure amidst political instability
- Metals hit fresh 2022 lows
- Oil rebounds off weekly lows
Coming Up
- USD US retail sales
- USD UoM consumer sentiment
- USD Fed’s Bullard speaks
Risk Sentiment Weaker on US Rally & China GDP MIss
Risk markets are broadly lower again across the European open on Friday as the strength in USD continues to weigh on sentiment. We saw a little bit of buying off the lows yesterday in US stock markets as USD softened from the highs of the session. However, looking ahead today there is plenty of room for further downside in equities markets if the Dollar is seen rallying on the back of June US retail sales. Overnight, the China quarterly GDP miss resharpened concerns on a slowdown there as lockdowns continue, adding to the risk off tone.
JPY Rallying on Safe-Haven Demand
In FX, JPY has seen better strength today as the drop in risk sentiment feeds into safe-haven buying. The currency has been out of favour recently as a destination during flight-to-safety episodes though this seems to have corrected over late Asian and early European trading on Friday. GBP remains among the weakest of the G10 currencies. Political uncertainty and recessionary fears are gripping the UK which continues to battle soaring inflation and major airport disruption as we head into the summer. AUD has been on the backfoot also, giving up gains seen earlier in the week in response to stronger -than-expected labour market data.
Gold & Silver Hit Fresh 2022 Lows
Gold and silver prices are both under heavy selling pressure again today as the metals complex extends its losses on the week. Both metals have broken out to fresh 2022 lows as the ongoing rally in USD creates a headwind for gold and silver.
Oil Prices Rebound off Weekly Lows
Oil prices have seen plenty of action this week and the last 24 hours has been no exception. Following a breakout move to the lowest level since February, crude prices subsequently rebounded around 7% off the lows, taking advantage of some pullback in USD during yesterday’s session. Prices are still lower on the week however and the latest report from the EIA confirmed a large weekly surplus in inventories.
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