Equities Advance Amid Mixed Data

Despite limited data releases, equities in the US and Europe showed strength, supported by a growing risk appetite. The dollar remained steady, while gold and crude oil witnessed gains.

Key Factors for Today

• Markets Rally as Risk Appetite Grows Amid Limited Data
• Gold Surges 1.25% Following US Retail Sales
• WTI Crude Jumps 2.25% as API Reports Inventory Drawdown
• BOJ Doubles Down on Easing, Yen Weaker
• Canadian CPI at 26-Month Low, USD/CAD Volatile
• Kiwi Swings After Higher Inflation Print in New Zealand

Market Movers

• Gold prices rose by 1.25% to reach $1978/oz, inching closer to the $2k handle, with support expected at $1965/oz.
• WTI Crude Oil surged 2.25% to $75.75/bbl, distancing itself from the support at $74/bbl and targeting the next resistance at $77.34/bbl.
• The Bank of Japan (BOJ) reinforced its easing stance, impacting the Yen's value, with USD/JPY trading marginally higher, and bulls aiming for 140.00.
• Canadian CPI inflation fell to a 26-month low, with June's rate at 2.8%, below the Bank of Canada's (BOC) target range of 3.0%, causing fluctuations in USD/CAD.
• New Zealand's Q2 CPI surged to 1.1%, driving the annual rate to 6.0%, above expectations and indicating potential rate hikes by the Reserve Bank of New Zealand (RBNZ).

Economic Calendar

• UK CPI Inflation
• EA CPI Inflation
• Building Permits
• Housing Starts
• EIA Crude Oil Stock Change
• BOE Ramsden Speech
• AU Employment Change

The Big News

Gold Soars 1.25% After US Retail Sales

In June, US retail sales grew by 0.2%, slightly below the expected 0.3%, while core retail sales aligned with forecasts at 0.2%. Despite the mixed data, the retail sales control group surpassed expectations, leading to raised estimates for Q2 GDP and reducing the likelihood of a recession. This bolstered US equities, prompting a 1.25% rise in gold prices to $1978/oz, edging closer to the $2k milestone. Analysts are keeping an eye on support at $1965/oz.

API Drawdown Assists WTI 2.25% Higher

The American Petroleum Institute (API) reported a minor drawdown in inventories last week, with a decline of -0.8M bbl, compared to the anticipated 2.3M bbl build. Concurrently, the Department of Energy (DOE) refrained from selling crude from the Strategic Petroleum Reserve (SPR) for the first time in nearly four months. Consequently, WTI crude oil prices rose by 2.25% to $75.75/bbl, distancing itself from the $74/bbl support and eyeing the next resistance level at $77.34/bbl.

BOJ Doubles Down on Easing, Yen Impacted

BOJ Governor Kazuo Ueda reiterated the central bank's commitment to easing policies. His remarks came just days after hinting at the possibility of policy adjustments if market conditions deteriorated significantly. The latest dovish comments reinforced expectations for further monetary accommodation. The USD/JPY remained relatively unchanged but with a slight upward trend, as bulls set their sights on 140.00, while 138.00 provides a critical support level. As a result, the Yen appeared weaker early Wednesday.

Canada CPI Inflation Falls to 26-Month Low

Canada's June CPI inflation grew at a monthly rate of 0.1%, below the expected 0.3%, causing the annual rate to reach 2.8%, falling short of the Bank of Canada's (BOC) target range of 3.0% for the first time in 26 months. Core inflation experienced a more significant decline, dropping from 3.7% to 3.2%. The volatile data prompted fluctuations in USD/CAD, with the pair rising then falling, leaving resistance at $1.3240 behind and opening up $1.3117.

Kiwi Swings Following Higher Inflation Print

New Zealand's Q2 CPI saw a significant increase of 1.1%, surpassing the forecasted 0.9%, driving the annual rate to 6.0%, above the expected 5.9%. The surge was primarily driven by food prices. Following the release, analysts reaffirmed expectations of a quarter-point hike at the next RBNZ meeting. The Kiwi spiked above $0.63 briefly but retraced to 0.6250 early Wednesday, signalling potential further decline to 62 cents.