Spreadex Market Update
Optimism Soars as Data and Earnings Boost Markets
Financial markets rallied on the back of positive economic data and upbeat earnings reports, creating a surge in risk appetite. The UK's unexpected drop in CPI inflation and optimistic guidance from US banks contributed to the market's buoyant sentiment.
Key Factors for Today
- Markets Rally on Data and Earnings Boost
- UK CPI Inflation Drops, Fuelling Speculation of BOE Slowdown
- US Housing Starts Align with Expectations, Banks Offer Positive Guidance
- EIA Reports Small Drawdown in Crude Inventories, WTI Falls
- EUR/USD Slightly Lower Despite Revised EU CPI Higher
- Australia's Unemployment Rate Falls, Aussie Surges 1%
Market Movers
- The UK experienced an unexpected downside in CPI inflation, dropping to 7.9% in June, compared to the forecast of 8.2% and the previous headline figure of 8.7%.
- US housing starts for June aligned with expectations at 1.43M new homes, while the focus shifted to positive earnings guidance from US banks for the year.
- The EIA reported a small drawdown in US crude inventories at -0.7M bbl, slightly below the expected -0.2M bbl.
- The final reading for June CPI in the Eurozone remained steady at 5.5%, affirming the significant decline from the previous 6.1%.
- Australia added 32.6K jobs in June, exceeding expectations of 15K adds and bringing the unemployment rate down to 3.5%, compared to the expected 3.6%.
Economic Calendar
- TCMB Interest Rate Decision
- Initial Jobless Claims
- Philadelphia Fed Manufacturing Index
- South Africa Interest Rates Decision
- Existing US Home Sales
- Gfk Consumer Confidence
- Japan Inflation Rate
The Big News
Cable Flops As UK Inflation Fell More Than Expected
The UK experienced an inflation surprise, with CPI falling to its lowest in 15 months, easing to 7.9% in June. This decline improved optimism that the Bank of England (BOE) will slow down its aggressive hiking, leading to a 0.75% drop in the pound against the dollar. Market resistance is expected at $1.30 unless bearish bets accelerate towards $1.2850.
US Housing Starts Align With Expectations
June housing starts in the US were reported at 1.43M new homes, slightly below the expected 1.48M. However, positive guidance from US banks, including an uptick in M&A activity reported by Goldman Sachs, alleviated fears surrounding major financial institutions' performance. Gold remained largely unchanged, with near-term resistance at $2k and support at $1970/oz.
EIA Reports Small Drawdown, WTI Still Falls
US crude inventories fell -0.7M bbl last week, slightly below the expected -0.2M bbl, while refinery utilization rose to 94.3%. Despite this, WTI ended the session in the red at $75.30/bbl, possibly opening up $74/bbl again unless bulls can reclaim $76.90/bbl.
EUR/USD Slightly Lower Even After EU CPI Revised Higher
The final reading for June CPI in the Eurozone was kept at 5.5%, affirming the strong decline from 6.1% prior. Although the core rate was adjusted slightly higher to 5.5%, up from the preliminary reading of 5.4%, Euro tested $1.12 against the dollar. The price action today will determine whether the attempt at $1.13 concluded weak or recent declines continue towards $1.1128.
Australia Unemployment Falls, Bolstering Aussie 1%
Australia's impressive addition of 32.6K jobs in June, surpassing expectations of 15K, led to a decline in the unemployment rate to 3.5%. This positive news propelled the Aussie back above $0.68, and it may rise further towards $0.6870, with a reversal of gains unlikely at this stage.
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