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Global markets remain volatile ahead of the most awaited macro news of the week, the US CPI report. The US Bureau of Labor Statistics (BLS) will release the latest US consumer inflation figures today at 12.30 GMT. The inflation data could determine the size of the US Federal Reserve's rate hike at this month's policy meeting. The markets should react positively if inflation shows further signs of cooling. If inflation subsides, Fed may not need to be as aggressive as planned.
Forecasts indicate that the annual headline CPI is expected to rise by 3.1% in June, compared to the previously recorded 4.0%. Similarly, core CPI inflation is anticipated to soften to 5.0% in the reported month. On a monthly basis, US CPI is projected to increase by 0.3% in June, a slight improvement from the 0.1% recorded in May. Meanwhile, core monthly CPI inflation is expected to dip marginally to 0.3% from the prior reading of 0.4%.
EQUITIES
European and UK shares opened higher continuing the theme from the previous session. While US stock futures slightly retreats from the fresh weekly highs as markets took a deep breath ahead of the US inflation report. On Tuesday, Wall Street ended higher supported by the speculations that the Federal Reserve (Fed) will end its rate-hiking cycle following a 25 bps lift-off in July.
OIL
Crude oil bulls remain in the driving seat with their feet on the accelerator supported by the weak US dollar. Oil futures inched a little higher Wednesday as the dollar index stays under pressure for the fifth consecutive day. While the latest API crude inventory data showed the US crude inventories increased by about 3 million barrels last week, defying expectations for a 0.2-million-barrel draw.
CURRENCIES
In the currency market, the US dollar index struggling to regain footing after suffering steep losses in the last few trading sessions. The prominent safe-haven currencies the Swiss franc (CHF) and the Japanese yen (JPY) remain the strongest currency pairs of this week. Meantime, the GBPUSD slightly reversed from the daily highs. The currency pair reached a fresh multi-month high after the chances of another 50bps hike from the BOE at the next meeting increased to 74%.
GOLD
Gold price volatility remains elevated ahead of the US CPI report. Gold price is currently trading at $1932, the metal struggling to regain upside momentum as investors await the CPI data. Technically, the medium-term trend remains supportive but If the US dollar regains upside strength in the coming days, we could see a pullback in the precious metals.
Economic Outlook
On the data front, the Reserve Bank of New Zealand (RBNZ) has kept interest rates unchanged at 5.50% as expected but warned that policy settings will need to remain tight for some time yet. This is the first time since August 2021 that the central bank has not changed interest rates. The board said that the level of interest rates was constraining spending and inflation pressures as required.
Moving ahead today, the important events to watch:
US – CPI: GMT – 12:30
Canada – BOC interest rate decision and statement: GMT – 14:00
Technical Outlook and Review
EURUSD: EURUSD maintains gains on a weak dollar and hit a fresh 2-month high of 1.1035. The technical scenario is bullish after the price breaks above the psychological mark of 1.1000. If the bullish momentum continues, then the next upside levels to watch and 1.1050/80. On the downside, any meaningful pullback now seems to find some support near the 1.0970 zones, below which the slide could further get extended towards the 1.0940/30 region.
The important levels to watch for today: Support- 1.0970 and 1.0940 Resistance- 1.1050 and 1.1080.
GOLD: Today as long as the metal trades above 1920 levels, the short-term uptrend will remain in place. On the upper side, the first resistance is located around 1940, a break above this level will confirm a possible move to 1948/50. On the downside, 1930 is the immediate support level, followed by 1926. Further selling pressure will intensify only if the metal break below 1920 levels.
The important levels to watch for today: Support- 1926 and 1920 Resistance- 1940 and 1948.
Quote of the day – “Patterns don't work 100% of the time. But they are still critical because they help you define your risk. If you ignore patterns and focus on hunches, feelings, and hot tips, just forget about achieving consistency.” -Ifan Wei.
Read more - https://gulfbrokers.com/en/daily-market-report-685
Forecasts indicate that the annual headline CPI is expected to rise by 3.1% in June, compared to the previously recorded 4.0%. Similarly, core CPI inflation is anticipated to soften to 5.0% in the reported month. On a monthly basis, US CPI is projected to increase by 0.3% in June, a slight improvement from the 0.1% recorded in May. Meanwhile, core monthly CPI inflation is expected to dip marginally to 0.3% from the prior reading of 0.4%.
EQUITIES
European and UK shares opened higher continuing the theme from the previous session. While US stock futures slightly retreats from the fresh weekly highs as markets took a deep breath ahead of the US inflation report. On Tuesday, Wall Street ended higher supported by the speculations that the Federal Reserve (Fed) will end its rate-hiking cycle following a 25 bps lift-off in July.
OIL
Crude oil bulls remain in the driving seat with their feet on the accelerator supported by the weak US dollar. Oil futures inched a little higher Wednesday as the dollar index stays under pressure for the fifth consecutive day. While the latest API crude inventory data showed the US crude inventories increased by about 3 million barrels last week, defying expectations for a 0.2-million-barrel draw.
CURRENCIES
In the currency market, the US dollar index struggling to regain footing after suffering steep losses in the last few trading sessions. The prominent safe-haven currencies the Swiss franc (CHF) and the Japanese yen (JPY) remain the strongest currency pairs of this week. Meantime, the GBPUSD slightly reversed from the daily highs. The currency pair reached a fresh multi-month high after the chances of another 50bps hike from the BOE at the next meeting increased to 74%.
GOLD
Gold price volatility remains elevated ahead of the US CPI report. Gold price is currently trading at $1932, the metal struggling to regain upside momentum as investors await the CPI data. Technically, the medium-term trend remains supportive but If the US dollar regains upside strength in the coming days, we could see a pullback in the precious metals.
Economic Outlook
On the data front, the Reserve Bank of New Zealand (RBNZ) has kept interest rates unchanged at 5.50% as expected but warned that policy settings will need to remain tight for some time yet. This is the first time since August 2021 that the central bank has not changed interest rates. The board said that the level of interest rates was constraining spending and inflation pressures as required.
Moving ahead today, the important events to watch:
US – CPI: GMT – 12:30
Canada – BOC interest rate decision and statement: GMT – 14:00
Technical Outlook and Review
EURUSD: EURUSD maintains gains on a weak dollar and hit a fresh 2-month high of 1.1035. The technical scenario is bullish after the price breaks above the psychological mark of 1.1000. If the bullish momentum continues, then the next upside levels to watch and 1.1050/80. On the downside, any meaningful pullback now seems to find some support near the 1.0970 zones, below which the slide could further get extended towards the 1.0940/30 region.
The important levels to watch for today: Support- 1.0970 and 1.0940 Resistance- 1.1050 and 1.1080.
GOLD: Today as long as the metal trades above 1920 levels, the short-term uptrend will remain in place. On the upper side, the first resistance is located around 1940, a break above this level will confirm a possible move to 1948/50. On the downside, 1930 is the immediate support level, followed by 1926. Further selling pressure will intensify only if the metal break below 1920 levels.
The important levels to watch for today: Support- 1926 and 1920 Resistance- 1940 and 1948.
Quote of the day – “Patterns don't work 100% of the time. But they are still critical because they help you define your risk. If you ignore patterns and focus on hunches, feelings, and hot tips, just forget about achieving consistency.” -Ifan Wei.
Read more - https://gulfbrokers.com/en/daily-market-report-685
