Daily Market Report - Tuesday, July 11, 2023


The US dollar pairs remain the centre stage of attention ahead of Wednesday’s US CPI report. The dollar index, which tracks the U.S. currency against six major peers has taken an even deeper plunge on Tuesday Morning dragged down by the speculation that the US Federal Reserve is nearing the end of its policy tightening cycle. The dollar index reached its weakest levels in two months. As of this writing, the DXY trades below 101.80

San Francisco Fed President Mary Daly said on Monday, we are nearing the end of our rate-hiking cycle, with credit tightening less severe than initially anticipated. Atlanta FED President Raphael Bostic says that while inflation is too high, policymakers can be patient for now amid evidence of an economic slowdown. However, Fed futures currently price 5% for pause and 95% for a 25bps rate hike in July 26th's decision after Fed's Daly, Mester and Bostic comments.


US stock futures gave up some of its daily gains after several mixed comments by Fed officials overnight reinforce market expectations for a 25 basis points (bps) rate hike at the upcoming FOMC. On the other hand, investors await the next round of earnings results. Q2 Earnings season kicks off this week and all eyes are on the largest U.S. financial institutions.


Crude oil futures slightly reversed from the early gains. However, the overall momentum remains bullish after the oil prices started the week on a bullish note. Moving ahead, oil traders should closely monitor the US inflation data and weekly crude inventory report on Wednesday to get a clear picture of the oil price’s long-term direction.


In the currency market, EURUSD remains steady above 1.10 after the release of weak ZEW economic sentiment data. Germany's ZEW Indicator of Economic Sentiment fell to -14.7 in July, its lowest level since December 2022. The recently bullish sentiment is supported by the weaker dollar and hawkish ECB. Meantime, ECB Governing Council member Francois Villeroy de Galhau stated over the weekend that Eurozone interest rates will soon reach their peak, but it will be more of a high plateau than a definitive peak.


Gold price regains bullish momentum ahead of the US inflation data. The metal extends the gains on Tuesday morning following the Federal Reserve Bank of New York's monthly Survey of Consumer Expectations showed on Monday that the US consumers' one-year inflation expectation dropped to the lowest level since April 2021 at 3.8% in June from 4.1% in May.

Economic Outlook

On the data front, the UK reported mixed employment data. The number of people in work in the United Kingdom went up by 102 thousand in the three months to May 2023. While the unemployment rate in the UK rose to 4.0 percent from March to May 2023, the highest level since the last quarter of 2021 and above market expectations of 3.8 percent.

Technical Outlook and Review

For today, If the upside momentum continues then the next upside level is to watch at 1.1030 and 1.1050. 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 regions.

The important levels to watch for today: Support- 1.0970 and 1.0940 Resistance- 1.1030 and 1.1050.

GOLD: The metal once again found buyers near $1910 while the upside momentum is still limited as traders remained cautious ahead of the CPI outcome. The next resistance is located around 1938 followed by 1940, a break above 1940 will confirm a possible move to 1945/48.

The important levels to watch for today: Support- 1930 and 1926 Resistance- 1940 and 1945.

Quote of the day Think for yourself and don’t let the market direct you. Security prices sometimes fluctuate, not based on any apparent change in reality, but on changes in investor perception. – Seth Klarman.
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