Jeffrey Halley

Oil prices slump overnight Although OPEC+ was a damp squib, rising recession fears saw oil prices slump once again overnight after a negative global outlook from the Bank of England policy meeting. Both Brent crude and WTI have now comprehensively broken lower through their 200 DMA’s, a negative technical development. Although Saudi Arabia continues raising prices for their crude grades to Asian and US customers in the real world, futures markets suggest this may be a last hurrah. Brent crude slumped by 3.55% to USD 93.55 a barrel overnight. WTI fell by 3.10% to USD 88.00 a barrel. In Asia, the overnight dip in prices has been irresistible to local buyers, sending Brent crude 0.75% higher to USD 94.25 and WTI 1.00% higher to USD 88.90 a barrel. Brent crude broke below its 2022 uptrend at USD 109.00 in early July, and it seems unlikely we will see USD 110.00 Brent again this year, barring Eastern European shocks. The 200-DMA at USD 98.35 is the initial resistance, followed by USD 102.50 a barrel. Support is at USD 93.55, and failure clears the road to USD 90.00 a barrel. Failure of USD 90.00 could trigger another wave of capitulation selling. WTI’s 2022 trendline failed at USD 108.35 in early July, never to be seen again. US recession fears continue to weigh on WTI prices. Resistance lies at USD 95.20 barrel, the 200-DMA, followed by USD 102.00. Support is at USD 87.50 and then USD 82.00 a barrel. As noted in earlier newsletters, the avalanche of USD 200.00 a barrel, end of the world Brent crude forecasts, proved an uncannily accurate indicator of the impending peak in oil prices. Gold rallies, did I just say that? My four days away in Bali have seen gold’s impressive recovery rally continue. Overnight gold rose an impressive 1.45% to USD 1791.50 an ounce, edging to USD 1792.00 an ounce in Asian trading. It continues to benefit from a weaker US dollar, in turn, driven by falling US bond yields, as markets continue to price in peak inflation and a US recession. Notably, gold prices based, mid-July, at critical long-term support at USD 1680.00 an ounce. The ensuing rally remains a powerful bullish technical pattern which seems to be now attracting plenty of interest. Gold should remain well supported on dips to USD 1775.00 now, with a test of USD 1800.00 imminent. ​ Gold’s technical picture suggests it will continue grinding towards the USD 1900.00 region in the coming weeks. Until such a time as bond markets decide that inflation will be stickier than anticipated and yields start to rise again. The first test of that will come in the form of the US Non-Farm Payrolls this evening. A soft US payroll number, though, will likely support gold’s upward momentum, as it is likely to result in another bout of US dollar weakness as yields fall. My last commentary closes with a bullish outlook on gold; who would have thought? And with that, dear readers, all I can say is thank you very much; you’ve been a wonderful audience. Jeff has left the building……. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Oil slides, gold rally continues - MarketPulseMarketPulse

US dollar has had an uneven sell-off overnight The US dollar fell overnight, led by losses against the euro for unknown reasons, with the Japanese yen also gaining as US yields slid slightly. Sterling and the Australasians hardly moved, while Asian currencies remain stubbornly anchored near to recent lows.   The dollar index fell 0.59% lower at 105.75 overnight, retracing slightly higher by 0.11% to 105.87 in Asia. The dollar index breakout lower at 106.45 has continued to cap rallies this week on a closing basis, suggesting downside risks are still the path of least resistance. Beyond that, 106.75 is the next resistance. Support is at 105.65, and then the more important 1.0500 level. Failure signals a deeper move lower to 1.0350 and, potentially, the 102.50 longer-term breakout.   EUR/USD rallied by 0.76% overnight to 1.0245, easing slightly to 1.0235 in Asian trading. Given stubbornly high European gas prices and the recessionary risks from its Eastern border, the single currencies environment remains challenging, even if 0.9950 is now looking like a medium-term low. EUR/USD had solid resistance nearby at 1.0250 and then 1.0300. A close above 1.0300 this even would signal further gains to 1.0500, however. Meanwhile, EUR/USD has support at 1.0150 and then a series of daily lows between 1.0100 and 1.0125.   GBP/USD traded in a choppy 150+ point Bank of England range overnight but ultimately finished nearly unchanged at 1.2160. In Asia, it has edged lower to 1.2145. When your central bank has forecast a recession and inflation rising to 13.0% but has only hiked rates to 1.75%, it is reasonable to assume they are behind the curve. That stagflationary reality could be limiting sterling’s gains. Support is at 1.2065, the overnight low, with resistance at 1.2215, the overnight high, followed by 1.2300.   Four days in Bali saw me miss the long-awaited capitulation sell-off by USD/JPY as the US/Japan rate differential narrowed. Much will depend on the US Non-Farm Payroll data this evening and the reaction by US bonds. The sell-off this week went further than I expected but held the 100-day moving average (DMA), which today is at 130.70. Resistance is clearly denoted at 134.65 now. Expect plenty of noise in between.   AUD/USD rose 0.25% to 0.6965 overnight, and NZD/USD rose by 0.40% to 0.6295. Both are almost unchanged in Asia as risk sentiment holds up into the Asian session. The technical picture for both remains constructive as both currencies staged upside breakouts higher a fortnight ago. They remain well above their breakout lines at 0.6790 and 0.6145, and a daily close above either 0.7050 or 0.6350 signals the next stage of the recovery rally.   Asian currencies were steady overnight, booking an uneven session of mixed gains against the greenback. In Asia, surging inflation numbers from the Philippines and Thailand have sparked 0.75% rallies by THB and PHP to 35.620 and 55.17 as markets price in faster monetary tightening. That has had a knock-on impact across the Asian FX space, with the Korean won gaining 0.40% to 1297.20. The Indonesian rupiah and Malaysian ringgit remain near recent lows, however, as both central banks remain very reluctant rate hikers. With inflation rising in Asia, lifting rate hike expectations, Asian currencies could finally be starting also to gain some benefits from recent US dollar strength elsewhere. USD/INR has eased to 89.976 today. With the RBI rate decision this afternoon, I expect volatility ahead. Further INR strength from here probably relies on the RBI statement being hawkish; otherwise, I suspect INR weakness will resume. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. US dollar retreat continues - MarketPulseMarketPulse

Asian markets rise as Pelosi crisis eases The further from Asia Nancy Pelosi goes, the more supportive of local equities it becomes, it seems, as Asian markets draw a collective sigh of relief and climb into the green today. China’s military exercises around Taiwan seem to be getting the “one and done” treatment. That followed a mixed session on Wall Street overnight, which could only be described as noisily sideways. Asian markets are also likely to react positively to another slump in oil futures overnight, even as Saudi Arabia raises its crude prices to Asian buyers. On Wall Street overnight, the S&P 500 finished just 0.08% lower, while the Nasdaq climbed by 0.41%, and the Dow Jones eased 0.26% lower: an inconclusive session. US futures in Asia are on the move higher, though, as China nerves abate. S&P 500 and Dow futures have risen by 0.25%, while Nasdaq futures have gained 0.35%. In Asian markets, the Nikkei 225 has climbed 0.75% higher today, with South Korea’s Kospi rallying by 0.80%. Taipei is experiencing an inverse-Pelosi rally of impressive proportions, the TAIEX leaping higher by 1.85%. Things are more sedate in mainland China, where the Shanghai Composite, CSI 300 and the Hang Seng are almost unchanged. Singapore has added 0.25%, while Kuala Lumpur has fallen by 0.50%, and Jakarta is 0.20% higher. Bangkok is unchanged, with Manila easing 0.25% after higher inflation data. Australian markets have been content to track US index futures higher. The ASX 200 and All Ordinaries gaining 0.40%, while New Zealand, with the All Blacks Springboks rugby test tomorrow consuming mental capacity, is unchanged. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Pelosi relief rally in Asia - MarketPulseMarketPulse

The day is finally here and today is my last markets note for OANDA. Like Elvis, I will be leaving the building, and it seemed appropriate that today’s title image is of me in my Elvis Presly jumpsuit. It was lovingly made by Happy Harry’s Tailors in Singapore, with Mrs Harry hand sewing the sequins. I highly recommend this lovely couple for all your tailoring needs, regardless of gender; Harry even does kilts.   I would like to thank and acknowledge all my colleagues at OANDA, which is a great company to work for. Most especially, my fellow analyst team members in New York, London and Tel Aviv, Ed, Craig, and Kenny, as well as my direct overlords in the management reporting tree, Darren and Dana. I shall miss you all.   To the assembled journalistic army of the financial markets and beyond, upon whom my writings have been foisted, thank you all for your tolerance. After three-plus decades in the markets, I’ve seen a few “cycles,” which look remarkably like a lot of men (it’s mostly men) making the same mistakes as the previous generation while uttering “this time it’s different”. I have witnessed an entire global industry arise with the purpose of making the great game seem a lot more complicated to the “non-expert” than it really is. My writings and media appearances have always been an attempt to “clear the fog” and to tell it like it is in an approachable manner for everyone, not just those in financial markets and political ivory towers. Thank you all for allowing me the opportunity to do so in writing, in forums, on radio, and on television as “the voice of reason.”   As for me, I saw a Harvard Business Review (HBR) YouTube that said you need to disrupt yourself before you get disrupted. It’s the HBR, so like the Fed, it must be right. I am planning to disrupt myself, heading into journalistic academia for a year in a distant land called Wales. Apparently, the people there speak an unusual version of English, and a stranger local language lacking any vowels. It is mountainous, sparsely populated, girt by sea and river, has a small capital city, cold winters, many sheep, and a passionate population frustrated by the performance of their national rugby team. As a Kiwi, I will feel at home there.   And now, on with the show.   With the Pelosi show having also left the building, the impact of China’s admittedly extreme sabre rattling appears to be also passing. Asian markets seem to be pricing in the missiles flying over Taiwan in much the same manner as North Korean missile tests. A few wobbles in Seoul and Tokyo and then back to business as usual.   After a few days’ holidays, my initial impression is that Asian markets are looking at another night of tumbling oil prices and soft commodity prices as a much more positive longer-term driver than short-term noise from mainland China. A weaker US dollar will also be cause for cheer for the region, although that story has been confined to the major currency space thus far, with Asian currencies yet to find much support from it. That said, inflation data today from Asia suggests that the regional inflation lag is loitering and in some cases, playing catchup.   Assisting the US dollar fall overnight was the Bank of England, which hiked rates by 0.50%. As ever, it is what the central bank said, and not what they did, that had the greatest impact. The BOE remained hawkish, saying the UK inflation could hit an eye-watering 13.0%. But the BOE also sounded a loud warning about both the UK and the international economy, signalling a bitter recession was on the way. The BOE has been the most straight-talking of the G-10 central banks for a long time now, but on a slow US data night, it was enough to see energy prices and the US dollar tank. Oddly enough, most of the US dollar losses were made against the euro, surely the ugliest horse in the glue factory right now. I am at a loss to explain this.   Today in Asia, the South Korean Current Account for June improved to USD 5.61 billion, boosted by falling input prices, while Japanese Household Spending sharply outperformed in June, rising by 3.50%. That will give the Bank of Japan some cheer after 20 years, suggesting that inflationary forces are finally doing their job after decades, convincing Japanese households that goods won’t be cheaper next month than this month. 2022 continues to surprise me on many levels.   Philippines Inflation YoY for July rose to 6.40%, well above the 6.20% expected. That should ensure the central bank continues its hawkish pivot and may give some support to the beleaguered peso. Indonesian GDP YoY for Q2 outperformed impressively, riding recovering consumer demand and robust commodity prices as it climbed by 5.44%. USD/IDR remains uncomfortably near 15,000.00, but with inflation also rising at a decent pace now, the stubbornly dovish Bank Indonesia may also be nearing a hawkish pivot, supporting the rupiah. Thailand’s Inflation YoY for July printed at 7.61% this morning, only marginally lower than last month, keeping the pressure on the Bank of Thailand to keep hiking.   The Reserve Bank Of India announces its latest policy decision this afternoon, the most anticipated data point in Asia today. Markets forecasts are for a 0.35% hike to 5.25%. India is ahead of the rest of Asia on the inflation front. Inflation rose there far sooner and by more than in the rest of Asia, which is now clearly playing catchup. Ironically, with RBI policy rates and India inflation moving closer together, the RBI may have more room to be a little softer on rate hikes. However, I remain in the 0.35% to 0.50% camp as the Indian rupee remains one of the region’s worst performers. The joys of stagflation.   All roads lead to the US tonight, though, and the week’s data highlight the US Non-Farm Payrolls. Despite all the recession doom and gloom in the US, with the housing market under stress and stubbornly high inflation, not all the pieces have fallen into place. Nor is there actually any unity in the market about the trajectory of US growth or inflation. US ISM Manufacturing was robust earlier this week, consumer spending is holding up, and the labour market appears to be remaining as tight as ever.   A weak US Non-Farm Payrolls this evening will give ammunition to the riders of the apocalypse if labour market weakness is finally seeping through in tier-1 data. Despite some very hawkish Fed speakers this week, a soft number probably sees US yields and the US dollar fall, while somewhat perversely, US stocks will probably rally due to the former. A US recession being good for stocks, apparently. Conversely, another surprise upside release is likely to have the opposite reaction, at least in the short term, as it reinforces the Fed speaker’s hawkish rhetoric.   China releases its July Balance of Trade over the weekend, expected to print at around a USD 90 billion surplus. That data is unlikely to shake the tree too much. Far greater risk lies in the geopolitical sphere, and the property sector slow moving trainwreck, as well as the usual covid-zero risks. For that reason, and with US data and the weekend ahead, the animal spirits of Asia may be tempered today, with quiet days on equities and currency markets. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Jeff is leaving the building - MarketPulseMarketPulse

Russia trades in a choppy range Oil prices finished almost unchanged overnight, but that belied another large range intraday, with both contracts moving sharply higher before reversing. Russia’s moves on European natural gas continue to underpin prices, while global recession fears continue acting as a headwind. Brent crude finished almost unchanged at USD 104.60, easing slightly to USD 104.45 in muted Asian trading. Notably, Brent crude rose above USD 107.00 once again overnight, only to retreat sharply. The series of daily highs between USD 107.50 and USD 107.70 a barrel is a formidable barrier. A daily close above USD 108.00 would now be a significant bullish technical development targeting the 100-day moving average (DMA) at USD 110.00, followed by USD 115.00 a barrel. Support is nearby at USD 104.00 and then USD 101.50 a barrel. WTI finished 0.80% lower at USD 95.50 overnight, having traded as high as USD 99.00 a barrel intraday. In Asia, it has edged lower to USD 95.30. It looks the more vulnerable from a technical perspective, and a large gain by official US crude inventories tonight could spark more selling. WTI has resistance at USD 99.00, the overnight high, and then USD 100.00. The 200-day moving average (DMA) at USD 94.85 is nearby support, followed by USD 92.50 a barrel. A daily close under the 200-DMA would be a negative technical development. Gold trades sideways Gold was almost unchanged at USD 1717.50 an ounce overnight, where it remains in Asia, as its flatline price action continues. The charts continue to suggest that gold is trying to form a medium-term low; however, the price action remains underwhelming, and we will have to wait until we get into the meat of the week’s calendar to see if this scenario plays out. Like everything else, it is on hold for the FOMC now. Gold needs to overcome heavy resistance at the USD 1745.00 an ounce triple top before the gold bugs can really start to get excited. ​ It has support at USD 1680.00, and then the longer-term support around USD 1675.00 an ounce zone. A sustained failure of USD 1675.00 will signal a much deeper move lower targeting the USD 1450.00 to USD 1500.00 an ounce regions. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Oil in choppy waters, gold directionless - MarketPulseMarketPulse

Currency markets range-trade overnight It was another night of range trading for currency markets overnight, which seem reluctant to aggressively position until the FOMC is out of the way. One exception was the euro, which fell heavily on natural gas-derived recession fears. That lifted the dollar index, which finished 0.68% higher at 107.20, having bounced off rising wedge support. In Asia, it has moved 0.17% lower to 107.01. The rising wedge support is at 106.40 today, and a daily close under 106.40 signals more losses towards 1.0500 and 1.0350, potentially extending to the initial 102.50 long-term initial breakout. Resistance is at 107.30 and 108.00.   EUR/USD slumped by 1.03% to 1.0117 overnight, dogged by energy fears dragging the Eurozone into a deep recession. In Asia, it has managed to recover 0.26% to 1.0143 as the US equity index futures rally sees some modest US dollar selling sweep Asia. The fall overnight has swung the technical picture to the negative, and the multi-day resistance at 1.0275 is formidable. Only a sustained break above 1.0360 now suggests a longer-term low is in place. EUR/USD has support at 1.0100 and 1.0100.   GBP/USD had a very choppy day but ultimately settled just 0.14% lower at 1.2030, rising to 1.2050 today in Asia. The rising wedge support is at 1.1960, followed by 1.1900 and 1.1800. Rising wedge resistance is at 1.2100, followed by 1.2200. It would take a sustained break above 1.2400 to call for a longer-term low by sterling.   With US yields moving sideways overnight, USD/JPY edged higher to 136.95 overnight, where it remains in Asia. A loss of 135.50 sets the scene for a larger downside correction, potentially reaching 132.00. Initial resistance is distant at 138.00, followed by 139.40. The US/Japan rate differential continues to hold USD/JPY in its thrall, and it is clearly marking time until tonight’s FOMC.   Weaker US stock markets saw AUD/USD and NZD/USD ease overnight to 0.6937 and 0.6230. Weaker inflation data has pushed AUD/USD down to 0.6920, with the kiwi unchanged. The technical picture for both remains constructive as both currencies stay well clear of their breakout lines at 0.6790 and 0.6145. Asian currencies eased slightly overnight before booking some slight gains today. As a whole, the Asian FX space is almost unchanged and is in a holding pattern ahead of the FOMC this evening. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. US dollar eyes FOMC decision - MarketPulseMarketPulse

Asia follows Wall Street’s drop Wall Street fell during the main session overnight, as Walmart’s result and soft US confidence and housing data heightened recessionary fears and dampened sentiment. The S&P 500 finished 1.15% lower, the Nasdaq tumbled 1.87% lower, with the Dow Jones losing 0.74%. In Asia, the picture has been sharply reversed after both Alphabet and Microsoft gave upbeat future assessments, despite both slightly missing earnings forecasts. US index futures are sharply higher as a result. S&P futures are 0.78% higher, Nasdaq futures have jumped 1.56% higher, and Dow futures have gained 0.30%. Asian markets are painting a different picture, mostly trading to the negative side, continuing a pattern of following the Wall Street main session price action, with continuing question markets over China risks. With the FOMC to come tonight, Asian markets also appear to be taking some risk off the table into the week’s main event. Japan’s Nikkei 225 is just 0.15% higher, but South Korea’s Kospi has fallen by 0.55%. In China, markets are finding no solace from the China property fund or Ali Baba’s intention to create a Hong Kong main board listing, allowing retail investors to access its stock from Shenzhen and Shanghai. The Shanghai Composite is down by 0.28%, with the CSI 300 falling by 0.58%, while Hong Kong has slumped by 1.40%. Singapore is 0.25% lower in regional markets, and Taipei has lost 0.55%. Kuala Lumpur is just 0.12% higher, while Jakarta and Bangkok are roughly unchanged, and Manila has lost 0.45%. Australian markets have not responded to inflation rising by less than anticipated today, the ASX 200 is 0.10% lower, and the All Ordinaries have eased by 0.15%. European markets had another soft session overnight, dogged by slumping Russian natural gas exports to the Eurozone. That reality is set to continue hamstringing European equities, and ahead of the US FOMC this evening, European markets look set to continue trading from the soft side. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Asian equities ignore US futures reversal - MarketPulseMarketPulse

Markets expecting 75bp hike After what seems like an interminable wait, we are finally at FOMC day, and the last one I shall be covering as the voice of reason in this missive. Markets have baked another 75 basis points into their loaves of bread, but it’s going to be all about what the Fed and Jerome Powell say and not what they do. The IMF downgraded world growth forecasts last night, and there are plenty of recessionary signs around the world. What we’re not yet seeing, is easing commodity prices and supply chain pressures flowing through to lower prices.   Markets will be betting heavily that the Federal Reserve may mollify some of its inflationary language. These were the same markets that just recently were pricing in 100 basis points today in a panicked manner, so don’t take their “wisdom” as gospel. Although the Fed may well be pleased that some of their harsh medicine is taking effect by virtue of voice and intent rather than action, it wouldn’t make much sense for them to take their foot off the brakes right now and pivot to being dovishly hawkish. The Fed already has a credibility issue thanks to being so vehemently in Team Transitory, and although my expectations for them are nearly as low as the Reserve Bank of New Zealand, monetary custodial of my beloved but now thoroughly messed up country, I expect them to “stay on message.”   As such, some complacency may be shaken out of the US bond market this evening, and the US dollar’s downward correction may base, while the FOMO gnomes of Wall Street may have a tough day. Or I could be completely wrong, please circle back to the “wisdom” comment above. Either way, the big loser will probably be the White House as November’s mid-terms loom closer, and the tears flow harder.   Wall Street fell overnight as it continued absorbing the Walmart earnings shocker, but US index futures are bouncing quite impressively in Asia after the Alphabet and Microsoft results. Both tech giants just missed on earnings, but both maintained very upbeat outlooks; that was enough for the FOMO gnomes. Meta announces after the close of trading overnight, and if we are looking for an online ads selloff, Meta’s results may be that catalyst. If you’re wondering why, go and look at your Facebook and Instagram feeds, which have become a wasteland of actual content from your “community” but a dumping ground for pointless adverts. They look more desperate than Joe Biden at the moment.   Interestingly with US earnings, McDonalds, Coca Cola and Chipotle all produced decent results. That circles back to this year’s winners being companies making things that people need no matter what the economic climate is, while companies that rely on the discretionary consumer wallet may find the going tough. Eating and drinking is one of those necessities, although I am not advocating that readers should consume a diet of fizzy drinks, burgers, and Mexican food. For Asia’s part, South Korea’s SK Hynix and LG Display announce results today, and it will be interesting to see if the pandemic boom demand for electronic goodies is finally tailing off.   In Asia, Australian Inflation has just been released. YoY Q2 Inflation rose to 6.10% from 5.10%, but slightly less than the 6.20% forecast. MoM Inflation was slightly lower than forecast at 1.80% as well. Australia remains the lucky country, even on inflation, it seems. The slightly softer results have seen RBA hiking expectations pared, sending the Australian dollar lower for now, while I expect local equity markets did not react.   China Industrial Profits has also just been released, climbing by 0.80% in June YoY, a vast improvement on May’s -6.50%. An easing of lockdowns in China likely accounted for most of the boost, and as readers will know, I continue to believe that China’s covid-zero policy remains a key risk for domestic markets, with a likely spill over into regional ones in the event of extended lockdowns. Its impact appears to be muted today.   Ahead of the FOMC tonight, the US releases Durable Goods and Existing Home Sales. Both have downside risk, especially existing home sales after yesterday’s new home sales produced a very soft number. That data will probably only be a driver for intraday volatility, though, as we await the pronouncements of Powell and the FOMC. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. We're here, finally - MarketPulseMarketPulse

Asian equity markets are slightly softer after Walmart results US markets had a mixed session overnight, with the S&P 500 and Dow Jones booking small gains while the Nasdaq fell. Overall, the picture was of continued range-trading, and investors positioning themselves for the earnings run this week, as well as the FOMC. In the Nasdaq’s case, it looked like some trimming of positions ahead of the big-tech earnings releases starting today. The S&P 500 edged 0.10% higher, the Nasdaq fell by 0.43%, and the Dow Jones rose by 0.28%. The Walmart results also saw Amazon and Target stocks get a beating by association and re-energised recession nerves. That sees US futures falling in Asia. S&P 500 futures are 0.35% lower, Nasdaq futures are down by 0.25%, and Dow futures have fallen by 0.45%. That sentiment has carried over into Asian markets today, which are also having a modestly mixed day, erring towards the downside. Japan’s Nikkei 225 has fallen by 0.20%, while South Korea’s Kospi has risen by 0.35% after strong GDP data. In China, the Shanghai Composite has edged 0.05% lower, with the CSI 300 adding 0.15% and Hong Kong gaining 0.40%. Singapore is 0.25% higher, but Taipei has slipped 0.50% lower, and Jakarta and Kuala Lumpur have fallen by 0.40%. Manila and Bangkok have edged 0.25% higher. In Australia, markets are treading water. The All Ordinaries is down 0.10%, with the ASX 200 unchanged. It doesn’t look like the Asia session will be one to set the world on fire today, especially with a light data calendar. The natural gas situation in Europe means that European equities will struggle to replicate yesterday’s gains. US markets will come down to the Microsoft and Alphabet results with a dash of data for seasoning. I won’t even bother to speculate what the soup will taste like. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Walmart pushes Asia slightly lower - MarketPulseMarketPulse

Russia lifts oil prices Russia has further reduced gas flows to Germany overnight, which is threatening to unwind oil’s move lower on Nord Stream 1 reopening. As that reality set in, Brent crude rose 1.20% to USD 104.85, and WTI gained 1.30% to USD 96.25 a barrel. In Asia, the Russian moves have also spooked local markets, sending prices sharply higher. Brent crude is 1.85% higher at USD 106.60, and WTI has leapt 1.80% higher to USD 98.00 a barrel. Despite the price discount by WTI over Brent widening to near three-year highs, both contracts have futures curves that remain in deep backwardation, signalling that prompt physical supplies remain tight, even if US gasoline stocks are now rising sharply and refining margins are falling. Russia remains the wild card in the energy space, supporting prices, a situation unlikely to change anytime soon. Of the two contracts, WTI looks the more vulnerable, having the greater physical beta to US domestic energy consumption. Brent crude is approaching significant technical resistance at USD 108.80, a sustained break of which signals a larger rally targeting USD 115.00 a barrel. Support is at USD 101.50 a barrel. WTI has resistance at USD 100.00, while it once again, bounced off its 200-day moving average (DMA) at USD 94.85 overnight. Until a sustained break of the 200-DMA occurs, significant topside squeezes by WTI remain entirely possible. Gold trades sideways Gold finished 0.45% lower at USD 1720.00 overnight, edging 0.20% higher to USD 1723.25 an ounce in another aimless Asian session. The charts continue to suggest that while gold is trying to form a medium-term low, its price action remains underwhelming, and we will have to wait until we get into the meat of the week’s calendar to see if this scenario plays out. Gold needs to overcome heavy resistance at the USD 1745.00 an ounce triple top before the gold bugs can really start to get excited. ​ It has support at USD 1680.00, and then the longer-term support around USD 1675.00 an ounce zone. A sustained failure of USD 1675.00 will signal a much deeper move lower targeting the USD 1450.00 to USD 1500.00 an ounce regions. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Oil rises on Nord Stream, gold drifting - MarketPulseMarketPulse

Will US dollar resume downward correction? Currency markets range-traded overnight, with very little to show in either the G-10, Asia FX, or EM space. The technical picture on the dollar index, however, is testing the bottom of its rising wedge, and it is shouting that the US dollar correction lower still has legs. Overnight, the dollar index finished almost unchanged at 106.48 but has moved through the wedge support at 106.40 today, falling 0.18% to 106.29. A daily close under 106.40 signals more losses towards 1.0500 and 1.0350, and it could extend to the 102.50 long-term breakout point. Resistance is at 107.00, 107.30 and 108.00. EUR/USD was flat at 1.0230 overnight, gaining 0.15% to 1.0237 in Asia. Russian gas woes could limit gains despite the technical picture being constructive. It has resistance at 1.0275, but only a sustained break above 1.0360 would suggest a longer-term low is in place. EUR/USD has support at 1.0150 and 1.0100. GBP/USD edged 0.35% higher to 1.2040 overnight, rising to 1.2065 in Asia. Sterling has support at 1.1900 and 1.1800, with resistance taken out at 1.2060 today, followed by 1.2200. A close above the 1.2060 wedge formation signals a larger rally to the 1.2400 regions, but it would take a sustained break above 1.2400 to call for a longer-term low by sterling. With US yields moving sideways overnight, USD/JPY drifted 0.40% higher to 136.65 overnight, where it remains in Asia. A loss of 135.50 sets the scene for a larger downside correction, potentially reaching 132.00. Initial resistance is distant at 138.00, followed by 139.40. The US/Japan rate differential continues to hold USD/JPY in its thrall. AUD/USD and NZD/USD rose modestly overnight to 0.6960 and 0.6265, where they remain in Asia. ​ They continue consolidating their respective topside wedge breakouts. Only a move back below either 0.6800 or 0.6150 changes the short-term bullish technical outlook. Like AUD and NZD, the Asian FX space was almost unchanged overnight and is in a holding pattern ahead of the main events for the week, starting with US tech earnings this evening. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Currency markets range-trade overnight - MarketPulseMarketPulse

Markets eye earnings, FOMC meeting As expected, markets were quiet overnight ahead of a deluge of tier-1 earnings, data, and the US FOMC policy decision over the rest of the week. Equity, currency, oil, and precious metals markets were content to range trade, with only bitcoin showing some life, falling by nearly 6.0%. Bloomberg is reporting that it looks like Coinbase is in trouble with the US SEC over what is a security and what isn’t. Draining the crypto-swamp is going to be a drawn-out process. Oil is rising higher this morning in Asia as energy markets, once again, get caught out by a Russian whipsaw choke hold. There have been a couple of developments overnight that appear to be weighing on Asia today. Gazprom cut natural gas flows through Nord Stream 1 to around 20% of capacity, citing the usual “technical issues.” That follows the cruise missile attack on Odessa on the weekend, shortly after signing a Turkish-brokered deal with Ukraine to allow the resumption of grain exports. Markets continue to place hope on what Russia says, rather than what it does, when they should be approaching it from the opposite direction. Dutch natural gas prices moved nearly 10.0% higher, but European equities were remarkably resilient; despite a weak German IFO number, I can’t see that lasting. Late in the US session, retail stalwart Walmart produced a very unimpressive set of results alongside a grim outlook for the rest of the year. Walmart blamed food and energy inflation, reducing consumers’ discretionary spending power, and I can’t argue with that. Today sees Alphabet and Microsoft also announcing earnings, and although there is a lot of nerves around the digital advertising space, I suspect it will be Meta’s results tomorrow that really set the tone. As Meta found out earlier in the year, stock markets are a harsh mistress now if the pandemic-derived growth fantasies can’t be maintained. The same fate surely awaits all three, and Apple this week is that the fairy-tale hits a brick wall. Either way, we are unlikely to see a Wall Street session this week as quiet as the one overnight. Meanwhile, in China, the announcement of a USD 44 billion fund by the government to support beleaguered property developers had zero impact on Chinese equity markets yesterday. That could be because China will need to stump up a lot more than USD 44 billion worth of yuan to stop the rot. Evergrande, the big distressed-debt kahuna of the space, is approaching an end of July deadline to progress on restructuring its offshore debts. The CEO has been replaced this week, a victim of creative accounting by the group uncovered earlier this year. It looks like the end of July deadline will be a bit of a sea anchor for China equities this week. Yesterday, Singapore’s inflation data surprised to the upside on both the core and headline readings. We can safely assume that the MAS will be sharpening their pencils for another tightening of monetary policy at their scheduled October meeting, although October seems like a long way away right now. One bright spot today was South Korean Adv Q2 GDP, which rose by 0.70%, with forecasts expecting a retreat to 0.40%. Strong consumer consumption as covid restrictions eased, were behind the gain. Unfortunately, April-June 2022 is also an age away now, and the picture may have darkened since. I am expecting minimal impact from the data on either the won or the Kospi. The Thailand Balance of Trade and Singapore Industrial Production will be of only marginal interest today. Europe’s calendar is empty except for the Hungarian Central Bank policy decision; markets expect a 0.75% hike to 10.0%. The US calendar is rather more substantial, featuring Case-Shiller House Price Index, New Home Sales, CB Consumer Confidence and Richmond Fed Manufacturing and Services Indexes. In the present environment, with the recession word on everyone’s lips, you’d have to say all that data has downside risks. The US government is apparently trying to change the definition of a recession from two consecutive quarters of negative growth. Like governments everywhere, they are in a damage-control mood as inflation soars, making their populaces angry. In many cases, most of that blame should be laid at the feet of Russia and their respective central banks. Bulging with PhDs in economics, they all missed the transitory versus entrenched inflation trade, and now here we are. Governments get the blame, of course, especially in democracies. The White House’s responses of late, as mid-terms loom, are starting to look desperate and are lacking dignity. Still, US commodity prices have fallen this month, gasoline consumption and pump prices have fallen sharply, and the US-centric WTI complex is looking much more wobbly than Brent crude. They say the best cure for high prices is high prices; perhaps the Democrats will get some good news before the mid-terms, although if job losses have started in earnest, it may still be for nought. Anyway, I digress. Today’s session in Asia is likely to be erring to the soft side as recession fears mount in the US after Walmart’s results. Europe will be dominated by gas, the US by big tech earnings with a smattering of data. I had said previously that the bear market rally will have its moment of truth at the FOMC, but judgement day could arrive a little earlier. I am still not game to pick how this week finishes and will happily watch the circus from the upper-tier seats. One last thing, and I know I must be boring readers now, but it’s important, and it’s China. Reuters has reported overnight that authorities had ordered 100 large firms in Shenzhen into closed loop systems to counter Covid and keep the factories going. Once again, Covid-zero means Covid-zero, not Covid-zero once and done. If push comes to shove, I have no doubt that China will engage in large-scale lockdowns once again if it can’t get on top of its Covid outbreaks. Bottom fish China if you wish, and if you have a long-term view, why not? But be prepared for an exciting ride along the way, as the light at the end of the 2022 tunnel could be the train coming the other way: possibly carrying officials to an Evergrande creditors meeting. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. The waiting game - MarketPulseMarketPulse

Oil prices ease in Asia Brent crude and WTI had another choppy intra-day session on Friday, but like currency markets, closed almost unchanged as the dust settled on the day. ​ Futures markets remain deeply in backwardation, suggesting that in the real world, prompt supplies are as tight as ever, however rising recession fears globally do suggest that gains are likely to be limited in the shorter-term, geopolitics aside. Oil futures’ biggest problem is that the mind-boggling intra-day volatility seen of late is likely to reduce risk positioning, and thus, trading liquidity. A negative feedback loop is likely to exacerbate price moves. Brent crude closed 0.25% lower at USD 103.60 on Friday, falling by 1.10% to USD 102.50 a barrel in Asia today. WTI closed 1.45% lower at USD 95.00 on Friday, losing another 1.0% to USD 94.05 a barrel in Asia today. Brent crude has well-denoted resistance at USD 108.00 a barrel on the charts, and then USD 111.00. It has support at USD 101.75 and USD 101.00 a barrel. WTI looks the more vulnerable, moving below its 200-day moving average (DMA) at USD 94.75 today, and taking out support at USD 94.30 a barrel where it traced a double bottom USD 94.30, its overnight low and its 200-day moving average. (DMA). That now opens a retest of the July lows at USD 90.60 a barrel. Resistance is distant at USD 100.00 a barrel. Brent’s outperformance likely reflects its use as the international benchmark for global trade in oil, where physical supplies remain tight. WTI, on the other hand, is a domestic benchmark meaning that US recession nerves seem to be more heavily weighing on its price. Brent crude continues to hold comfortably above its 200-DMA at USD 97.65 a barrel, and until that comprehensively breaks, I am not yet pencilling in the demise of high oil prices, although I have long said I believe a medium-term high is in place. The more analysts there were calling for USD 200 and USD 300 a barrel crude, the more confident I became. Gold is trying to form a base Gold closed higher for the second session in a row on Friday, quite the achievement given its woeful performance of late. Gold closed 0.50% higher at USD 1727.50 an ounce on Friday, edging slightly lower in moribund Asian trading to USD 1728.75. Two positive sessions do not mean gold is out of the woods, but the technical picture does suggest it is trying to form a base, having bounced off long-term support near USD 1680.00 an ounce last week. It faces a myriad of data and event risk this week, but the chart does suggest buying the dips toward USD 1700.00 with a tight stop wouldn’t be the dumbest call of your career. Gold needs to overcome heavy resistance at the USD 1745.00 an ounce triple top before the gold bugs can really start to get excited. ​ It has support at USD 1680.00, and then the longer-term support around USD 1675.00 an ounce zone. A sustained failure of USD 1675.00 will signal a much deeper move lower targeting the USD 1450.00 to USD 1500.00 an ounce regions. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Oil dips lower, gold tries to solidify - MarketPulseMarketPulse

US dollar edges higher The US dollar has moved slightly higher in Asia today versus both the DM and Asia FX space, most likely due to the Russian attack on Odessa over the weekend. Friday saw a noisy session, with large intra-day trading ranges versus the major currencies. As the dust settled though, the US dollar finished only modestly lower. The dollar index was almost unchanged at 106.55 on Friday, edging higher to 108.65 in sedate Asian trading. The bottom of its rising wedge is at 106.30 today, and a sustained failure suggests a much deeper correction to 104.00, and potentially to its 102.50 long-term breakout point. Resistance remains at 107.40 and 108.00. EUR/USD traded another wide range on Friday, but closed just 0.15% lower at 1.0215, easing to 1.0205 in Asia. It has resistance at 1.0275, which allows for a test of the 1.0360/1.0400 resistance zone. Only a sustained rise above would suggest a longer-term low is in place. EUR/USD has support at 1.0130 and 1.0100. GBP/USD closed almost unchanged overnight at 1.2010 on Friday, falling to 1.1990 in Asia. GBP/USD has broken out of its falling wedge but needs to take out heavyweight resistance around 1.2060 to confirm a low is in place. It has support at 1.1900 and 1.1800, with resistance at 1.2060 and 1.2200. Lower US yields across the curve saw the Japanese yen emerge a winner overnight as the US/Japan rate differential narrowed, with the street still long to the eyeballs of USD/JPY. USD/JPY finished 0.92% lower at 136.10 overnight, rising slightly to 136.20 in Asia. It has broken out of its rising wedge support at 135.50 initially. Initial resistance is distant at 139.00, followed by 139.40. The US/Japan rate differential continues to hold USD/JPY in its thrall, and if US yields move sharply lower this week, the technical picture suggests USD/JPY could fall back to 132.00. AUD/USD and NZD/USD fell slightly overnight to 0.6925 and 0.6250, easing to 0.6905 and 0.6235 in Asia, likely due to the Russian missile attack on Odessa. Both currencies remain well above their upside breakout points and only a move back below either 0.6700 or 0.6100 changes the bullish technical outlook. USD/Asia finished almost unchanged on Friday, with the USD between 0.10% and 0.20% versus the THB, TWD, MYR, and CNY today. Both the INR and KRW have strengthened slightly and in USD/IDR’s case, it looks like Bank Indonesia is on top at 15,000.00 today. I expect volatility in Asian currencies to increase as the week goes on and we get more inputs from tier-1 data, the US FOMC, and US earnings. Overall, Asian currencies remain under pressure versus the greenback, and I believe we will need to see a sustained move lower by the US 2-year yield to change that dynamic. A hawkish FOMC likely sees selling pressure return to Asia FX. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. US dollar moves higher in Asia - MarketPulseMarketPulse

Senior Market Analyst Jeffrey Halley talks about news impacting the market and the week ahead. In this week’s action-packed episode, all eyes are on Wednesday’s US FOMC policy meeting. Where goes US monetary policy goes the world, it could be argued, but a LOT is happening this week ex-FOMC. Firstly we look at Wall Street’s price action on Friday and Asian equity markets today. Asian markets are lower today after the wheat deal signed by Russia and Ukraine on Friday was followed up by a Russian missile attack on the port of Odesa over the weekend. European equities haven’t liked what they saw either. We discuss the joys of Russian diplomacy before moving on to US earnings with Microsoft, Alphabet, Meta and Apple releasing Q2 numbers this week, as well as a raft of other heavyweights. We discuss which one is likely to be the odd man out. (clue: it starts with M) From there, it’s onto data from around the world that will come thick and fast this week, with tier-1 releases from Europe and the US, amongst others. We discuss China and its property sector, and a new support fund announced today while taking a quick diversion to take in Singapore inflation data. Inflation was much higher than forecast, and the MAS will certainly tighten again in October. But what does it mean for the rest of Asia, Asian central banks, and Asian currencies?   This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. OANDA Market Insights Podcast (Episode 356) - MarketPulseMarketPulse

Will FOMC opt for 75bp hike? This month has dragged on and seems to be lasting forever. One reason could be that it is my last full month as a keyboard warrior, toiling as the voice of reason as I try to make sense of the nonsense in the financial markets. The second, and more likely, is that the US FOMC policy meetings falls at the end of the month, instead of its usual mid-month slot. But as the last week of July arrives, so does the FOMC policy meeting, with the results due out in the early hours of Thursday morning Singapore time. For what it’s worth, I am in Team Taylor, and going for 75 basis points, with 100 being a bridge too far. Last Friday’s price action may have softened the ardour of the 100 basis point hikes on the committee as well. Equity markets finished sharply lower, ostensibly because of soft social media earnings, but given Wall Street’s schizophrenic nature of late, it was just as likely to be recession fears, booking some short-term profits, and cutting exposure ahead of the weekend and any potential risks that emerged over it. Currency markets had a noisy day but finished not far from unchanged across the DM and EM space, so I don’t think Friday’s equity sell-off was a structural move. Friday’s S&P Global Manufacturing and Services PMIs for Europe and the US were disappointing to say the least, coming in softer across the board. Eurozone bond yields moved sharply lower as the market falls over itself to price in a recession there. Even Italian BTPs rallied. That seems to have flowed into the US bond market as well, with the US yield also moving sharply lower across the 5 to 30-year tenors, and even 2-years closed under 3.0%. The R-word remains on everyone’s lips. Even gold managed to string two consecutive positive days together, while oil markets were broadly unchanged. Agricultural commodities fell on Friday after Russia and Ukraine signed a Turkey-brokered deal to allow Ukrainian grain exports to resume from Black Sea ports such as Odessa. Naturally, Russia decided to rain cruise missiles down on Odessa over the weekend, including one that hit a grain silo. That has seen wheat futures rise by 2.0% this morning and has led to some US dollar strength and extended the risk-off tone to equity markets. Various news outlets are also running a story about China’s increasingly strident warnings behind the scenes to US officials around Nancy Pelosi’s intended visit to Taiwan sometime in the next few weeks. This week features a raft of heavyweight US second-quarter earnings from tech heavyweights, which could drive volatility on stock markets in addition to the FOMC. Alphabet and Microsoft announce tomorrow, Meta on Wednesday, perhaps the highest risk one looking at the ad-strewn content-light wasteland of my Facebook and Instagram feed. Apple announces after the bell on Thursday evening NYT. Falling across the FOMC, we could be in for some tasty volatility around the mid-week hump. Alongside the FOMC, we have the German Ifo this afternoon, US Durable Goods Wednesday, German Inflation, US GDP and German, French, Italian, Spanish and Eurozone GDPs Thursday, and then Eurozone Inflation prints and US Personal Consumption and Expenditure data and the Chicago PMI on Friday. Slap in some China property and Taiwan risk, Eastern Europe risk, and the US President who has Covid, and good luck picking the bones out of this week. It’s the show with everything but Yul Brunner. I’ll be in Bali next week for four days, and mightily glad I am, watching the dust settle from the distance. Closer to home, we see Singapore Core Inflation for June (4.20% exp. YoY), and Headline Inflation (6.20% exp YoY), released at 1300 SGT today. Having already made an unscheduled monetary tightening this month, higher-than-expected inflation data this afternoon will lock-and-load the Monetary Authority of Singapore to tighten again at their scheduled October meeting. I am in Singapore this week, and although COE’s have hit record high prices in July, I am still seeing a lot of brand new Mercedes and Range Rovers being driven around. I also paid just over seven dollars for a quite small, but pleasing, hipster latte in Singapore this morning. My feeling is that inflation will come in on the high side this afternoon, which may give local equities some headwinds this week while supporting the Singapore dollar. On a similar note, Australia releases its Q2 CPI on Wednesday, and we can expect volatility over the number as the street uses it to reprice the trajectory of the Reserve Bank of Australia tightening cycle. The Australian dollar’s value is a function of international investors’ macro outlook for the world economy, risk-on/risk-off for those of us in the pilot fish part of the financial markets. A high CPI print could also be a headwind for Australian equities though, although they have been mostly content to follow Wall Street like a doting puppy of late. It is a slow week for China data, with just Industrial Profits on Wednesday. However, we do see official PMIs released this weekend on Sunday, and the Caixin PMI next Monday. The focus is likely to remain on China’s Covid-19 trajectory and the China property market woes. Evergrande is approaching an end-of-month deadline around debt restructuring, and if no progress is made, this could start grabbing more headlines as the week advances. The bear market rally in equities faces more than a few hurdles this week as outlined above. The currency markets technical picture look a bit clearer and the US dollar correction lower would appear to still have legs. There are rising and falling wedge breakouts everywhere. The dollar index is testing the base of its rising wedge, USD/JPY has broken lower out of its wedge, GBP/USD, AUD/USD and NZD/USD have all broken higher out of falling wedges. USD/JPY has the potential to be the most emotional, especially if the evolution of the week sees US yields move sharply lower again. Long USD/JPY is a very crowded trade, and a thinning of the herd is long overdue. One could also argue that both bitcoin and gold are trying to form bases as well, but let’s not get too far ahead of ourselves, they remain the ugliest horses in the glue factory. However this week plays out, I suspect today will be the most sedate day of the week to come, enjoy the peace and quiet while you can. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. FOMC week finally - MarketPulseMarketPulse

Oil prices fall overnight Brent crude and WTI had another session of 5.0% intraday ranges overnight, closing quite a bit lower than their opening levels. Global recession fears and the resumption of Russian gas flows to Europe seem to have been the catalyst, although I am sure that trading volatility recently is reducing liquidity as well, exacerbating movers. The futures markets remain deeply in backwardation, suggesting that prompt supplies are as tight as ever in the real world. The leaders of Saudi Arabia and Russia had a phone call today, with Saudi Arabia affirming Russia’s importance to the OPEC+ group and further emphasising which side OPEC’s bread is buttered regarding US relations. Along with Saudi Arabia making noises about rapidly approaching production capabilities, that has sent oil prices higher in Asia today ahead of the weekend. Brent crude closed 2.45% lower at USD 103.85 overnight, climbing 1.30% to USD 105.20 a barrel in Asia today. WTI closed 3.55% lower at USD 96.40 overnight, gaining 1.0% to USD 97.55 a barrel in Asia. Brent crude has well-denoted resistance at USD 108.00 a barrel on the charts and then USD 111.00. It has support at USD 104.00 and USD 101.00 a barrel. WTI traced a double bottom at USD 94.30, its overnight low and 200-day moving average (DMA). That makes this level quite pivotal now, a sustained failure signalling a retest of USD 90.00. Resistance is at USD 100.00, followed by USD 104.00 a barrel. Gold remains on the long-term injured list Gold traded in a wide USD 40.00 range overnight between USD 1680.00 and USD 1720.00, with the price action suggesting that some sell-at-worst long-liquidation occurred as USD 1700.00 failed. The longer-term support is around USD 1675.00 an ounce, barely holding but also emphasising its importance. In the end, a weaker US dollar and falling US yields allowed gold to record a decent gain for the day, although on the scale of recent moves in other asset classes, gold remains entrenched in the danger zone. Gold finished 1.32% higher at USD 1719.00 overnight, easing 0.26% lower to USD 1715.00 an ounce in Asia today as US dollar strength resumed. ​ It has support now at USD 1680.00, and then the longer-term support around USD 1675.00 an ounce zone. A sustained failure of USD 1675.00 will signal a much deeper move, targeting the USD 1450.00 to USD 1500.00 an ounce regions. Gold has resistance nearby at USD 1720.00, then USD 1745.00, and now a triple top. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Oil falls, gold vulnerable - MarketPulseMarketPulse

Asian markets are content to follow Wall Street higher Asian markets are mostly higher today, content to follow Wall Street’s overnight rally. The Snap after-market results are tempering US futures, taking the sheen off Asia’s rallies today. The fall of oil prices overnight is also supportive of Asian markets, although weekend event risk may also be staying investors’ hands. On Wall Street, the S&P 500 finished 0.99% higher, the Nasdaq jumped by 1.36%, with the Dow Jones rose by 0.51%. In Asia, the Snap results have seen tech companies come under some pressure, pushing US futures lower. S&P 500 futures have fallen by 0.40% lower, Nasdaq futures are off 0.65%, with Dow futures down 0.20%. In Asia, Japan’s Nikkei 225 is 0.20% higher, but South Korea’s Kospi has fallen by 0.40%. In China, the Shanghai Composite has gained 0.35%, while the CSI 300 has climbed by 0.55%, and Hong Kong has risen by 0.60%. Singapore is 0.70% higher in regional markets, with Taipei edging 0.15% higher. Jakarta has added 0.10%, Kuala Lumpur by 0.37%, Bangkok by 0.30%, and Manila is unchanged. Australian markets are also relatively subdued, the All Ordinaries have risen by just 0.10%, and the ASX 200 is unchanged. European markets had a very mixed day, with a resumption of gas flows from Russia offset by the surprise 0.50% rate hike by the ECB and Italian political chaos, although given that has been the natural state of affairs since 1945, we should be used to it. The widening of German/Italian bond spreads was more troublesome, and the ECB may need to roll out that fragmentation tool sooner than later. With weekend event risk ahead and the reality of gas flows resuming at reduced rates, Italian politics, and the decade of ECB negative interest rates being over, it is hard to see European equities finishing the day on a high note. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Asian markets edge higher - MarketPulseMarketPulse

US dollar resumes its downturn The US dollar resumed its correction lower overnight as the euro rose on renewed Russian gas flows, US yields fell, and investor sentiment rose in the equity space. The dollar index fell by 0.40% to 106.60 overnight, although heightened nerves in the equity space today have seen it rise by 0.23% to 108.84. The 106.40 area was tested for the 4th time overnight and now looms as a critical inflexion point. Failure signals more losses towards 1.0500 and 1.0350. Resistance is at 107.30 and 108.00.   EUR/USD traded in a wide range overnight, bounced around by Russian gas, Italy, and the ECB. In the end, it had onto much of its gaseous gains, finishing 0.50% higher at 1.0230. The first sign of trouble in US stock futures has prompted a US dollar rally in Asia, which doesn’t bode well for the single currency. EUR/USD has fallen 0.32% to 1.0197 as a result. It has resistance at 1.0275, but only a sustained break above 1.0360 would suggest a longer-term low is in place. EUR/USD has support at 1.0150 and 1.0100.   GBP/USD closed almost unchanged overnight at 1.2000, having spiked to a low of 1.1900 intraday. In Asia, the dollar rebound sees GBP/USD easing 0.25% to 1.1975. Sterling has support at 1.1900 and 1.1800, with resistance at 1.2060 and 1.2200. A rise above the 1.2060 wedge formation signals a larger rally to the 1.2400 regions, but it would take a sustained break above 1.2400 to call for a longer-term low by sterling. Its fate is probably tied to EUR/USD’s direction today.   Lower US yields across the curve saw the Japanese yen emerge a winner overnight as the US/Japan rate differential narrowed, with the street still long to the eyeballs of USD/JPY. USD/JPY finished 0.65% lower at 137.35 overnight, rising slightly to 137.55 in Asia. A loss of 137.00 could set off a deeper correction to 135.50 initially. Initial resistance is distant at 139.00, followed by 139.40. The US/Japan rate differential continues to hold USD/JPY in its thrall.   AUD/USD and NZD/USD rose overnight, falling 0.20% and 0.35% to 0.6920 and 0.6230 on US dollar strength in an inconclusive Asian session this morning. They continue consolidating their respective topside wedge breakouts. Only a move back below either 0.6800 or 0.6150 changes the short-term bullish technical outlook.   Bank Indonesia surprised markets by holding rates unchanged yesterday, and unsurprisingly, USD/IDR is above 15,000.00 at 15,015.00 this morning. Asian currencies were a mixed bag overnight, without any strong directional moves. The US dollar correction continues to pass the Asia FX space by, with regional currencies remaining at, or near, recent lows versus the greenback. We may need to wait for the FOMC outcome next week to see another directional move. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. US dollar falls overnight - MarketPulseMarketPulse

ECB surprise, Nord Stream gas reopens Volatility was the winner overnight, with a multitude of data points and events leaving market price action messier than a teenager’s bedroom. The European Central Bank surprised markets by lifting policy rates by 0.50%, ending over a decade of negative interest rates. The euro has already been rallying, but its gains were tempered by the collapse of the Italian government, and post the ECB meeting, German/Italian bond spreads started widening noticeably. The ECB’s Lagarde said policy decisions would be made on a meeting-by-meeting basis going forward, tossing their forward guidance out. Perhaps more importantly, Russian gas started flowing back down the Nord Stream 1 gas pipeline yesterday, albeit at flows resembling the 40% of capacity before it closed for maintenance. Still, when it comes to Europe and energy, any news is good news as fears had risen that Russia would leave it turned off. EUR/USD had already started rallying on this news, which was likely the major reason that oil prices fell overnight in another 5.0% intra-day range session. European equities were far more mixed, with some stark winners and losers. For that, we can thank the Italian political situation, widening North/South bond spreads, and the ECB’s 0.50% rate hike. In the US, a multi-month high for US Initial Jobless Claims and a soft Philly Fed Business Conditions Index spooked bond markets and saw US yields move quite a bit lower overnight. The US curve now looks bowl-shaped after US 10-years fell by over 15 basis points. That saw the US dollar weaken as well, as US recession fears also ramped up. I must say, Initial Jobless Claims rising by 7,000 to 251,000 does seem like clasping at straws. Wall Street liked what they saw, rallying powerfully once again overnight. Lower bond yields and some solid earnings results keep sentiment perky during the main session. That has changed a bit after hours after weak Snap. Inc results saw their stock price plummet by 25%. That dragged down the other social media-esque giants. As Meta found out earlier in the year, markets will severely punish richly valued tech stocks at the first sign of trouble, and there is now some risk to the broader equity markets from the FAANGS yet to report. This morning, we have seen Australian and Japanese Manufacturing and Service PMIs come in on the soft side, along with Japanese Inflation, which edged lower in June YoY to 2.40%. We have a bunch of S&P Global PMIs still to come for the European heavyweights, the Eurozone, and the US today. It looks like they will all have downside risks for obvious reasons, but I am not sure it will be enough to deter the FOMO gnomes of Wall Street. I will be covering my last FOMC meeting next week, and it seems likely that this will be the defining moment for markets in what has been a tumultuous month. 0.75% or 1.0% I know not, although my gut says 0.75%. The statement will be crucial and, depending on how it plays out, could stop what I consider a bear market rally, in its tracks. Inflation remains and will remain stubbornly high, geopolitical risk abounds, growth is slowing around the world, and recession risks are rising. I can’t see how that is a productive environment for equities, and that’s before the rest of big-tech reports quarterly earnings. That said, the technical pictures across the equity and currency space suggest we have more room for a further retracement. AUD/USD and NZD/USD have broken up out of falling wedges, with GBP/USD about to do so. The S&P 500 is approaching resistance at 4,020.00, as is the Dow right here at 32,030.00, although the Nasdaq’s lies far away still at 13,500.00. Failure of 106.40 by the dollar index will signal a much deeper correction lower, and the slump in US yields overnight is setting up USD/JPY for a serious culling of long positions. Two warning signs remain for me. One is that the US Dollar moves lower has all but passed by the Asia FX space. Most USD/Asia pairs remain at or near recent highs, which in some cases, are record highs. We likely need to see a much bigger fall in US yields and/or oil prices to change that. I can’t see the Fed being so happy to see the US yield curve slump at this stage in the process, though. The second is gold. Gold’s price performance has been appalling in July, remaining at multi-month lows no matter whether the US dollar or US yields have rallied or fallen. The US dollar usually rallies during a recession, part of the “dollar smile” complex. Gold seems to be telling us that we call “peak dollar” at our peril. One news event that may lift sentiment in Asia today is an announcement by Turkish officials overnight, saying that an agreement to resume Black Sea grain exports from Ukrainian ports will be signed at some stage today. Fingers crossed on that one. Happy Friday, everybody. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. The end of a messy week - MarketPulseMarketPulse

Oil prices are steady Brent crude and WTI were steady once again overnight, with US official crude inventory data having little impact on prices, although the rise in gasoline inventories by 3.5 million barrels may have capped prices intraday. European gas concerns look to be supporting the downside for now. Another factor behind the lack of volatility could be that volatility in July has bordered on the absurd at times, and that may have prompted traders to move to the sidelines.   Brent crude has edged 0.40% lower to USD 106.05 a barrel in Asia, with WTI moving 0.90% lower to USD 98.90 a barrel on futures markets. Brent crude has well-denoted resistance at USD 108.00 a barrel on the charts and then USD 111.00. It has support at USD 104.00 and USD 101.00 a barrel, and then USD 97.50, the 200-DMA. WTI has support at USD 98.25 and USD 96.00 a barrel, followed by USD 94.30, its 200 DMA. Resistance is at USD 100.00, followed by USD 104.00 a barrel.   Gold’s moment of truth draws near If any asset class yells that the risk sentiment rally could be a very false dawn, it is gold. Having completely failed to rally on material US dollar weakness this week, it has edged even lower to longer-term support overnight and this morning. To say that gold’s price action is underwhelming is an understatement, and it appears to be facing imminent material downside risks if the technical picture is to be believed.   Gold fell by 0.86% to USD 1697.00 overnight, easing by another 0.30% to USD 1691.00 an ounce in Asia this morning. ​ It is now just above longer-term support around the USD 1675.00 an ounce zone. A sustained failure of USD 1675.00 will signal a much deeper move, targeting the USD 1450.00 to USD 1500.00 an ounce regions. Gold has resistance nearby at USD 1720.00, then USD 1745.00, now a triple top. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Oil stable, gold loses ground - MarketPulseMarketPulse

US dollar bounces back The US dollar rebounded overnight as a multitude of risk factors in Europe saw the euro fall heavily, lifting the dollar index. The US dollar strength was not confined to just them, though, with the greenback booking decent gains versus both the DM and EM space. The weak US housing data provided the catalyst for the rebound on a day when US yields remained almost unchanged. The dollar index rose by 0.33% to 107.05 before edging 0.19% lower to 106.85 in Asia. ​ The technical picture still suggests the correction lower has more to run, however, and the dollar index has now traced a triple bottom at 106.40. Failure of 106.40 now signals a deeper move towards 1.0500, and 1.0350 is possible. ​ Resistance is at 108.00 and 109.30. EUR/USD EUR/USD fell by 0.44% to 1.0180 overnight before rising by 0.27% to 1.0210 in Asia. The single currency faces a multitude of risks today, but markets seem poised to buy euros if gas flows resume through Nord Stream 1 this afternoon, even at reduced flows still. EUR/USD has traced out a triple top at 1.0175, which is initial resistance. That is followed closely by 1.0200. Only a sustained break above 1.0360 would suggest a longer-term low is in place. EUR/USD has support at 1.0100, 1.0000 and 0.9900/25. GBP/USD GBP/USD closed slightly lower at 1.1980 overnight, where it remains in Asia. Higher than expected UK inflation and the emergence of the final two new prime ministerial candidates having little impact. It has support at 1.1930, 1.1800 and 1.1760, with resistance at 1.2060 and 1.2200. A rise above 1.2060 suggests a larger rally to the 1.2400 regions, but it would take a sustained break above 1.2400 to call for a longer-term low by sterling. USD/JPY USD/JPY is sharply unchanged at 138.10 today, for the third day in a row. The BOJ policy decision and revised forecasts had zero impact on the currency. US bond yields have been steady this week, which likely explains the tight ranges in USD/JPY. ​ 139.40 is initial resistance, followed by 140.00. Support is at 137.40 and 136.00. AUD/USD and NZD/USD are also steady at 0.6895 and 0.6230 this morning, consolidating their respective topside wedge breakouts. Only a move below either 0.6800 or 0.6150 changes the short-term bullish technical outlook. Asian currencies are slightly weaker versus the US dollar today, in contrast with the moves by major currencies during the Asian session. A weaker CNY fixing by the PBOC this morning is playing its part, as are China’s economic and virus concerns. In the bigger picture, the US yield differential is still weighing on Asian currencies, in addition to global slowdown fears. That has kept the pressure up on regional currencies, with USD/KRW, USD/PHP, USD/IDR, USD/MYR, and USD/INR all pushing against recent highs and in some cases, record highs. This afternoon, a dovish BI could see USD/IDR break above 15,000.00, adding more pressure to Asia FX. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. US dollar rebounds overnight - MarketPulseMarketPulse

ADB and China nerves cause a mixed picture with Asian equities today Wall Street’s rally continued overnight, boosted by the Netflix results apparently. In Asia, US futures are flirting with negative territory as Alphabet and Microsoft announce hiring assessments. Meanwhile, another China property developer is defaulting on offshore debt, Covid cases remain elevated in mainland China, and the Asian Development Bank has downgraded regional growth while raising inflation assessments once again. Taken in totality, Asian markets are very mixed today as China nerves temper the urge to follow Wall Street in several markets.   Overnight, the S&P 500 rise by 0.59%, while the tech-heavy Nasdaq outperformed, rallying by 1.58%. The Dow Jones managed just a 0.15% gain. In Asia, US futures have run out of steam, with S&P 500, Nasdaq and Dow futures easing by 0.10%.   In Asia, Japan’s Nikkei 225 is up just 0.23% after the BOJ left policy unchanged. Meanwhile, South Korea’s Kospi has eked out a 0.40% gain after the sharp rise once again by the Nasdaq overnight. China markets are in negative territory, with the Shanghai Composite and CSI 300 losing 0.45% and Hong Kong falling by 1.25%.   In regional markets, Singapore has fallen by 0.65%, but Taipei, also highly correlated to the Nasdaq, has managed to rise by 0.70%. Jakarta is lower by 0.85% ahead of the BI decision, while Kuala Lumpur has gained 0.65%. Bangkok is 0.30% lower, while Manila has risen by 0.75%. Australian markets are also mixed, the All Ordinaries have risen by just 0.05%, but the ASX 200 has fallen by 0.30%.   European markets ran out of steam yesterday, having coat-tailed Wall Street higher this week. A combination of Italian political instability, the resumption-or not- of gas flows through Nord Stream 1 today, and the ECB policy meeting, combined to bring a dose of reality back to European markets. I expect European markets to also struggle today with so many irons in the fire. Although if gas flows resume this morning, that may give European stocks an initial boost, even if the flows are slight. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Asia mixed after Wall Street gains ground - MarketPulseMarketPulse

Thursday is shaping up to be a frisky day for financial markets, but probably nothing today will be more important than when the bell tolls 6. A.M. in Berlin. The official Nord Stream 1 maintenance period finishes, and the natural gas from Russia is supposed to resume. President Putin has already signalled that flows will remain below capacity, and if they resume at 40%, the rate before the shutdown, that is probably the best Europe can expect. The European Union has already told member states that they will need to cut gas usage by 15% until March next year, and if flows are even lighter than 40%, the economic picture for Europe, and the UK, darken considerably.   European markets have piggybacked the bear market US equity rally this week. However, they ran into a brick wall yesterday as Euro-reality set in. Notably, EUR/USD failed ahead of 1.0300 and has fallen back to 1.0200. It isn’t just natural gas that is capping Eurozone risk; Italy’s government looks to be in imminent danger of collapsing after Mario Draghi won a non-confidence vote yesterday. It was a trojan horse, though, as the three largest members of the coalition boycotted the vote. Mr Draghi is expected to resign again, triggering new elections. It also imperils disbursement of further multi-billion tranches of the Covid-recovery fund and threatens Italy’s reform path, and by extension, will probably push BTP yields higher.   ECB poised for lift-off I wouldn’t want to be the European Central Bank today, which is scheduled to announce its latest monetary policy decision this afternoon. It will be a damned if you do, damned if you don’t sort of meeting as they look across Europe’s wartime stagflationary economy and the ability of the Italians to shoot themselves in the foot so regularly since 1945. We can expect a token 0.25% hike to an inflation-slaying 0.25%, with the deposit rising to an equally frightening um, -0.25%. I have always said that something has been rotten in the state of Denmark with the EU since the GFC. While the rest of the world has many to squeeze in two or three economic cycles, Europe has basically sat at zero to negative interest rates since 2008 and has been quantitatively easing in some shape or form since then.   While the rate hike is a Hobson’s Choice for the ECB this afternoon, more attention is likely to be focused on the ECB’s anti-fragmentation tool to maintain government bond spreads between member states. Just don’t call it targeted quantitative easing, ok? With Rome pulling an Italian Job on the Eurozone at the worst possible time, it may be needed sooner rather than later. If markets are underwhelmed with the toolbox and Ms Lagarde’s press conference and rate outlook, European equities and the euro may also be underwhelmed, and that’s before we see whether Russian gas returns this morning.   The US equity rally continued overnight, thanks to the zero-sum game in the Netflix results and even large American airlines reporting profits; who would have thought? Tesla’s results were also ok, although they’ve taken a bath selling their bitcoin, but who hasn’t? Interestingly, Existing Home Sales slumped by -5.40% MoM for June as rate hikes bite. Equity markets ignored this as they are wont to do, but it speaks volumes that although US yields were nearly unchanged, the US dollar rallied quite impressively. And not just versus a running-on-empty euro either. Sterling was Trussed-up and beaten down, as was AUD and NZD etc, and Asian currencies also retreated. More on that below.   News that both Alphabet and Microsoft are “assessing hiring requirements” has sent US futures lower in Asia. All I can say as I watch diverging asset class prices is that one should beware of stock markets bearing “gifts.” I’ve been saying that for decades about investment banks, but it seems appropriate for the FOMO gnomes of Wall Street as well today.   In Asia today, the Asian Development Bank downgraded its Asia growth forecasts yet again while raising its inflation outlooks. We also have two central bank meetings of note. Firstly, the Bank of Japan announces its policy decision this morning. The BOJ is expected to temper its growth and inflation forecasts into 2023, and we can rightly assume there will be no change to its current ultra-easy settings. With US yields having settled down this week, the long USD/JPY trade has lost some momentum for now as well, likely easing some internal bureaucratic pressures.   Bank Indonesia is harder to call. BI has been a very reluctant rate hiker as its inflation environment remains benign, with a well-publicised priority to support Indonesia’s post-covid recovery. Unscheduled tightening last week by Singapore and Manila highlights the pressure central banks across the region are coming under as their currencies wilt under King Dollar. Notably, the rally by major currency heavyweights versus the greenback this past week did not flow meaningfully into the Asia FX space. In fact, looking at them this morning, all are at or near their recent lows, including USD/IDR, which continues nibbling at 15,000.00. That may force BI’s hand to enact a 0.25% hike, as with commodity prices falling, the help BI gets from a beefy current account surplus will diminish.   The Turkish central bank will also announce its latest policy decision this afternoon. That’s always worth buying some popcorn and taking a comfortable seat as we watch Erdogan-omics Part 10. More fun than a John Wick sequel and with a higher economic body count. Expect no change. South Africa also announces, and there I expect a far-more-sensible 0.50% hike to 5.25% to occur, with upside risk. That probably won’t be enough to relieve the pressure on the rand, and I expect this story to play out more in H2 across the EM and Asia FX space as the Fed keeps on hiking. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. 6. A.M. Berlin - MarketPulseMarketPulse

Oil prices explode higher Brent crude and WTI prices continued higher overnight as sentiment in markets swung to peak inflation once again, and concerns persisted around the resumption of Russian gas supplies. Brent crude rose 1.50% to USD 107.25 overnight, before edging lower to USD 106.40 in Asia. WTI rose by 1.50% to USD 103.35 a barrel overnight, moving 0.70% lower to USD USD 102.65 a barrel in Asia. ​ Brent crude has nearby resistance at USD 107.25, followed by USD 108.00 a barrel. Support is at USD 103.65 and USD 99.50. WTI has support at USD 99.35 and USD 96.00 a barrel, with resistance nearby at USD 104.00 and USD 105.00 a barrel. Gold remains unimpressive Gold has another unimpressive session overnight, failing ahead of USD 1720.00 intraday, but closing almost unchanged at USD 1711.00 an ounce, before edging lower to USD 1709.00 in Asia. Gold’s inability to hold onto even modest rallies in prices, even as the US dollar falls and US bonds trade sideways, is a major concern. Risk remains heavily skewed towards the downside. Gold has initial support at USD 1700.00, followed by the more important USD 1675.00 an ounce zone. A sustained failure of USD 1675.00 will signal a much deeper move lower targeting the USD 1450.00 to USD 1500.00 an ounce regions in the weeks ahead. Gold has resistance nearby at USD 1725.00, and then USD 1745.00. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Oil jumps over peak inflation, gold steady - MarketPulseMarketPulse

Safe-haven dollar dips as risk sentiment rises With risk sentiment soaring in US equity markets overnight, the US dollar bull market correction continued unabated, with losses versus the DM and EM space overnight. The dollar index closed 0.68% lower at 106.68 overnight, easing another 0.15% to 106.53 in Asia. but traded in a very choppy 115-point range between 106.90 and 108.05. The index traced out a double bottom at 106.40 overnight, and this marks initial support. Failure allows a test of 105.85 and then 105.00. Above, resistance is at 107.60, the overnight high, and then 108.70. A neutral relative strength index allows the US dollar correction to continue for some time yet.   EUR/USD rallied through 1.0200 yesterday, finishing 0.80% higher at 1.0225. Asia has edged higher to 1.0245. ​ The technical picture still suggests only a sustained break above 1.0360 would suggest a longer-term low is in place. EUR/USD has support at 1.0120 and 1.0000. The single currency faces serious event risk in the latter half of the week, firstly from the ECB policy decision, and secondly, from Russian natural gas flows which are due to resume after pipeline maintenance.   USD/JPY is holding steady at 138.00, where it remains in Asia. 139.40 is initial resistance, followed by 140.00. Support is at 137.40 and 136.00. The former was tested again overnight, and failure now signals a much deeper correction lower.   AUD/USD and NZD/USD rallied strongly overnight, breaking higher out of their falling wedge formations, implying more gains are likely in the near term. Having broken higher through 0.6850, AUD/USD is trading at 0.6920 today and the technical picture suggests a move through 0.7000 is likely. Similarly, the rise through 0.6150 by NZD/USD suggests that further gains above 0.6300 are possible. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. US dollar correction continues - MarketPulseMarketPulse

Wall Street rally continues in Asia Asian equity markets are enjoying a very positive session today, content to coattail the impressive rally by Wall Street overnight. Overnight, US stocks booked impressive gains after Netflix had less worse results than expected, and peak inflation hopes abounded on expectations of resumed Black Sea grain exports and Russian gas exports to Europe. All-in all, it looked like Wall Street was looking for any excuse to continue the bear-market rally, and they got it.   Overnight, the S&P 500 jumped an impressive 2.73% higher, while the Nasdaq rallied by 3.09% as the Netflix results inspired investors to pile back into big tech en masse. Not to be outdone, the Dow Jones also booked a healthy 2.39% gain. In Asia, the party continues for US futures. S&P 500 futures are 0.53% higher, Nasdaq futures are rallied by 0.72%, and Dow futures have added 0.41%.   In Asia, Japan’s Nikkei 225 has jumped 2.40% higher, with South Korea’s Kospi climbing by 1.05%, and Taipei is also 1.05% higher. The rally is less impressive in mainland China thanks to rising Covid-19 cases. The Shanghai Composite is 0.67% higher, the CSI 300 has added just 0.38%, but Hong Kong’s Hang Seng has rallied 1.80% higher.   In regional markets, Singapore is 1.33% higher, with Kuala Lumpur gaining 0.55%. Jakarta has rallied by 1.80%. Manila and Bangkok have added 0.40%. Australian markets are having a strong day on the back of the US equity rally. The ASX 200 is 1.50% higher, while the All Ordinaries has rallied by 1.65%.   European markets booked another outsized session of gains overnight, following Wall Street and hitching their wagon on hopes that Putin would return Nord Stream 1 flows to normal from tomorrow. I admire their optimism, but Mr Putin appeared to pour cold water on that this morning, and I suspect it will eventually pour cold water on European equity markets’ dalliance with the world of fantasy today. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Asian equities follow Wall Street higher - MarketPulseMarketPulse

The bear market rally looks well and truly back on track this week, thanks to one of the stranger things I have seen in 2022, Netflix losing only one million subscribers in Q2 instead of 2 million and forecasting an additional one million subscriber additions in Q3. Minus one plus one equals um, zero, the last time I looked. But it is not for me the second guess the bullish herd mentality of the equity market, especially as they continue to grapple with the reality that 20-years of central bank monetary puts have come to an end. The Netflix results were apparently backstopped by Stranger Things 3 being released. I’ll not argue with that as I love Stranger Things and remember the 80’s and all the music very well. Mrs Halley is less enamoured with season 3, complaining about the slow pace and the convoluted plot threads. That’s what makes a market I suppose. I have a feeling that omicrons’ rampage across the world has left many subscribers working or isolating from home, delaying the pressing of the cancel subscription button. Either way, with the street hungry for good news to feed the buy-the-dip appetite, Wall Street has a huge day, which saw investors piling back into big tech as well, lifting the Nasdaq by over 3.0%. I heard more peak inflation noise being bandied around, with Reuters reporting that Nord Stream 1 natural gas flows from Russia to Germany would resume this week as scheduled. Additionally, hopes were raised around negotiations to ease Russia’s seaborne blockade of Ukrainian food exports. Peak inflation is as good a reason to pile into equities and other risk sentiment asset classes as any I suppose. I personally believe we could be near peak inflation, but any hopes that it is suddenly going to fall quickly are naïve, far more likely is that it stays elevated for quite some time to come. The other issue I have from the above paragraph is having to use the words “hope” and “Russia.” I’m not sure how many times investors have to be slapped around the face on this point. Will Russia turn on Nord Stream 1? To emphasise this, let’s circle back to the Reuters natural gas story. It did mention that its sources said the flows, when they resume this week, will not return to previous levels, and by this, I mean its 160 million cubic metre-per-day capacity. Vladimir Putin, on his return from fellow economic powerhouse, Iran, is already setting the scene for reduced flows resuming, blaming faulty pumping units again according to Reuters. They also reported that Mr Putin said in Iran that “not all issues had been resolved yet” vis-à-vis Black Sea grain exports. So, Joe Biden left Saudi Arabia empty-handed on commitments by the Saudis to pump more oil, and Vladimir Putin is saying Nord Stream 1 gas flows will remain low and that Black Sea grain shipments have “issues” to overcome. And markets are pricing in peak inflation with a precipitous drop in H2 2022. I do admire the optimism. In large directional macro moves of the type we have seen in equities and currency markets the past few months, it is not unusual to see quite aggressive short-term reversals of those trends. I am yet to be convinced that we are seeing anything more than a bear market rally at the moment. Europe’s day of reckoning may come earlier when Nord Stream 1 is due to be switched on tomorrow. For the rest of world, that may come at next week’s FOMC policy meeting. Over in China, the mortgage payment strike by disgruntled apartment buyers is grabbing the headlines. The government is seemingly moving to push the funding gap to beleaguered developers onto local governments and state policy banks, meaning the fallout so far has been limited on equity markets. Perhaps more concerning is new Covid-19 cases reached 1,012 in China yesterday, according to official data. A flesh wound anywhere else, but in China’s covid-zero world, a cause for concern around potential new lockdowns. Readers should monitor developments here closely. Covid-zero means covid-zero in China, not lock down Shanghai and Beijing once and done. Mainland equities have only rallied modestly today, and your answer probably lies there. In other news China left its one and five-year Loan Prime Rates unchanged, but this was completely expected. There is no other data of note due out in Asia today, the Reserve Bank of Australia Governor Lowe spoke earlier today. Mr Lowe said he expected CPI to keep heading higher, that employment was past its theoretical maximum, and that interest rates would have to keep going up. Mostly, it was of no surprise to markets now, and the Australian dollar and local equities are ignoring it to hitch their reins to the US peak-inflation, we can trust Russia, less-worse earnings, sentiment rally overnight, like everyone else. This afternoon, German PPI is expected to rise to an eye-watering 33.90% YoY for June, as hints of a 0.50% rate hike by the ECB tomorrow gave the euro a boost overnight. The United Kingdom releases inflation for June, expected to climb to 9.30% YoY, with Core Inflation at 5.80%, PPI rising to 23.20% and Retail Prices rising 11.80%. With UK employment data yesterday surprisingly strong, some serious pressure is going to fall on the Bank of England now to accelerate rate hikes lest material sterling weakness return. US Housing Starts for June edged slightly lower overnight, and tonight we receive Existing Home Sales, which are expected to fall slightly to 5.38 million. In this environment, a bigger fall as rate hikes bite is likely to be interpreted as peak inflation/less Fed rate hikes equals buy equities and sell US dollars. Counterintuitive I know, but I don’t make the story up, I just report it and try to make sense of it. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. The stranger things put - MarketPulseMarketPulse

US dollar retreats against majors The US dollar fell once again against the major currencies as its downward correction continued. Notably, Asia FX made very limited gains overnight, and this US dollar move seems very much contained to the major currency space. The dollar index closed 0.53% lower at 107.41 overnight but traded in a very choppy 115-point range between 106.90 and 108.05. These mark initial support/resistance today. Above that, resistance is at 108.70, 109.30, and then 110.00. The drop to 106.90 overnight may have taken out many of the weak long positions, but should it fail again, the next target is the 1.0585 breakout point, followed by 1.0500. ​ In Asia, the dollar index is 0.12% higher at 107.53. EUR/USD rallied to test 1.0200 intraday, only to retreat, finishing 0.56% higher at 1.0145. In Asia, it has edged lower to 1.0130. ​ The technical picture still suggests a correction back towards 1.0200 is possible, but only a sustained break above 1.0360 would suggest a longer-term low is in place. EUR/USD has support at 1.0000 and 0.9900/25. The single currency faces serious event risk in the latter half of the week, firstly from the ECB policy decision, and secondly, from Russian natural gas flows which are due to resume after pipeline maintenance. GBP/USD rallied by 0.70% overnight to 1.1952, testing 1.2030 intraday. Like the euro, the extent of the intraday rally suggests that quite a lot of the weaker shorts were taken out, leaving positioning more balanced. It has support at 1.1870, 1.1800 and 1.1760, while resistance at 1.2060 and 1.2200 remains intact. A rise above 1.2060 suggests a larger rally to the 1.2400 regions, but it would take a sustained break of 1.2400 to call for a longer-term low by sterling. It is unchanged in Asia. USD/JPY fell by 0.28% overnight at 138.15, where it remains in Asia as Japan returns from holiday. Thursday’s high around 139.40 is initial resistance, followed by 140.00. Support is at 137.40 and 136.00. Given the sentiment in the market this week, a fall in US yields this week could finally translate to a meaningful downside correction by USD/JPY, which is a crowded trade. AUD/USD and NZD/USD finished sideways overnight, testing and failing ahead of resistance at 0.6850 and 0.6200, respectively, price action that mirrored EUR/USD and GBP/USD. AUD/USD has risen 0.25% to 0.6830 today, while NZD/USD gained 0.15% to 0.6165. Both currencies are showing falling wedge formations and a sustained break above 0.6850 or 0.6200 signals more gains ahead this week by the antipodeans. The overnight retreat by the US dollar bypassed Asian currencies once again, which posted only modest gains. That suggests that China’s growth fears, and the impending widening of the US interest rate differential at the short end of the curve, continue to weigh on AsiaFX performance. Today, USD/Asia is barely changed from their overnight closes. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. US dollar correction continues - MarketPulseMarketPulse

Oil prices explode higher Brent crude and WTI prices exploded higher overnight after Gazprom declared a backdate force majeure on some major European customers. That raised fears that gas flows would not return through the Nord Stream 1 pipeline to Germany at the end of the week, causing a knock-on impact on oil prices. Markets also seem to have concluded that President Biden effectively returned from Saudi Arabia empty-handed from his weekend visit. Brent crude leapt 4.80% higher to USD 105.65 overnight, adding another 0.35% to USD 106.00 a barrel in muted Asian trading. Brent crude has nearby resistance at USD 106.50, followed by USD 108.00 a barrel. Support is distant at USD 99.50. WTI leapt 4.55% higher overnight to USD 102.05, adding 0.45% to USD 102.45 a barrel in Asia. It has now-distant support at USD 96.00 a barrel, with resistance nearby at USD 103.00 and USD 105.00 a barrel. The intraday volatility in oil prices is rendering technical levels somewhat meaningless for now, and it seems that extra volatility is feeding into less intraday liquidity, exacerbating movements in a negative feedback loop. I note that both contracts have held and rallied from their 200-day moving averages on a daily closing basis. When combined with the fact the futures curves are still in backwardation, a bullish set-up for prices that reinforces that despite speculative volatility, the underlying supply/demand imbalance is as tight as ever. Oil prices may have peaked, but they certainly don’t look like they’re going materially lower from here unless we get a huge surprise from OPEC+. Stubbornly firm economic data from the US and improving data from China are other supportive factors. Risks remained skewed to the upside if Russian gas does not start flowing back to Europe at the end of this week. Gold remains unimpressive Gold has another unimpressive session overnight, peeping above USD 1720.00 intraday but closing almost unchanged at USD 1709.00 an ounce by the session’s close. ​ It has edged 0.10% lower to USD 1708.00 an ounce in another comatose session in Asia. Gold’s inability to hold onto even modest rallies in prices, even as the US dollar falls and US bonds trade sideways, is a major concern in my option. It suggests that risks remain heavily skewed towards the downside. The US dollar index is over 150 points off its peak from last Friday, yet gold remains glued to 11-month lows. It seems that only a much deeper correction lower by the US dollar will grant gold a stay of execution. Gold has initial support at USD 1700.00, followed by the more important USD 1675.00 an ounce zone. A sustained failure of USD 1675.00 will signal a much deeper move lower, targeting the USD 1450.00 to USD 1500.00 an ounce regions in the weeks ahead. Gold has resistance nearby at USD 1725.00 and then USD 1745.00 an ounce. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Oil soars, gold directionless - MarketPulseMarketPulse

Wall Street did another U-turn overnight, finishing lower as the dearth of tier-1 data and the pre-FOMC media blackout left the FOMO gnomes chasing their tails once again. Wall Street closed modestly lower, ostensibly because Apple said it would slow hiring, joining its other tech-giant brethren. That was despite Goldman Sachs and Bank of America producing decent earnings results, although investment banking revenue took a hit as IPOs and SPACs have dried up. More than likely, the stock market pullback was just noise on a slow news day. The losses overnight have been dwarfed by the gains from Friday, so the bear market rally thesis still has life; it just won’t be a linear progression. US dollar retreat continues Elsewhere, currency markets ignored Wall Street, with the US dollar falling again overnight. Once again, the greenback mostly retreated versus the majors, while Asian FX booked only modest gains. The greenback was long overdue a correction, and this is playing out nicely. The interest rate differential play remains real in Asia. Readers should beware of the “dollar smile”; running into the FOMC, the US dollar’s grin may get wider again. US yields also edged higher overnight, but it seems like noise, nothing special. Gold remains in an induced coma near USD 1700.00 an ounce, and risks remain skewed towards more gold bugs getting squashed. Oil had another frisky session, Brent and WTI rallying by around 5.0% overnight. That seems to be becoming the norm for oil prices these days, and with intraday vol like that, risk managers are probably telling the trading desk to cut position sizes intraday, creating a negative feedback loop on the liquidity front. It’s hard to say what made New York want to push oil higher, but I suspect they belatedly realised that Joe Biden came away with nothing from the Saudis. The + in OPEC+ is clearly more important to OPEC at the moment. Gazprom also announced some force majeures on European gas customers overnight, apparently, something that doesn’t bode well for the reopening of Nord Stream 1 on Thursday this week. Gas-margeddon Thursday is clearly playing its part in the oil rally, and it makes the European stock market rally even more surprising overnight. The major news flow washing over Asia today appears to be China’s announcement overnight that it may allow mortgage payment holidays for local buyers on uncompleted housing projects. Although the structure isn’t at all clear yet, it appears that local authorities and state-owned banks making will be “invited” to take up the slack. It appears to be a response to the mortgage payment protest by citizens in China, something the CCP is acutely sensitive to, and may mark the first steps by government entities to take on the credit risk from developers to get projects completed. China markets seem to be interpreting the announcement as a quasi-stimulus to backstop the property market. I won’t disagree with that, as trying to quietly work out the developer debt problem under the radar over time clearly hasn’t worked. Shanghai industrial commodity futures are on fire in early trading; nickel, aluminium, coking coal (to make steel), and rebar prices, amongst others, are all between three and six per cent higher today, suggesting markets believe government intervention is about to unlock the construction sector. That’s a bit of a reach, given have no concrete details of the plan yet, but one must respect the momentum. It is a desert on the data front in Asia today, but the China developments should see some positive spill over into Asian markets, which could well shrug off the noise from Wall Street overnight. This afternoon, Eurozone inflation data for June looks set to print at 8.60%. Given that it is final and not flash or preliminary, I expect that to be priced in. UK employment and earnings this afternoon could throw a recession curve ball if both surprise to the upside. That will lead to some recalculations on BOE tightening and could support the sterling. US Housing Starts and Building Permits for June look to be the day’s data highlights. I wouldn’t rule out an upside surprise today with retail sales and consumer confidence data holding up nicely last week. Since stock markets rallied after that higher data last week, I wouldn’t bet against the same thing happening again tonight. Finally, the only release of note in Asia today, the RBA Minutes, has dropped. The RBA members noted that rates were well below the neutral rate, given the conditions in the economy. You could probably leave a blank space in that sentence and put – insert central bank name here – at the moment. The Australian dollar is sharply unmoved this morning, suggesting the minutes revealed nothing that wasn’t already priced in. A day of headline-watching beckons. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Asian equities are trading soft - MarketPulseMarketPulse

Oil prices edge higher Both Brent crude and WTI rose modestly on Friday as they continued to unwind the mid-week slump. In Asia, hopes of more China stimulus, and a lack of concrete production promises from President Biden’s Middle East visit have seen Brent crude prices climb in Asian trading.   Brent crude finished Friday’s session 1.25% higher at USD 100.80, having tested USD 102.50 intraday. In Asia, it has added another 1.25% to USD 101.80 a barrel. WTI rose by 1.17% to USD 97.60 on Friday, edging 0.3% to USD 97.90 a barrel in Asia today.   Brent crude has resistance at USD 102.50, and then USD 104.00 a barrel, followed by a now distant USD 106.00 a barrel. It has support at USD 98.30 and then USD 97.00, the 200-DMA. WTI has support at USD 94.30, the 200 DMA, and then USD 90.60 a barrel. Resistance is at USD 99.00, followed by USD 101.00 a barrel.   Supply risks remain evident in international markets, and futures curves remain in backwardation. Despite the ructions in the speculative futures markets, the real-world dynamic remains as supportive of oil prices as ever. If Russian doesn’t switch gas exports back on to Europe at the end of the week, Brent crude could once again, find itself back near USD 110.00 a barrel.   Gold remains unimpressive Gold was notable on Friday; it felt no positive spillover impact from the risk sentiment rally that swept other asset classes. Gold finished Friday’s session 0.15% lower at USD 1707.50 an ounce. In Asia, continued US dollar weakness has allowed it to show some belated gains, rising 0.50% to USD 1715.70 an ounce in yet another quiet Asian session.   Overall, gold’s price action continues to be uninspiring with recoveries limited in scope, while the falls, when they do occur, are much larger and faster in scope. Gold’s fate this week rests on the hopes that the investor sentiment rally seen elsewhere, inspires more US dollar weakness this week.   Gold has initial support at USD 1700.00, followed by the more important USD 1675.00 an ounce zone. A sustained failure of USD 1675.00 will signal a much deeper move, targeting the USD 1450.00 to USD 1500.00 an ounce regions in the weeks ahead. Gold has resistance nearby at USD 1720.00, then USD 1745.00, now a triple top. That is followed by USD 1780.00, USD 1800.00, its June downward trendline. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

US dollar retreats as Wall Street rises The US dollar fell heavily on Friday, versus the developed market space, as Wall Street’s impressive rally spilt over into a broader sentiment rally in other asset classes. That saw the dollar index make a long-overdue correction lower. The dollar index fell 0.60% to 107.98 on Friday, easing another 0.17% lower to 107.80 in Asia as US dollar weakness continued. Resistance is at 109,30, the overnight highs, and then 110.00. Support is at 107.50 and then the 1.0585 breakout point, followed by 1.0500. ​ The relative strength index indicator (RSI) has moved out of the overbought territory, but the technicals suggest the US dollar correction could continue through the week. EUR/USD rallied by 0.67% to 1.0088 on Friday, rising another 0.17% to 1.0115 in Asia. ​ The technical picture suggests a correction back towards 1.0200 is possible, but only a sustained break above 1.0360 would suggest a longer-term low is in place. EUR/USD has support at 1.0000 and 0.9900/25. The single currency faces serious event risk in the latter half of the week, firstly from the ECB policy decision, and secondly, from Russian natural gas flows which are due to resume after pipeline maintenance. GBP/USD followed the euro overnight, finishing 0.37% higher at 1.1870, rising 0.23% to 1.1895 in Asia. It has support at 1.1800 and 1.1760, with resistance at 1.1965, followed by 1.2060 and 1.2200. A rise above 1.2060 suggests a larger rally to the 1.2400 regions, but it would take a sustained break of 1.2400 to call for a longer-term low by sterling. USD/JPY fell on Friday by 0.38% at 138.50, easing another 0.15% to 138.30 in Asia. Thursday’s high around 139.40 is initial resistance, followed by 140.00. Support is at 137.40 and 136.00. Given the sentiment in the market this week, a fall in US yields this week could finally translate to a meaningful downside correction by USD/JPY, which is a crowded trade. AUD/USD and NZD/USD rallied on Friday as investor sentiment ended the week on a high note. NZD/USD leapt higher on higher-than-expected inflation data today, but those early gains have since been eroded. AUD/USD and NZD/USD are both 0.25% higher at 0.6810 and 0.6175. Both currencies are showing falling wedge formations. A sustained break above 0.6850 or 0.6200 signals more gains ahead this week by the antipodeans. Asian currencies had another noisy session on Friday, but as the dust settled, were mostly unchanged versus the US dollar. The price action merely reversed their intraday losses from earlier in the session. The positive news headlines from China over the weekend on stimulus to support the property sector has allowed Asian currencies to book modest gains in Asia. However, despite a slew of recent policy tightenings in the region, fears of a widening interest rate differential with the US continue to cap gains by Asian currencies. That suggests markets will continue to call Asian central bank’s bluffs, the first being Indonesia on Thursday. Notably, the Philippine peso and Indian rupee continue to remain under pressure, USD/PHP rising 0.15% today to 29.913, with USD/INR rising 0.10% to 79.770. Across the rest of the region USD/Asia has fallen modestly by between 0.10% and 0.20%. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Wall Street rally pushes US dollar lower - MarketPulseMarketPulse

Asia follows Wall Street higher Wall Street staged an impressive rally after better than expected retail sales and consumer sentiment data from the US on Friday, as markets focused on a still-robust US consumer while ignoring its ominous warnings for the trajectory of Fed monetary policy. With a dearth of tier-1 data this week, and the FOMC in a pre-meeting media blackout, the equity rally could potentially extend throughout the week. Looking at the S&P 500 chart today, the technical picture certainly suggests that. The S&P 500 could rally back to 4,050.00, its March downtrend line, and still be in a bear market. To start saying the worst was over for equity markets would require a sustained break of that level and preferably, the 100-day moving average (DMA) at 4,140.00.   Friday saw the S&P 500 rally by 1.92%, the Nasdaq rally by 1.79% with the Dow Jones the session’s outperformer, leaping higher by 2.15%. US futures are performing well in Asia today. S&P 500 futures are up 0.40% while Nasdaq futures have jumped 0.95% higher, with Dow futures gaining 0.20%. Banking heavyweights Bank of America and Goldman Sachs are releasing earnings today, although I believe it would take nightmare results and outlooks from both to give markets pause for thought.   Asian markets are content to track Wall Street this morning, helped along by hopes of more aggressive stimulus measures in China to resolve its property market wobbles. Japan’s Nikkei 225 is closed today, while South Korea’s tech-centric Kospi leaping 1.75% higher. In China, the Shanghai Composite has leapt 1.50% higher, with the CSI 300 rallying by 1.20% and Hong Kong’s Hang Seng gaining an impressive 2.55%.   Across regional markets, better Singapore NODX data has lifted the Straits Times 0.65% higher, with Taipei adding 0.60%, while Kuala Lumpur is lagging at unchanged. Jakarta added 0.20%, Bangkok 0.25%, and Manila eased by 0.25% as the peso remains under pressure. Australian markets are also higher after the Wall Street rally, the All Ordinaries rising by 0.90%, and the ASX 200 gaining 0.85%.   European markets also enjoyed a very positive session on Friday. But with the ECB looming on Thursday and the scheduled resumption of Russian gas deliveries, European equities may struggle to replicate Friday’s gains this week. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Asian equities track Wall Street higher - MarketPulseMarketPulse

Wall Street rises as US data outperforms It says something about the level of confusion in the markets right now (American markets anyway), that having wrung their hands all last about inflation, 100 basis point rate hikes by the Fed, and an impending recession, that strong US Retail Sales and Michigan Consumer Sentiment on Friday saw Wall Street rally impressively. If that data had come out on Tuesday or Wednesday last week, we would probably have had a meltdown. And yet here we are, Wall Street’s S&P 500, Nasdaq and Dow Jones booking roughly 2.0% gains on Friday. Last Friday’s Wall Street price action was enough to spark risk sentiment rallies on forex markets, led by the usual suspects, the euro and the Australian dollar, although not much love permeated into the Asian currency space. Oil held steady, but gold found no solace and remains near USD 1700.00. We also saw a modest rally in commodity prices. Bitcoin has wound its way back to USD 21,000.00 this morning in the crypto space, although it has been grinding higher all last week. Even US yields fell slightly on Friday after that US data; go figure? My bear market rally theory postulated on Wednesday, got a beating on Thursday, and now looks quite clever again this morning after another day where Wall Street forgot to take their medication. I’ll stick my neck out again and say that with a relatively thin US data calendar this week, the FOMO gnomes of Wall Street may enjoy a week in the sun. This morning missive is heading into its last two full weeks of life before I head off to pastures new, and one thing I won’t miss is trying to find something intelligent to explain Wall Street’s short-term price actions. I suspect that Europe and its travails will be front and centre this week, with a smattering of China covid zero and property market nerves thrown in for good measure. The European Central Bank meets on Thursday to decide whether to hike its policy rates for the first time in 11 years, by a mighty 0.25%… That would take the Refinancing Rate to an inflation-fighting 0.25%, and the Deposit Rate to -0.25%, which I am sure will leave the Eurozone CPI quaking in its boots. We should also get some insight into its antifragmentation tool, intended to keep Eurozone sovereign spreads “on message,” but is really there there to support Italy’s debt because they clearly can’t do it themselves if one glanced at the weekend news. Europe is a classic example of the perils of easy monetary policy and QE; it’s easy to take it out of the box, but as you get the financial system addicted to a zero per cent cost of capital, it’s hard to put it back. Europe isn’t alone here of course, and at least they can say “look at Japan.” High fives mes Amis. The reason we can discount a 0.50% hike from the ECB when that is the minimum clearly needed, is something far more important for Europe. Thursday the 21st is gas-mageddon day for the Nord Stream 1 gas pipeline from Russia to Germany. Scheduled annual maintenance is due to finish that day, and the gas is supposed to start flowing again. I’ll give it another day because it’s Russia. But if flows don’t resume on Friday, that bear market rally by the euro and European equities could well evaporate like the pipeline flows. About energy, it is pleasing to see that sense is prevailing somewhere, and that Japan is restarting several mothballed nuclear power stations in preparation for the winter. Nations everywhere should be looking at this solution right now. Especially as North America looks as far away as ever from getting its act together on gas and oil, pipelines to move it, and refineries to make it into energy and fertiliser, etc. for the world. Japan’s moves are likely to bear more fruit than US President Biden’s visit to Saudi Arabia for a fist pump with MBS this weekend. Mr Biden emerged confident that Saudi Arabia and the UAE would pump more oil; Saudi Arabia emerged and said that’s up to OPEC+. Oil prices are sharply unchanged today in Asia, which tells you who the market believes. China officials from the PBOC promised more support for the economy over the weekend. And it appears that behind the scenes, the wheels are turning to engineer a funding vehicle for beleaguered property developers to continue and complete the construction of residential projects. The alleged Chinese mortgage payment strike by homebuyers seems to have been the catalyst to spur faster action. Conversely, Covid-19 cases appear to be creeping higher around the mainland, with Macau’s full lockdown extended by four days. The threat of Covid-zero Part Deux in Shanghai and other large urban centres will temper bullish spirits among China equity investors. Robust loan demand, and decent economic data last week should mean that Wednesday’s one and five-year Loan Prime Rates remain unchanged. Thursday also sees the Bank of Japan’s latest policy decision. With USD/JPY finding a cap ahead of 140.00 for now, some pressure will ease on the BOJ, which will also be watching the country’s supply/demand energy balance and the spiralling Covid-19 caseload with concern. With the FOMC meeting not until the end of the month as well, there is little incentive for the BOJ to spring a shock and for markets to change any monetary settings. The policy decision from Bank Indonesia, also on Thursday, is far more interesting. With Singapore and the Philippines announcing unscheduled rate hikes last week, and South Korea, Malaysia, and Taiwan hiking rates at recent meetings, it is going to get harder for BI to stand against the wind. With the FOMC expected to hike by at least 0.75% at the end of the month, and Asian currencies wilting under US dollar strength, the uber-dove BI is likely to hike by at least 0.25%. BI is clearly capping USD/IDR at 15,000.00 now, and despite a surging current account surplus as palm oil exports resume, currency pressures are going to force BI’s hand. The question is, is 0.25% enough? I have my doubts. Like North America and Europe, Asia’s data calendar is fairly thin once you strip out the discussion points above. With the FOMC in a pre-meeting news blackout, markets will be left to the tender mercies of headlines and geopolitical developments. One benefit is that, excluding any shocks and a lack of Fed speaker rate-hike bombs, and annoying data that has to be ignored when it doesn’t tell the story the FOMO gnomes want to hear, it could give the aforementioned bear market rally, room to breathe. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Bear market rally back on? - MarketPulseMarketPulse

Oil prices are steady Both Brent crude and WTI were caught up in recession fears overnight, plummeting by four dollars a barrel at one stage in panicked New York trading. Once again, both contracts found their feet as the US dollar retreated after rate hike comments from Fed officials, finishing the day nearly unchanged after a torrid session. Brent crude finished almost unchanged at USD 99.55, adding 0.30% to USD 99.90 a barrel in Asian trading. WTI was almost unchanged at USD 96.45 overnight, slipping 0.30% to USD 96.20 a barrel in Asia today. How oil finishes the week will be reliant on how the US data comes out tonight, and after this week’s volatility, I won’t try to second-guess the gnomes of Wall Street. Brent crude has resistance at USD 101.00, and then USD 104.00 a barrel, followed by a now distant USD 106.00 a barrel. It has support at USD 97.00, the 200-day moving average (DMA), and then USD 95.50 a barrel. WTI has support at USD 94.15, the 200 DMA, and then USD 90.60 a barrel. Resistance is at USD 98.00, followed by USD 101.00 a barrel. Gold’s recovery was over before it started Gold had another near USD 40 dollar range overnight, but this time, it could not recoup those losses, and its incipient recovery looks over before it started. Gold fell by 1.50% to USD 1710.00 overnight, where it remains treading water in Asian trading. Gold’s fate is entirely in the hands of US data tonight, and whether that can spark losses for the US dollar, otherwise the technical picture has flipped in one day to looking very ominous once again. Failure of USD 1675.00 will signal a much deeper move lower targeting the USD 1450.00 to USD 1500.00 an ounce regions in the weeks ahead. Gold has resistance at USD 1745.00, now a double top. That is followed by USD 1780.00, USD 1800.00, its June downward trendline. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Oil pares losses, gold loses ground - MarketPulseMarketPulse

China Retail Sales boosts Asian markets Wall Street threatened to melt down overnight as markets hit the panic button over a potential 1.0% Fed rate hike at the end of this month, and soft earnings from JP Morgan and Morgan Stanley raised recession fears. Soothing comments on the former by two Fed officials allowed very skittish equity markets to rally later in the session, with Wall Street making back much of its losses. US Stocks The S&P 500 fell by 0.30%, while the Nasdaq managed to close in positive territory, rising 0.03%. Meanwhile, the Dow Jones closed 0.46% lower. In Asia, markets have reacted positively to the China data, allowing US futures to power higher. S&P 500 futures are 0.35% higher, Nasdaq futures have leapt 0.60% higher, while Dow futures have gained 0.20%. Asian Indices With markets focusing on improved China retail sales data, Asian markets are moving higher as well today, helped along by the steady rally in US futures. Japan’s Nikkei 225 has risen by 0.45%, with South Korea’s Kospi adding 0.25%. In China, the Shanghai Composite is unchanged, but the narrower large-cap Shanghai 50 has jumped by 0.80%. The CSI 300 has added 0.15%. However, Hong Kong has fallen by 1.10% as China property worries, and the Alibaba summons weigh on sentiment. In regional markets, Singapore has risen by 0.30%, while Taipei has rallied 0.70% higher. Jakarta is 0.20% higher, with Kuala Lumpur easing by 0.15%, and Bangkok remaining unchanged. With pressure still on the Philippine peso, and markets reeling from the unscheduled rate hike yesterday, Manila has dropped by 1.10% today. In Australia, the slump in China’s iron ore prices and copper overnight has continued today and seems to be weighing on resource stocks. Additionally, the very impressive employment data yesterday has raised concerns the RBA will have to tighten faster and harder. Those headwinds have seen Australia underperforming today. The All Ordinaries and ASX 200 dropped by 0.85%. With European markets on edge over Russian natural gas supplies, recessions, and Italian political instability, it is hard to see the losses of yesterday being reversed ahead of the weekend. In the US, stock markets are likely to have a very binary outcome to US Retail Sales. Strong data will lift rate hike fears. Additionally, we have earnings from Citibank and Wells Fargo today, and if the JPM/MS earnings yesterday are a guide, there won’t be much good news today either. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Markets panic over possible 1% Fed hike I only have some egg dripping from my face this morning, instead of a full dozen including shells. My view that the price action post the US inflation numbers across asset classes suggested an albeit temporary, risk sentiment rally was on the way, was in serious doubt yesterday. Markets in Europe and early New York went “hold my beer” and went into “the Fed is going to hike by one percent, we’re all doomed” mode. The negativity was compounded by soft quarterly earnings from JP Morgan and Morgan Stanley. Equities, oil, commodities, and precious metals were pummelled, while the US dollar soared on currency markets with the euro falling close to 0.9950 before regaining 1.0000 later in the day.   Admittedly Europe had reason to be nervous. Statements out of Russia about whether Nord Stream 1 would restart after maintenance finishes on 21st July didn’t fill the market with confidence. Ructions in Italian politics (there’s something completely different…), added to the woes with Prime Minister Draghi offering to resign. Something the Italian President thankfully declined. Although the euro managed to unwind most of its losses, European equities were thrown on the ground, kicked a lot, and stayed there. It’s hard to see them recovering until the 21st of July “gas-mageddon” day passes. You can throw Europe’s illegitimate love child, the United Kingdom, into that fray as well.     Thankfully, it was two Federal Reserve officials who rode to the rescue. Fed Governor Waller and St Louis Fed President Bullard both indicated they were erring towards a 0.75% hike at the July FOMC meeting, and not the dreaded 1.0%. Lost in the small print for both was that both qualified that on “incoming data.” Oil finished where it started, the US dollar gave back a goodly portion of its gains, and Wall Street finished a bit lower, while the Nasdaq actually closed flat. US bonds saw yields rise in the longer-dated tenors, while the 2-year remained unchanged, narrowing the curve inversion, and boosting risk sentiment at the periphery.   In Asia, all eyes are on China today. The mortgage payment strike by Chinese consumers seems to be gathering more headlines, highlighting a millstone around China’s neck that had been forgotten recently, the slow-moving trainwreck of the private developer sector, where debt issues appear to be spreading to the domestic market from being an offshore problem. Alibaba Cloud executives have also been invited for tea and biscuits with the police apparently, who are keen to know how a 1 billion name database of theirs stored on Ali Cloud was stolen by hackers. China equity markets won’t like that as the words “common prosperity” ring like a bad Christmas song that returns from the dead each year in December, or mid-October if you live in Singapore.   Mostly, attention will be on the tier-1 data dump that has just been released. The House Price Index for June YoY has slumped to -0.50%, and GDP for Q2 YoY rose by only 0.40%. That is likely tied to Industrial production, which missed estimates, rising by 3.90% YoY for June. Offsetting that was a very strong performance by Retail Sales, which leapt higher by 3.10% YoY for June, well above estimates. Assuming that Q3 is not marked by more lockdowns in key urban centres like Shanghai, the data is expected to rebound. With the Chinese consumer seemingly in better shape than thought, markets will concentrate on the Retail Sales number and the data dump is probably a modest positive on balance.   Attention will now swivel to tonight’s US Retail Sales numbers, which are expected to rise by 0.80% MoM for June. Given both Fed officials overnight qualified their rate hike remarks as depending on incoming data, we can expect some volatility over the release. Higher Retail Sales will put the 1.0% hike front and centre again, and I would expect we will see another rerun of the early Wall Street price action of yesterday, i.e., sell everything, buy dollars. Softer Retail Sales data could allow that risk sentiment rebound I talked about yesterday to gather some steam, as the markets seem to have priced in a 0.75% rate hike from the FOMC now. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. When a plan doesn’t come together - MarketPulseMarketPulse

US dollar in choppy waters Currency markets had another choppy overnight session, which ultimately ended up sideways again, despite US inflation unexpectedly rising. EUR/USD traded to parity but managed to finish higher at 1.0040, a pattern repeated across most major currencies. With the US dollar looking overbought on short-term indicators as well, I suspect that the odds of a US dollar correction lower have risen sharply, especially as Asian central banks and others have rushed to tighten monetary policy this week. I could see the correction persisting in some shape or form until the FOMC meeting later this month. The dollar index traded in a 100-point 107.50 to 108.50 range overnight but ultimately finished just 0.13% lower at 108.02. It has risen by 0.23% to 108.27 in Asia, led by a much weaker Japanese yen. Resistance is at 108.50 and 110.00. Support is at 107.50 and then the 1.0585 breakout point, followed by 1.0500. ​ The relative strength index indicator (RSI) is overbought, signalling a potential correction lower by the US dollar. EUR/USD traded through 1.0000 to 0.9998 overnight, but held this level once again, and rose back to finish the day 0.21% higher at 1.0058. In Asia, it has eased to 1.0035. A clean break of 1.0000 is likely to trigger a sharp move lower as stop-losses and algos kick in, but it is significant that it has held this level for two days in a row, although its rallies have been limited. ​ The oversold RSI and underwhelming post-inflation performance by the US dollar suggests the euro could be tracing out a low for now and a correction back towards 1.0200 is possible. EUR/USD has support at 1.0000 and then 9900/25. It has resistance at 1.1020, the overnight high, and then 1.0200. GBP/USD traded as high as 1.1965 overnight before closing unchanged at 1.1890. It has fallen to 1.1870 in Asia but looks to be trying to trace out a temporary low at 1.1800, which is initial support. Resistance is at 1.1965 and then 1.2060 and 1.2200. USD/JPY continued rallying overnight as US short-dated yields rose, finishing 0.41% higher at 137.45. In Asia, USD/JPY has continued rallying quite aggressively, rising 0.44% to 138.05. With a procession of central banks capitulating and hiking rates aggressively in the past 24 hours, Japan’s super-easy policy leaves it an outlier and that seems to be weighing on the yen. ​ USD/JPY’s next resistance is at 140.00, with support at 136.00, 134.25 and 132.00. I expect the “watching markets closely” noise to increase from Tokyo today and being long above 138.00 could be a dangerous trade in the shorter term. AUD/USD was unchanged at 0.6755 overnight, quite the surprise, given the US inflation data and another reason to think a greenback correction lower is imminent. ​ In Asia, super-strong employment data had lifted rate hike expectations and pushed AUD/USD 0.30% higher to 0.6775. It also looks like some decent AUD/JPY buying is going through. It has resistance at 0.6800 and 0.6850, with support between 0.6700 and 0.6730. NZD/USD is unchanged at 0.6130 again today, suggesting increased downside risks post the RBNZ yesterday. AUD/NZD buying post the Australian data is also capping NZD/USD gains. Asian currencies ranged overnight once again and have edged lower in Asia as some US dollar strength had returned. Overall, though, the response by Asian FX has been relatively muted post the US data and the moves seen by the MAS and BSP this morning. That said, USD/MYR continues to creep closer to 4.4500, USD/IDR to 15,000.00 and USD/INR and USD/KRW remain close to recent highs. The SGD and PHP have outperformed today as both central banks sprung unscheduled monetary tightening on markets. With South Korea, Singapore and the Philippines tightening this week, the pressure will be increasing on other regional currencies to follow suit as Asian central banks break ranks on inflation. Most notably, the INR, IDR and MYR look the most vulnerable and the recent slump in commodity prices will be another headwind for Indonesia and Malaysia. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. US dollar consolidates - MarketPulseMarketPulse

Asian markets edge higher Given the scale of the rise in headline inflation from the US overnight, US equities were remarkably resilient, perhaps helped by core inflation easing slightly. Wall Street finished lower, but on another week, if we had seen data like that from the US, Wall Street would have been rushing for the exit door. The resilience of Wall Street implies that US equities markets could be set for a bear market rally, especially if the US yield curve continues to move lower and the inversion deepens. Longer-term, none of what I have outlined above will be a constructive environment for equity markets. US earnings season gets underway properly today as well, with JP Morgan and Morgan Stanley announcing. Investment banking revenue will have fallen, but more interesting will be their economic outlook for the rest of the year.   Overnight, and post-CPI, Wall Street fell, with the S&P 500 closing 0.45% lower. The Nasdaq was impressively solid, falling just 0.15%, while the value-centric Dow Jones underperformed, falling by 0.67%. In Asia, US futures are holding steady. S&P 500 and Dow futures are unchanged, while Nasdaq futures have gained 0.25%.   A lack of panic from Wall Street sees Asia stock markets treading water today, erring from unchanged to modestly higher. The Nikkei 225 has risen by 0.75% today, boosted by a weaker yen overnight and falling oil prices this week. South Korea’s Kospi has edged 0.10% higher. Impressive trade data yesterday continues to lift China markets. The Shanghai Composite is 0.30% higher, with the CSI 300 rising by 0.50% and the Hang Seng gaining 0.30%.   In regional markets, Singapore is 0.70% lower after the MAS unexpectedly tightened monetary policy today. Taipei has jumped 0.80% higher, with Kuala Lumpur adding 0.15%, and Jakarta rising by 0.30%. Bangkok is unchanged, but Manila has tumbled by 1.30% after the BSP weighed in with their own rate hike this morning. Australian markets are higher today on impressive employment data, the ASX 200 gaining 0.40%, and the All Ordinaries rallying by 0.60%.   Europe had another torrid day as energy concerns persisted as the Eurozone wilts under a heat wave. Progress in the Ukraine/Russia agricultural export negotiations may give Europe more hopes that Russia won’t switch off the gas from the 21st of July. As such and given the performance of Asia and US markets overnight, I expect Europe to post a positive opening this afternoon. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Asian equities tread water - MarketPulseMarketPulse

Central banks deliver large rate hikes Central banks around the world have gone full Bon Jovi handing out some monetary policy bad medicine over the past 24 hours, as the fight against inflation permeates even the most ardent fence-sitters. South Korea and New Zealand hiked by 0.50% yesterday, with Canada weighing in with a crowd-pleaser sized 1.0% hike. You’re getting that bad medicine, whether you need it or not.   This morning, the Monetary Authority of Singapore weighed in with its second unscheduled tightening of the year, recentring the policy band for the currency to “prevailing rates.” The MAS normally only announces monetary policy settings twice a year in April and October. So far it has reacted in January, April and now July, as core inflation surged. We can reasonably assume October will be a live meeting as well. USD/SGD has slumped by 0.67% to 1.3905 in response. For non-Singapore readers, the MAS uses the currency to manage monetary policy because of the nature of trade flows through the city-state. A google of “MAS” and “NEER” will allow you to do your own research on the mechanism. I recommend wrapping a cold towel around your head as you do.   In breaking news, the Philippines Central Bank has just announced an unscheduled rate hike of 0.75% to 3.25%. To say this is an unusual move by the Bangko Sentral ng Pilipinas (BSP) is an understatement, given that they have been amongst the most dovish and reluctant hikers in Asia. The US CPI and the MAS move today, along with the relentless pressure on the Philippines peso (PHP) have swayed BSP’s hand, underling the pressures facing Asian central banks now. USD/PHP has fallen by 0.32% to 56.06, but the PHP remains near record lows. We may see more of this from other monetary authorities in the region now as pain thresholds and the burning through of forex reserves reach their pain points. Bank Indonesia could be the next taxi off the rank, followed by Bank Negara Malaysia.   With even the Bank of England sounding hawkish this week and recent rate hikes in Eastern Europe and Latin America, it is clear that central banks around the world are laser-focused on fighting the entrenched inflation they helped to create, growth-be-damned. Higher rates are coming to a corner shop near you.   That brings us to the Big Kahuna, the US Federal Reserve whose FOMC policymakers meet at the end of the month. Overnight, US inflation surprised markets by surging higher to 9.10% YoY for June, with a 0.10% fall by core inflation to 5.90% cold comfort. Futures markets have raced to price in a more aggressive Fed Funds rate hike at the end of the month, approaching 1.0% overnight. At least one Fed speaker – there were many – mentioned 1.0% overnight as well. I still think it is a bridge too far for the FOMC to go 1.0%, but hey, it’s 2022 and nothing should surprise us anymore.   Unsurprisingly, EUR/USD traded down to parity after the data, but after toughing 0.9998, it rallied back to 1.0040. We saw similar price action in GBP/USD, AUD/USD, NZD/USD, USD/CAD, and USD/CHF as well, although USD/JPY went directly to jail and rose to 138.00. The surprises continued; Wall Street fell overnight, but only modestly so in the context of recent volatility. Gold and bitcoin dropped as well, but actually finished higher on the day. Oil prices didn’t move, shrugging off a huge rise in official crude inventories as well. The biggest head-scratcher for me was the US bond market. The US 2-year yield rose slightly, but yields fell across the rest of the curve. The US yield curve is now well and truly inverted from two years to thirty years.   So, US markets are pricing in faster Fed tightening, and a recession is on the way imminently. Ever optimistic, US markets seem to be pricing in that the Fed will deliver its bad medicine, and send the US into a recession, but it will be short-lived, and the Fed will be cutting rates by H2 2023. That probably plays with the market’s inbuilt psychological need to find reasons to look to be piling back into equities again this year. That’s a lot of faith to place in the Fed, inbuilt market biases aside. Given their track record on inflation in the past two years, that is a looooootttttt of faith to place in the Fed.   That said, given the mess the Fed has made with the transitory/entrenched inflation narrative, it’s just as easy to assume they will make a dog’s breakfast of tightening as well. The US inflation numbers overnight should have seen bond yields and the US dollar shoot higher, equities should have been stretchered off with a season-ending injury, and gold and cryptos should have headed so far south, that they found themselves in Mexico. Not that has happened, the opposite in fact. One must respect the price action and right now seems to be yelling that a bear market correction is on the way for equities and that the US dollar rally is about to take a pause for breath. That is in line with a number of overbought/oversold technical indicators I am seeing across asset classes and helped along by the rest of the central bank world ex-Europe and China, seemingly rushing to play monetary catchup.   Yesterday, China’s June Trade Balance printed a monster USD 98.0 billion surplus, well above forecasts. Whether it is due to a clearing of export backlogs or that things in China and the rest of the world aren’t as bad as they seem, I know not. It does suggest there is upside potential for the China data dump tomorrow in my opinion. If we are talking about bear market rallies, a healthy set of very important data releases tomorrow from China could be the catalyst to give that some momentum.   The Monetary Authority of Singapore and the Reserve Bank of Australia will be sharpening their tightening pencils today, despite the MAS action this morning. Singapore’s Advanced GDP for Q2 YoY surprised to the upside, rising by 4.80%. That comes after healthy retail sales data earlier in July and upgraded inflation assessments by the MAS this morning.   Over in the lucky country, the economic temperature needle rose to overheated territory today. Australian Employment for June rose by 88,400 jobs, well above the 30,000 forecasts, and follows excellent numbers in May. Healthy gains were made in both full-time and part-time jobs. An elevated CPI release on the 27th of July will lock and load another 0.50% hike in early August by the RBA, perhaps 0.75% if the FOMC goes 1.0% a few days before. The fact that AUD/USD remains near one-year lows is even more surprising in this context, although the AUD is driven by international investor sentiment these days, and the slump in energy, industrial and agricultural commodity prices over the past six weeks means that Australia’s terms of trade are probably going to soften in Q3.   On the subject of agricultural commodities, Turkey and the United Nations appear to have pulled off a miracle and are on the verge of brokering a deal between Russia and Ukraine allowing Ukrainian agricultural exports to partially resume from the Black Sea. That may put downward pressure on soft commodity futures in the short-term, although any impact from Ukrainian exports will have a substantial time lag, and quite frankly, to say it would have implementation challenges is an understatement.   That will be of limited solace to Europe, with emerging markets being the most likely immediate beneficiaries, and rightly so. Europe watchers should circle the 21st/22nd of July in their calendars. Russian annual maintenance on the Nord Stream 1 gas pipeline to Germany finishes that day, and the Canadians have given the Russians back their pipeline pump. The question is whether the gas starts flowing again. If it doesn’t EUR/USD at 1.0000 will be but a memory and there will be no bear market rally for European asset markets.   Looking through the rest of the day, the Japan 20-year JGB auction and Industrial Production data is unlikely to move the needle. India releases WPI Inflation for June this afternoon, and if it stays around 15.80% or higher, the pressure on the rupee, local equities, and the Reserve Bank of India is set to continue. Europe’s releases are second-tier this afternoon, and US PPI this evening will have been drowned in the noise of the overnight inflation data.   All roads lead to China’s data dump tomorrow, featuring GDP, retail sales and industrial production amongst others. That is followed by heavyweight retail sales and consumer sentiment data from the US. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Bad medicine is what I need - MarketPulseMarketPulse

Oil markets remain a bastion of calm I never thought I would say oil markets and bastion of calm in one sentence, but it is 2022, and anything is possible. Despite the noise seen in other asset classes from US data and central bank moves, oil was almost unchanged overnight. The US data and moves by Canada, Singapore et al to tighten policy should have been a headwind for oil. Most especially, the huge rises in the API and official Crude Inventories this week, as well as refined products, should also have seen oil move lower. Instead, Brent crude finished 0.60% higher at USD 99.65 a barrel, rising 0.45% to USD 100.10 in Asia. WTI held its 200-day moving average (DMA), and finished 0.85% higher at USD 96.35 a barrel overnight, gaining 0.35% to USD 96.70 in Asia. Given the scale of the selloff on Tuesday, the plethora of negative price indicators over the past 24 hours, and an ugly technical picture, the fact that oil has been steady for 36 hours suggests that the worst of the sell-off is over for now. Risks are rising that oil stages a corrective rally carrying both contracts back above USD 100.00 a barrel once again. Brent crude has resistance at USD 101.00, and then USD 104.00 a barrel, followed by a now distant USD 106.00 a barrel. It has nearby support at USD 98.40, followed by the much more important 200-day moving average (DMA) at USD 96.90 a barrel. Consecutive daily closes below the 200-DMA will force a reassessment by me, perhaps meaning that the backwardation of the futures curves moves lower with spot prices but remain in backwardation. A sort-off hawkish easing if you like. WTI tested its 200-DMA at USD 94.00 a barrel overnight but managed to rally from there. ​ That forms initial support, followed by USD 93.00 a barrel. Resistance is at USD 98.00, followed by USD 101.00 a barrel. Even gold looks resilient Gold fell quite heavily on the high US inflation data prints overnight but managed to recover all those losses and close higher on the day. Along with an oversold RSI technical indicator, and in line with my belief that a US dollar correction is on the way, I believe some short-term relief may also be coming gold’s way, allowing it to rally somewhat. Gold traded in a near-forty dollar range overnight, trading as low as USD 1707.00 an ounce post-US-inflation. However, it finished the session 0.55% higher at USD 1735.50 an ounce. In Asia, some incipient US dollar strength sees gold ease by 0.30% to USD 1730.00 an ounce. Gold appears to be trying to trace out a temporary bottom at the USD 1707.00 area, with USD 1700.00 and longer-term support at USD 1675.00 an ounce looking safe for now. Failure of USD 1675.00 still signals more pain ahead, though. Gold has resistance at USD 1745.00, now a double top. That is followed by USD 1780.00, and USD 1800.00, its June downward trendline. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Oil almost unchanged, gold recovers - MarketPulseMarketPulse

RBNZ delivers 50bp hike As advertised, the Reserve Bank of New Zealand raised rates by 0.50%, bringing the cash rate to 2.50%. The New Zealand dollar responded with a mere shrug, indicative of the move being priced in by the markets. It wasn’t all that long ago that a 50bp increase was labeled as “massive” and “super-sized”, but now such moves from central banks barely raise an eyebrow, as was the case with the RBNZ decision. With central banks raising rates fast and furiously in order to curb runaway inflation, large rate hikes have become the norm. The RBNZ has been in an aggressive mode with its rate-hiking cycle, and there is more to come. In May, the central bank forecast a rate peak of around 4% by the end of the year, and market pricing appears to be in sync with this assessment. The Fed is also raising rates aggressively, but higher rates from the RBNZ should prevent a widening of the rate differential and support NZD/USD. The tightening cycle is yet to bring a peak in inflation, but there are unmistakable signs that New Zealand’s economy is slowing down. Business and consumer confidence indicators point to a weakening in confidence, which could translate into lower spending in the private sector. Homeowners are paying higher mortgage rates due to the rise in rates, which has dampened the housing market. The US releases the June inflation report later today.  The data follows on the heels of a surprisingly strong non-farm payrolls report, which could signal a further acceleration in inflation. If headline CPI remains close to 9.0% YoY, and core CPI around 6%, that would cement a 75bp salvo from the Fed in late July, which would be bullish for the US dollar. Conversely, an easing in inflation would increase the chances of a 50bp move and weigh on the greenback. NZD/USD Technical 0.6125 is a weak support level, followed by 0.6062 There is resistance at 0.6189 and 0.6252 This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. NZ dollar yawns after Reserve Bank's hike - MarketPulseMarketPulse

Oil slumps overnight As mentioned above, a surprisingly high build in US API crude and refined product inventories spurred a late and aggressive slump in oil prices. Clearly, the speculative market is not prepared to wear any sort of losses from bottom fishing now, and we can expect to see more of these sorts of days going forward until the recession/inflation picture becomes clearer. That said, I believe that the disconnect between the real world, and the speculative world, is growing wider and although I don’t rule out more downside surprises, I believe the recent selloff could be getting a little overdone. Brent crude plummeted by 6.75% lower to USD 99.10 overnight, while WTI collapsed by 7.60% to USD 95.60 a barrel. In Asia, both contracts probed the downside initially, but the lure of low prices was too irresistible for Asian buyers. Brent crude has risen 0.30% to USD 99.40, while WTI has recovered its losses to be unchanged at USD 95.60 a barrel. The chart picture has turned negative again for both contracts, although I note that Brent crude has had these ranges up and down in three of the past six trading sessions, showing just how skittish the short-term trading market is. The RSIs on both contracts are still in neutral territory, implying that more downsides could occur, just as easily as a sharp rally could. Brent crude has nearby resistance at USD 100.00, followed by a now distant USD 106.00 a barrel. It has nearby support at USD 98.40 followed by the much more import 200-day moving average (DMA) at USD 96.80 a barrel. Consecutive daily closes below the 200-DMA will force a reassessment by me, perhaps meaning that the backwardation important futures curves move lower with spot prices but remain in backwardation. A sort-off hawkish easing if you like. 2022 continues to surprise me. WTI looks the more vulnerable after the API crude inventory data overnight, and tonight’s official US crude inventory data rises in importance. WTI tested its 200-DMA this morning at USD 94.00 a barrel but managed to rally from there. Consecutive daily closes under the 200-DMA would be an ominous development for prices, depending on your point of view. USD 93.00 is the next support level after the 200-DMA. Resistance is at USD 96.00 a barrel, followed by a now-distant USD 103.50 a barrel. Gold needs a low US inflation print Gold traded in quite a wide range between USD 1723.00 and USD 1745.00 an ounce overnight, but finished 0.45% lower at USD 1726.50 an ounce, another unimpressive close. In Asia, it has eased slightly to USD 1725.50 an ounce in a moribund session. Gold desperately needs the US inflation data to come in lower than expectations tonight, which should trigger a pullback by the US dollar, lifting gold prices. That said unless the US dollar stages an extended and extensive pullback lower, gold’s technical picture remains grim. A high inflation number tonight from the US could well see USD 1675.00 finally tested. The only saving grace for gold right now is an oversold RSI, suggesting that a lower US dollar could trigger a disproportionate upside correction by gold. Gold has resistance at USD 1745.00, now a double top. That is followed by USD 1780.00, USD 1785.00, and USD 1802.00, its downward trendline. Support is at USD 1720.00, followed by USD 1675.00. Failure of longer-term support at USD 1675.00 sets in motion a much deeper correction, potentially reaching USD 1500.00 an ounce. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Oil slides on inventories, gold steady - MarketPulseMarketPulse

Will US inflation shake up the greenback? After the impressive rally on Monday, the US dollar settled into a pre-US-inflation waiting game overnight, which continues today in Asia as the greenback consolidates recent gains. ​ The dollar index closed almost unchanged at 108.15 overnight, where it remains in Asia. Resistance is at 108.45 and 110.00. Support is at the 1.0585 breakout point, and then 1.0500, followed by 1.0350 and 102.50. ​ The US inflation data will dictate whether the overbought relative strength index indicator (RSI) has signalled a short-term correction lower for the US dollar. EUR/USD EUR/USD traded at 1.0000 overnight, but held this level and rose back to finish the day unchanged at 1.0037, where it remains in Asia. A break of 1.0000 is likely to trigger a sharp move lower as stop-losses and algos kick in. Since breaking a multi-year support line at 1.0850 in April, the euro has looked consistently weak, the recovery rally failing ahead of 1.0850 in a technical analysis nirvana. An oversold RSI allows for short-term recovery, with resistance at 1.0200 and 1.0270. Support is at 1.0000, and failure targets the 0.9900/25 area. GBP/USD GBP/USD fell to nearly 1.1800 overnight before rallying to an unchanged close at 1.1890 overnight. In Asia, it has crept slightly higher to 1.1910. Immediate support is at 1.1800, with 1.1400 as the medium-term target. Resistance is well defined at 1.2060 and 1.2200. USD/JPY USD/JPY edged 0.40% lower to 136.90 overnight as US yields eased, rising to 137.05 in sedate Asian trading. USD/JPY has resistance at 138.00 and 140.00, with support at 136.00, 134.25 and 132.00. Only a sharp fall in US yields seems likely to turn USD/JPY lower, but a soft US CPI (relatively), this evening, could also do the job. AUD/USD AUD/USD edged 0.35% higher overnight to 0.6755, rising slightly to 0.6770 in Asia as risk sentiment stabilises, at least for now. ​ In Asia, it has eased 0.17% lower to 0.6725. Risks remain skewed towards the downside and a test of 0.6600. It has resistance at 0.6780 and 0.6850. NZD/USD is unchanged at 0.6130 today, with the RBNZ’s 0.50% hike today clearly priced into the market. Asian currencies ranged overnight, producing a mixed bag of modest gains and losses against the US dollar. The Philippine peso underperformed again, USD/PHP rising 0.65% to 56.34 as the trade balance deteriorates, inflation rises and harsher tightening by the BSP is priced in. Asian currencies have booked small gains today in an otherwise lacklustre session. Overall, currency markets look content to wait on the sidelines for the US inflation data this evening. How the coins fall will dictate the US dollar’s next directional move. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. US dollar consolidates - MarketPulseMarketPulse

Asian heavyweights gain on lower oil prices Asia’s northern heavyweights are higher despite a negative Wall Street session overnight, thanks to the slump in oil prices late in the New York session. Wall Street couldn’t hold onto early gains as pre-CPI nerves and recession fears sent US equities down once again. The S&P 500 fell by 0.92%, the Nasdaq by 0.85%, and the Dow Jones by 0.62%. US futures are showing resilience in Asia though, suggesting choppy trading ahead of the US inflation data tonight. S&P futures are 0.25% higher, Dow futures are 0.15% higher, while Nasdaq futures have jumped by 0.50%. In Asia, the slump in oil prices overnight has lifted the northern Asia heavyweights, all of whom are voracious consumers of imported energy. Japan’s Nikkei 225 has gained 0.35%, with South Korea’s Kospi rising by 0.75%. In mainland China, the Shanghai Composite is 0.35% higher, while the CSI 300 has gained 0.45%. Hong Kong has risen by 0.70%. Taipei has leapt 2.85% higher after the government activated its stock stabilisation fund today. Elsewhere, growth-centric ASEAN has been unable to replicate those gains, following Wall Street’s overnight lead and heading south this morning. Singapore has fallen by 0.70%, with Jakarta losing 0.55%, and Kuala Lumpur falling by 0.65%. Manila continues to struggle as markets price in more aggressive tightening from the BSP and the trade balance deteriorates, retreating by 1.10% today. Bangkok has lost 0.75% today. Australian markets are treading water after resource prices fell again overnight. The ASX 200 and All Ordinaries are ranging narrowly on each side of unchanged. European markets conjured up a relied rally overnight, perhaps driven by Canada releasing a previously embargoed gas pipeline pump back to Russia, lifting hopes that Nord Stream 1 will start flowing again after maintenance finishes on the 21st of July. The momentum from that trade is going to wane quickly though, and Europe will be casting a nervous glance at US inflation data this evening, and inflation data from German, France, and Spain. I expect a cautious slightly negative, opening this afternoon. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Asian markets a mix after Wall St. drops - MarketPulseMarketPulse

It may not be monster surf breaks in Hawaii or Uluwatu in Bali, but today is shaping up to be a stormy day for markets, with plenty of chances to get dumped and held under the waves for a while. We have already had two central banks in Asia raise policy rates this morning, with the Bank of Korea and Reserve Bank of New Zealand hiking by 0.50%, with a hawkish tone in their statements. Rather surprisingly, the Korean won and New Zealand dollar are both sharply unchanged, suggesting that the news was already priced in. This evening, it will be the Bank of Canada’s turn, and markets have a chunky 0.75% rate hike pencilled in. Even the Bank of England was beating the rate hike inflation-fighting drums last night. India’s June YoY inflation stayed stubbornly above 7.0% overnight at 7.01%. That will keep the pressure on the Reserve Bank of India to keep tightening, and on the Indian rupee. So, at a glance, the G-20 central banks are very much in inflation-fighting mode, unless you are China, Turkey and possibly Europe, who are in a world of stagflation pain now. Markets brace for high inflation reports in Europe Just how much pain the Eurozone may be in inflation/stagflation-wise may be highlighted by German inflation this afternoon. June Inflation YoY is expected to remain very high at 7.60%, only modestly retreating from May’s 7.90%. French and Spanish Inflation YoY for June will be equally grim, expected to be 6.50% and 10.20% respectively. If the gas stays off through Nord Stream 1 after the maintenance period finishes on the 21st of July, those numbers are set to get worse, and not better. I suspect the outlook for the euro will get worse as well, and we will be looking wistfully back at EUR/USD at 1.0000 and wishing we’d sold more. It will be interesting to see if the ECB decides to take the Asian route through the pandemic and wear the inflation pain to keep the economic lights on. The United Kingdom (unless you’re Scottish), releases a chuck of tier-1 data this afternoon as well, including GDP, the Trade Balance, Manufacturing, and Industrial Production for May. All of it has downside risks and won’t have improved in May and in many ways, the BOE is facing the same quandary as the ECB. Combined with an extended leadership contest to select a new prime minister to replace Boris Trump, pressure is likely to remain on sterling as well. Before that, we get China’s balance of Trade shortly, expected to come in at USD 75.70 billion for June. Its market impact should be minimal though, as mainland markets fret over new potential covid-zero lockdowns, and ahead of a slew of tier-1 data releases on Friday, including GDP, retail sales and industrial production. US inflation could cement 75bp move All roads lead to the US Inflation data this evening, which comes after a surprisingly strong Non-Farm Payroll print last Friday. Overnight the US NFIB small business survey was quite weak, but it will be overruled by the inflation data, especially if headline inflation remains near 9.0% for June YoY, and the core remains near 6.0% YoY. That will lock and load 0.75% from the FOMC at the end of the month with potentially larger rate hikes to come, as well as shaking the confidence of the most ardent bottom-fisher in the US equity and bond market. Having said that, given the recent moves in the US dollar and US equities, if the data comes in softer than forecast, we could see a decent correction lower by the greenback, relieving some of the Euro’s pain. Equities will probably rally as the FOMO gnomes pile in, and the US yield curve will move lower. Glancing around other asset classes, the big mover overnight was oil, which plummeted after the US API Crude Inventories by 4.762 million barrels, the second week of huge increases. Notably, gasoline inventories rose by 2.927 million barrels, and distillates by 2.262 million barrels. Offsetting that was another big fall by stocks in the US SPR, which seems to be making up the feedstock difference now. With the street on recession watch, saw Brent and WTI fall by around 7.0%, with Brent crude closing under USD 100.00 a barrel. I remain sceptical that oil prices will move materially lower from here, however. The forward futures remain heavily in backwardation on both Brent and WTI, indicating real-world supplies remain tighter than Elon Musk’s wallet. OPEC also forecast a supply/demand deficit from its member to persist through 2023 overnight as well. The price action still appears to be a disconnect between the speculative world, and the real world, although I don’t discount more downside losses in the short term. Over in Disneyland, I mean crypto-land, bitcoin has slipped back below USD 20.000.00 of fiat currency US dollars to USD 19,500.00 this morning. A soft US inflation print tonight should save bitcoin’s bacon along with equities, temporarily at least. The line in the sand to flush our more margin stop-outs, 5-minute macros and some more HODL’ers is probably just below the June lows at around USD 18,500.00. Also hanging out for a weak US inflation number tonight are gold bugs. Gold remains in Dire Straits, hovering near USD 1725.00 an ounce, strictly rhythm, it doesn’t want to cry or sing (old people will get this). Another bout of US dollar strength could well see USD 1675.00 fail, setting off another capitulation trade. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Big Wednesday - MarketPulseMarketPulse

Senior Market Analyst Jeffrey Halley talks about news impacting the market and the week ahead. In this week’s podcast, the Euro is approaching parity with the US Dollar for the first time in decades. We discuss the move, the reasons behind it, and what lies ahead for the single currency. But first, it is a quick look at Asian markets where covid-19 concerns in China are weighing on sentiment. Then it is the British Pound and UK data and of course, British politics. From there it is the Bank of England before getting our teeth stuck into US inflation data due tomorrow. We ponder its implications for the market and why it matters to the Fed.   This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Market Insights Podcast (Episode 351) - MarketPulseMarketPulse

Flight to safety boosts US dollar The US dollar caught another flight-to-safety boost overnight, running rampant over DM currencies with the euro, sterling, yen, and Australian dollar coming in for particular attention. In Asia today, EUR/USD continues to flirt with parity, while the US dollar has strengthened broadly across the Asia FX space. US Dollar Index (DXY) The dollar index soared 1.23% higher to 108.21 overnight, gaining another 0.16% to 108.38 in Asia as the euro and sterling losses continued. Overall, the technical picture remains constructive for the dollar index, although the daily relative strength index (RSI) is now in overbought territory, suggesting a temporary downward correction is possible. Having broken out of a 5-year triangle at 102.50 in April, its longer-term target remains in the 1.1700 area. More immediate resistance is at 108.45 and 110.00. Support is at the 1.0585 breakout point, and then 1.0500, followed by 1.0350 and 102.50. ​ EUR/USD EUR/USD tumbled by 1.43% to 1.0040 overnight, edging 0.17% lower to 1.022 today, having traded as low as 1.0006 earlier in the session. I expect there to be plenty of bids into parity initially, likely option and exporter-related. A break of 1.0000 is likely to trigger a sharp move lower as stop-losses and algos kick in. Since breaking a multi-year support line at 1.0850 in April, the euro has looked consistently weak, the recovery rally failing ahead of 1.0850 in a technical analysis nirvana. An oversold RSI allows for short-term recovery, with resistance at 1.0200 and 1.0270. Support is at 1.0000, and failure targets the 0.9900/25 area. British Pound To US Dollar GBP/USD fell by 1.19%% to 1.1890 overnight, dragged lower by the euro and a rampant US dollar. With a new Prime Minister not due to be announced until early September, this uncertainty will continue to weigh on the sterling. In Asia GBP/USD has edged 0.20% lower to 1.1867. Immediate support is nearby at 1.1860 and 1.1800, with 1.1400 the medium-term target. Resistance is well defined at 1.2060 and 1.2200. US Dollar To Japanese Yen USD/JPY rallied by 0.98% to 137.40 overnight despite US yields easing. In Asia, it is steady at 137.30 as Finance Minister Suzuki’s comments add some two-way risk into being long USD/JPY at these levels, at least temporarily. USD/JPY has resistance at 138.00 and 140.00, with support at 136.00, 134.25 and 132.00. Only a sharp fall in US yields seems likely to turn USD/JPY lower. Australian Dollar To US Dollar AUD/USD slumped by 1.70% overnight to 0.6735 on a combination of haven-based US dollar buying, a reversal in global investor sentiment, and China lockdown concerns. In Asia, it has eased 0.17% lower to 0.6725. A correction above resistance at 0.6900 looks unlikely for now, with risks skewed towards the downside and a test of 0.6600. NZD/USD also plummeted overnight and is facing a test of 0.6100 today. Asia Asian currencies fell overnight as investors moved into risk-aversion mode and bought US dollars across the board. The won, baht and yuan led losses, and today USD/Asia is higher by around 0.30%, with the Philippines peso falling 0.60% after poor trade data, while USD/IDR is testing 15,000.00 and USD/MYR looks set to test 4.4500. USD/INR and USD/PHP are trading at record lows although the price action in USD/INR, USD/IDR, USD/KRW, USD/PHP and USD/THB suggests that local central banks are offering US dollars at these levels. That is likely to be smoothing rather than lines in the sand, and US inflation above 7.0% this Thursday will probably spur more selling. USD/CNH has also moved sharply higher in the last 24 hours, and any indication that China is enacting lockdowns again in major urban centres will see it and the rest of the Asia FX space move sharply lower. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Oil trades sideways overnight Oil prices had another choppy session overnight but ultimately traded sideways, booking just modest losses. Markets remain torn between recession fears in the US, Europe, and China torpedoing growth and thus, oil consumption, and the still very tight supply/demand reality of the physical market. Little hope is being assigned to Biden’s visit to Saudi Arabia unlocking more production from it or the UAE. The price is likely to be very high to achieve that. Brent crude finished 0.70% lower at USD 106.25 overnight, while WTI fell 1.30% to USD 103.35 a barrel. News that a court in Russia has overturned the environmental ban at the Kazakh’s Black Sea terminal in Russia, has sent oil prices slightly lower in Asia. That is likely to be temporary given the Russian judicial system, and it seems that China’s lockdown fears are keeping oil prices offered in Asia. Brent crude is 0.80% lower at USD 105.35 a barrel, with WTI falling by 1.10% to USD 102.30 a barrel. Reports that Iran is about to sell hundreds of drones, some armed, to Russia could be a body blow to any nuclear deal with the west. That means that the chances of Iranian crude returning legally to international markets in greater volumes is receding and could prove supportive of prices as the day goes on. Brent crude has resistance at USD 107.50 and then its 2022 trendline breakout at USD 108.85, followed by the 100-day moving average (DMA) at 110.75. It has traced double bottom at USD 103.75 and USD 98.60, followed by the 200-day moving average (DMA) at USD 96.75 a barrel. WTI has resistance at USD 105.00 and then its 100-DMA at USD 107.50 a barrel. Support is at USD 101.00 and then USD 96.60. Gold is soggy in Singapore The wholesale retreat of investor sentiment overnight saw massive inflows into the US dollar, pressuring gold once again. Gold fell 0.50% to USD 1734.00 an ounce overnight. In Singapore, gold has had a choppy USD 1723.00 to USD 1744.00 range this morning and appears to be trading tick-for-tick with movements in EUR/USD today. As such, a break of parity by EUR/USD will signal a test of USD 1700.00 by gold. As I write, gold is down by 0.30% to USD 1729.00 an ounce in Asia. Since breaking USD 1780.00, gold’s technical picture has deteriorated rapidly, and it is clear it remains at the mercy of the US dollar’s direction. The only positive note to be seen is that its RSI is now in very oversold territory, allowing for a modest corrective rally to occur if a downward correction in the US dollar happens. ​ Despite four sessions of sideways trading, gold remains anchored at the bottom of its range and only a miracle slump by the US dollar this evening is likely to move it off the seafloor. Gold has resistance at USD 1780.00, USD 1785.00, and USD 1820.00, its downward trendline. Support is at USD 1720.00, followed by USD 1675.00. Failure of longer-term support at USD 1675.00 sets in motion a much deeper correction, potentially reaching USD 1500.00 an ounce. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

China lockdowns weigh on Asian markets Wall Street went back into recession mode overnight, with the growth-centric Nasdaq underperforming as tech heavyweights were sold off. The Nasdaq’s fall has translated directly into weakness with the correlated North Asia heavyweights, while the rest of Asia and Pacific has escaped mostly unscathed. Covid-19 fears in China continue to hang like a dark cloud over the region, however. Overnight, the S&P 500 fell by 1.15%, with the Nasdaq tumbling by 2.26%, while the Dow Jones finished 0.52% lower. The giant Non-Farm Payrolls number has given Wall Street food for thought on US rate hikes, with the FOMC looming at the end of the month, even as haven flows sent US yields lower across the curve. In Asia, US futures continue to fall with futures on all three major indexes down by around 0.50%. The continuing retreat of US futures, along with the Nasdaq slump overnight and lockdown fears in China sees most of Asia lower. Japan’s Nikkei 225 has slumped by 2.0%, with South Korea’s Kospi dropping by 1.20%. In mainland China, lockdown fears see the Shanghai Composite 1.0% lower, with the CSI 300 falling by 1.20%. Hong Kong’s Hang Seng is also 1.20% lower. In regional markets, a holiday in Singapore and Malaysia yesterday see the Straits Times managing to remain unchanged, but the KLCI has fallen by 0.45%. Taipei has tumbled 2.55% lower. Jakarta is down just 0.05%, with Bangkok and Manila easing by 0.40%. A lower Australian dollar seems to be boosting the resource-heavy Australian markets today. The ASX 200 is 0.20% higher, while the All Ordinaries has gained 0.40%. Asia is roughly mirroring the Wall Street growth/value split overnight. Unfortunately, European markets are unlikely to find much solace because of that. Energy concerns and a slump by Wall Street overnight are likely to see European bourses open well in the red this afternoon. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Asian equities are mostly lower - MarketPulseMarketPulse

Things sure are looking messy out there right now, especially in Forex Land where the euro is within a hair’s breadth of trading at parity with the US dollar this morning. Overnight, the single currency slumped by 1.45% to 1.0040 as Euro yields edged lower as markets fell over themselves to price in a European recession. Energy, and by this, I mean Russian energy, lies at the heart of Europe’s turmoil, with news that Canada would release a specialised gas pipeline pump back to Russia to keep the petajoules flowing having no positive impact. My understanding is that as of yesterday, Nord Stream 1 which carries the fruits of Germany’s energy policies from Russia has entered its annual 10-day maintenance shutdown. The key question is, will the gas return after the 21st of July. Markets seem to be making up their mind already. The slump by the euro overnight also dragged sterling down with it, which faces a messy leadership battle now post-Bojo. Today it was announced that the process would be concluded by err… September 5th. Wonderful. Risk sentiment indicators, the Australian and New Zealand dollar, were also dragged down the euro whirlpool as well, as investors loaded up on US dollars and a fair few US government bonds as well by the looks, as US yields fell overnight. Gold, the forgotten asset class, is also trading one-for-one with EUR/USD this morning as well. Euro falls close to parity As for EUR/USD itself, it has never looked back after it fell through the multi-decade support line at 1.0850 earlier this year. I have no doubt there are plenty of options-related buds just ahead of parity. Likely these are related to 1.0000 knockouts and one-touches and other arcane options “structures”. If previous form is followed, we are likely to see a slow erosion of those bids, along with some dead cat bounces, and when parity finally goes, the stop-losses will kick in sending EUR/USD quickly lower. My charts are thin on the ground at these subterranean levels, but somewhere around 0.9900 looks like the next stop for the train. US data has thrown the cat amongst the pigeons of course. Friday produced another blockbuster Non-Farm Payrolls, which leapt higher to 372,000. Unemployment was unchanged at 3.60% suggesting Americans are returning to the workforce and are being slurped up by employers. That certainly rained on the “recession-is-nigh” party, something I have been saying isn’t a done deal to global deaf ears. The street is locked and loading another 75 basis points from the Fed at the end of the month. This Thursday’s US Inflation data will be the pivotal moment for financial markets this morning. If headline inflation stays at or above 8.80% YoY, and/or the core stays at 5.70% or above, get ready for a risk-aversion sell-off. Having said that, given the genetic propensity of the equity market FOMO gnomes to buy the dip, lower prints could spark a welcome relief rally in the stock, bond, and currency markets. Another risk point the street is begrudgingly waking up to at last is China and covid-zero. The city of Wugang is being locked down today for three days, while cases are creeping higher in other parts of the mainland. That is weighing heavily on China’s equities right now with mainlanders rightly worried that more lockdowns, especially in Shanghai or Beijing, could occur. That has overshadowed excellent lending data released this week, as banks respond to central government exhortations to get play their stimulus part. ASEAN markets are yet to wilt, although the Northern Asia heavyweights geographically collocated certainly are. That could be because of their correlation to the Nasdaq though. The value-heavy ASEAN stock markets are looking like a safety play this morning, I’m not sure how long that will last. Japan’s Finance Minister Suzuki has been on the wires this morning as USD/JPY approaches 138.00 saying Japan will take “necessary steps” in the forex market, as necessary I suppose. He also said that they would be closely communicating with other FX authorities internationally. This is the usual rhetoric when things don’t go to plan, and I do not believe we are imminently going to see the Ministry of Finance intervening in USD/JPY. (sidenote: the MOF makes the call on intervention; the BOJ merely executes it.) I am a little surprised that USD/JPY has remained at these levels, just as I am certain other “authorities” have bigger fish to fry right now and don’t think the yen’s depreciation is a threat to global financial stability. If the MOF intervenes, it’ll be doing it alone. Probably the best hope Japanese authorities have for some yen relief is a slump in US yields triggering a culling of the heavily long USD/JPY open interest out there. China will also be front-and-centre at the end of this week amongst the tier-1 US data dump. On Friday, it releases its House Price Index, Industrial Production, Retail Sales, Fixed Asset Investment, and Unemployment for June, as well as quarterly GDP Growth and Capacity Utilisation. Although virus nerves will captivate the short-term attention of traders and investors, the data will go a long way to answering how well-placed China is to weather another bout of Covid lockdowns. Tomorrow, we get rate decisions from the Bank of Korea and Reserve Bank of New Zealand as well as China’s 1-year Medium Term Facility Rate. The lending numbers from China this week mean there is no urgency to lower the 1-year MTF. The Bank of Korea is on track to announce a punchy (by their standards), 0.50% rate hike after recent elevated inflation data and a rapidly weakening won in the face of the dollar juggernaut. The Reserve Bank of New Zealand is being bandied around as the canary in the coal mine for other central banks, having started normalising policy sooner than other developed market central banks. That is giving the RBNZ far too much credit; only the Central Bank of Turkey has done a worse job. The RBNZ kept quantitatively easing as inflation exploded in New Zealand and sent house prices spiralling. Having sat like a possum in the headlights while the cost of living spiralled out of control and presided over the greatest transfer of wealth ever from our young people to our old people, they were then tardy and timid in stopping QE and then raising interest rates. They have nicely set up the country for an abrupt slowdown this year. A 0.50% rate hike is baked in, but the attention will be on whether they indicate a slower pace of hikes going forward. Given the stagflation nightmare they created, this would be a mistake and all I can say to any central bankers reading this newsletter is if the RBNZ blinks, you should absolutely do the opposite. The RBNZ is a reverse leading indicator, not a leading indicator. (NB: I am a Kiwi, and you may have noticed, that I am a bit upset with the RBNZ). Data released today in Asia have been second-tier. Japan’s June PPI rose by 9.20% YoY, higher than expected, and the Bank of Japan sticking to an easy monetary policy has kept up the pressure on the yen. The Philippines’ Balance of Trade was worse than expected, falling to USD -5.678 billion in May as imports exploded. Once again, a deteriorating trade balance will keep the pressure on the peso, already at record lows. Australian Consumer and Business Confidence data was weak, but a much lower Australian dollar overnight is keeping local equities supported. This afternoon sees the release of the German ZEW Economic Sentiment Index for July. It goes without saying it has serious downside risks and will be another headwind for the euro and European equities this afternoon. India’s Inflation data this evening should see YoY Inflation remaining above 7.0% as the Indian rupee slump continues and energy prices remain firm. The US 10-year note auction will be worth watching, with heavily US bond issuance this week. A weak bid-to-cover could give the US dollar rally a reason to pause, while the API Crude Inventories could lift oil prices if the headline number falls sharply from last week’s 3.8 million-barrel gain. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Struggling for parity - MarketPulseMarketPulse

Oil rallies sharply overnight Oil had another hugely volatile session overnight, with Brent crude and WTI rallying by over 4.0%, reversing the losses of Wednesday. That came despite a huge increase by US official Crude Inventories by 8.235 million barrels. That was a slightly misleading headline though, with the increase aided by disruptions in US refineries. Notably, gasoline inventories slumped by 2.5 million barrels as well. With US refining capacity running at an unrealistic 94.50%, any disruption will impact refined products and backstop WTI, in particular. Brent crude finished 4.50% higher at USD 104.25 a barrel, while WTI rallied by 4.15% to USD 102.20 a barrel. Oil’s rally actually started yesterday as the USD 100.00 Brent crude proved an irresistible temptation for Asian physical buyers. The slump in US gasoline inventories helped the process along by highlighting how tight supplies remain, especially in the refined categories. Asia has continued buying the dip today as well, perhaps cognisant of weekend headline risk. Brent crude has risen 0.75% to USD 105.00, with WTI adding 0.50% to USD 102.80 a barrel. Brent crude has resistance at USD 106.00 and then its 2022 trendline breakout at USD 108.85, followed by the 100-day moving average (DMA) at 110.50. It has traced a double bottom at USD 98.60, followed by the 200- day moving average (DMA) at USD 96.35 a barrel. WTI has resistance right here at USD 102.00 and then its 100-DMA at USD 107.16 a barrel. Support is at USD 96.60, USD 95.00, and then its 200-DMA at USD 93.50 a barrel. Gold is sideways in Singapore Without much movement in the currency space overnight, gold remained almost unchanged at USD 1740.50 an ounce, trading in a narrow range. Asia is equally dull, gold edging lower to USD 1740.00 an ounce. Since breaking USD 1780.00, gold’s technical picture has deteriorated rapidly, and it is clear it remains at the mercy of the US dollar’s direction. The only positive note to be seen is that its RSI has fallen into oversold territory, allowing for a modest corrective rally to occur. Despite a couple of sessions of sideways trading, gold remains anchored at the bottom of its range and only a miracle slump by the US dollar this evening is likely to move it off the seafloor. Gold has resistance at USD 1780.00, USD 1785.00, and USD 1820.00, its downward trendline. Support is at USD 1720.00, followed by USD 1675.00. Failure of longer-term support at USD 1675.00 sets in motion a much deeper correction, potentially reaching USD 1500.00 an ounce. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Oil bounces back, gold trading sideways - MarketPulseMarketPulse

US dollar holds onto gains The US dollar consolidated its gains overnight, ranging against DM and Asian currencies. The dollar index was almost unchanged at 107.09, where it remains in Asia. There is barely any movement in Asian forex markets today either, as the region happily slips into wait-and-see mode ahead of the weekend and tonight’s US data. Overall, the technical picture remains constructive for the dollar index though, although the daily relative strength index (RSI) is flirting with overbought territory, suggesting a temporary downward correction is possible. Having broken out of a 5-year triangle at 102.50 in April, its longer-term target remains in the 1.1700 area. More immediate resistance is at 107.25 and 110.00. Support is at the 1.0585 breakout point, and then 1.0500, followed by 1.0350 and 102.50. ​   EUR/USD edged 0.23% lower to 1.0160 overnight, where it remains in Asia, as currency markets took a rest from the volatility of the week. Since breaking a multi-year support line at 1.0850 in April, the euro has looked consistently weak, the recovery rally failing ahead of 1.0850 in a technical analysis nirvana. An oversold RSI could allow for a more extended recovery, with resistance at the 1.0300 and the 1.0350 breakout, followed by 1.0600. Support is just below at 1.0150 and then 1.0000.   GBP/USD rallied by 0.85% to 1.2025 overnight as BoJo finally said Bibi. Johnson’s resignations promise more turmoil ahead as there is no obvious candidate amongst the conservatives with a haircut to replace him. As such, I expect sterling’s strength to be as fleeting as a UK cabinet appointment. Immediate support is at 1.1880 and 1.1800, with 1.1400 the medium-term target. Resistance is at 1.2100 and 1.2200.   USD/JPY was steady at 136.00 overnight as US yields firmed slightly. The Abe shooting this morning pushed USD/JPY lower to 135.35, but it is already recovering, rising to 135.65. Despite the tragedy of these events, I do not expect them to provide anything but temporary strength. The US/Japan rate differential remains the primary driver of USD/JPY. ​ USD/JPY has resistance at 136.65 and 138.00, with support at 134.25 and 132.00.   AUD/USD and NZD/USD rose mechanically with investor sentiment overnight, both booking decent gains to 0.6840 and 0.6180. AUD/USD has nearby resistance at 0.6850, and NZD/USD at 0.6200. Support is at 0.6760 and 0.6125 respectively.   Asian currencies are treading water today ahead of the weekend and the US data this evening. The overnight session was non-committal, the US dollar consolidating gains although the Philippine peso has fallen to 56.00 to the dollar. The juice will be on South Korean, Philippine, Indian, and Indonesian central banks to signal more vigorous rate-hiking ahead, with no sign that the FOMC will blink. Today is likely to be a dull session. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. US dollar consolidates overnight - MarketPulseMarketPulse

US dollar rises on hawkish FOMC minutes The US dollar continued its upward momentum overnight after hawkish FOMC Minutes lifted US bond yields higher across the curve. Recession nerves are also serving the greenback well as haven inflows continue to boost it. The dollar index rose 0.52% to 107.04 overnight, easing to 106.87 in Asia. The technical picture remains constructive although the daily relative strength index (RSI) is flirting with overbought territory, suggesting a temporary downward correction is possible. Having broken out of a 5-year triangle at 102.50 in April, its longer-term target remains the 1.1700 area with 1.1000 immediate resistance. Support is at the 1.0585 breakout point, and then 1.0500, followed by 1.0350 and 102.50. ​   EUR/USD remained under pressure with recessionary woes higher there than in the US. EUR/USD fell by 0.78% to 1.0185 overnight, before edging higher to 1.0200 in Asia. Europe’s energy vulnerability continues to weigh on the single currency and the Norwegian strike settlement, ominously, had no positive impact on the euro. Since breaking a multi-year support line at 1.0850 in April, Euro has never looked back. An oversold RSI could allow for a more extended recovery, with resistance at the 1.0300 and the 1.0350 breakout, followed by 1.0600. Support is at 1.0160 and then 1.0000.   GBP/USD coat-tailed the euro lower overnight, with UK politics having little impact on either Sterling or UK equities. GBP/USD fell by 0.30% to 1.1925, rising to 1.1950 in Asia. Immediate support is at 1.1880 and 1.1800, with 1.1400 the medium-term target. Resistance is at 1.2000 and 1.2200.   USD/JPY tested 135.00 overnight, but the rise in US yields lifted back to 135.90, leaving it almost unchanged overnight. In Asia, it has edged 0.15% lower to 135.70. Markets appear to be waiting now to see if the rise in US yields continues, or runs out of steam, dictating the direction of the pair. USD/JPY has resistance at 136.65 and 138.00, with support at 134.25 and 132.00.   AUD/USD and NZD/USD ranged overnight, finishing slightly lower in New York. The huge Australian trade balance number has lifted AUD/USD today, rising 0.60% to 0.6825. That has dragged the Kiwi higher as well, NZD/USD rising 0.65% to 0.6190. AUD/USD has nearby resistance at 0.6850, and NZD/USD at 0.6200. Risks remain skewed to the downside.   Asian currencies faded on US dollar strength overnight. Although the USD/CNY held steady, the KRW, THB, and PHP lost more ground after a hawkish FOMC Minutes. A raft of new rules to encourage INR inflows by the Reserve Bank of India yesterday say USD/INR trade in a wide range, but ultimately, INR strength proved temporary, and USD/INR closed almost unchanged. Lower oil prices may boost INR today and that is a pattern we are seeing across the Asian FX space, with most Asian currencies booking roughly 0.20% gains versus the greenback. Still, the bigger picture shows Asian currencies remain vulnerable to tighter US monetary conditions and a US recession and today’s strength looks temporary. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Asia buys oil after another overnight slump Oil had another hugely volatile session overnight as hawkish FOMC minutes and recession fears prompted more long liquidation and attracted algo-driven momentum sellers. Brent crude tumbled by 4.80% to USD 99.75 a barrel in another mind-boggling session. WTI tested USD 95.00 intraday, before gaining back some losses to finish 2.80% lower at USD 98.10 a barrel. In Asia, the lure of USD 100 a barrel of Brent crude has proved an irresistible lure to physical buyers, and oil prices have rallied today. Brent crude is 1.70% higher at USD 101.45 a barrel, while WTI has climbed by 1.20% to USD 99.20 a barrel. This perhaps highlights the disconnect between the speculative market on the futures exchanges, and the reality of the physical market where futures contracts remain heavily in backwardation, signalling immediate oil supplies are as tight as ever. I remain unconvinced that the fall in prices is anything more than an adjustment to recessionary fears and speculative noise in the futures space. We are yet to see demand destruction. Having said that, the failure of the 2022 support lines on both contracts so comprehensively must be respected, as are looming recession risks around the world. But with Russian oil supplies set to drop as the year progresses and it runs out of Western parts to maintain fields, and with the rest of OPEC hopelessly uninvested in maintaining production capacity, I fear the days of USD 100 oil will be with us for some time yet. Brent crude has resistance at USD 106.00 and then its 2022 trendline at USD 108.85, followed by the 100-day moving average (DMA) at USD 110.30. It has traced a double bottom at USD 98.60, followed by the 200-day moving average (DMA) at USD 96.35 a barrel. WTI has resistance at USD 102.00 and then its 100-DMA at USD 107.00 a barrel. Support is at USD 96.65, USD 95.00, and then its 200-DMA at USD 93.50 a barrel. Gold is in trouble The continuation of US strength overnight, and high US yields, delivered another kidney punch to gold which slumped once again, falling 1.45% to USD 1739.50 an ounce. In Asia, the shorter-term oversold technical picture sees a modest 0.45% bounce to USD 1746.00 an ounce. Since breaking USD 1780.00, gold’s technical picture has deteriorated rapidly, and it is clear it remains at the mercy of the US dollar’s direction. The only positive note to be seen is that its RSI has fallen into oversold territory, allowing for a modest corrective rally to occur. Gold has resistance at USD 1780.00, USD 1785.00, and USD 1820.00, its downward trendline. Support is at USD 1720.00, followed by USD 1675.00. Failure of longer-term support at USD 1675.00 sets in motion a much deeper correction, potentially reaching USD 1500.00 an ounce. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Oil takes a tumble, gold in trouble - MarketPulseMarketPulse

Recession watch   Senior Market Analyst Jeffrey Halley talks about news impacting the market and the week ahead.   In this week’s episode, Jeffrey Halley is filling in for a holidaying Craig Erlam. Market volatility continues to percolate at boiling point as asset markets try to price in a recession, or not! We start with the political situation in London with Tory ministers resigning in droves. Will Prime Minister Johnson survive and has it affected the pound, or does it even matter. Jeffrey looks at the technical picture before moving to the Euro which plummeted yesterday on recession fears. The sell-off continues today and the technical picture suggests parity to the US Dollar is upon us. In contract European equities are rallying impressively, unwinding the sell-off of yesterday. The culprit? Norwegian oil workers. Jeff explains. From there it’s over to the United States where markets are very noisy as well. Recession is the word on everyone’s lips, and US bond yields toppled overnight, with the yield curve slightly inverted and US 10-year yields back to 2.80%. Meanwhile, the US Dollar is seeing massive haven inflows allowing it to trample across the forex markets. Meanwhile, oil prices continue to fall, down over 5.0% today and Brent crude is officially below $100 a barrel! Still, the US data remains contradictory. We look at tonight’s JOLTs Job openings and S&P Global and ISM Non-Manufacturing PMIs, which have surprised to the upside. Is a recession locked and loaded? Jeffrey isn’t so sure yet, but oil markets are saying that today as well. Perhaps the US Non-Farm Payrolls can help answer the question on Friday, and a discussion of that data rounds out today’s podcast.   This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Market Insights Podcast (Episode 349) - MarketPulseMarketPulse

Oil plummets overnight on recession fears Recession fears saw oil markets plummet overnight, with both Brent crude and WTI taking out their 2022 rising support lines in no uncertain terms. Brent crude slumped by 7.90% to USD 104.75, having tested USD 101.00 a barrel intraday. WTI slumped by 8.75% to USD 100.90, trading as low as USD 97.50 a barrel intraday. In Asia, both contracts remain under pressure as China lockdown nerves sweep the region. Brent crude has fallen 0.90% to USD 103.85 a barrel, and WTI is 0.60% lower at USD 100.00 a barrel. The price action overnight, with both contracts trading in near fifteen dollar ranges, hints more at panic and forced liquidation than a structural change in the tight supply/demand situation globally. Although I acknowledge recession risks in the US, and covid zero ones in China, the world’s two largest consumers, the futures markets in both Brent crude and WTI remain in heavy backwardation. That says that in the physical market, supplies remained as constrained as ever, and despite the noise seen overnight, oil prices may be in danger of overshooting to the downside. Having said that, the failure of the 2022 support lines on both contracts so comprehensively must be respected, as are looming recession risks around the world. But with Russian oil supplies set to drop as the year progresses and it runs out of Western parts to maintain fields, and with the rest of OPEC hopelessly uninvested in maintaining production capacity, I fear the days of USD 100 oil will be with us for some time yet. That said, Brent crude and WTI are likely moving into a new USD 95.00 to USD 110.00 barrel range. Brent crude has resistance at its 2022 trendline at USD 108.85 a barrel, followed by the 100-day moving average (DMA) at USD 110.30. Support is at USD 101.00, USD 100.00, and then USD 96.25 a barrel, its 200-DMA. WTI has resistance at its 100-DMA at USD 106.95, followed by the 2022 trendline at USD 108.50 a barrel. Support is at USD 99.60, USD 97.50, and then its 200-DMA at USD 93.40 a barrel. Gold Price capitulates The massive strength of the US dollar across asset classes overnight was more than gold could withstand, despite lower US yields. It wilted in the face of US dollar strength and finished the overnight session 2.40% lower at USD 1765.00 an ounce. In Asia, it has eked out a tiny gain to USD 1767.40 an ounce. With gold moving inversely to the US dollar and no other inputs driving the price, gold’s only salvation from here is entirely reliant on a sudden reversal of course by the greenback. Having finally broken out lower from its multi-month USD 1780.00 to USD 1880.00 range, the failure of USD 1780.00 is an important technical development. Assuming the dollar rally continues, the technical picture suggests a move lower to USD 1720.00 an ounce in the days ahead. Gold has resistance at USD 1780.00, USD 1785.00, and USD 1820.00, its downward trendline. Support is at USD 1764.00 and then USD 1720.00, followed by USD 1675.00. Failure of the latter sets in motion a much deeper correction, potentially reaching USD 1500.00 an ounce. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Oil tumbles on recession nerves, gold slides - MarketPulseMarketPulse

US dollar broadly higher as risk sentiment fizzles The US dollar soared versus both developed and emerging market currencies overnight, as recession fears saw a spike in haven demand for US dollars. Quite a bit of that looks to have been recycled into US bond markets as well, adding to the recessionary downward pressure on yields. The dollar index leapt 1.26% to 106.49, a two-decade high. It remains there in Asia and the next technical target is the 109.00 area. Having broken out of a 5-year triangle at 102.50 in April, its longer-term target remains in the 1.1700 area. Support is at 1.0585, the overnight breakout point, and then 1.0500, followed by 1.0350 and 102.50. ​ The Norwegian oil strike deepened recession fears and broke the euro yesterday, EUR/USD plummeting 1.51% to 1.0265, a multi-year low. In Asia, it has eased another 0.10% to 1.0253. The overnight low at 1.0235 is initial support, followed by 1.0130 ahead of 1.0000. As I have said before, any deeper interruption of Europe’s natural gas supplies will mean a move below parity and a European recession. Since breaking a multi-year support line at 1.0850 in April, the euro has never looked back. Although risks are skewed to the downside now, the Norwegian strike settlement may allow EUR/USD to find some friends this afternoon. It has resistance at 1.0300, and then the 1.0350 breakout, followed by 1.0600. GBP/USD fell by 1.18% to 1.1960 overnight, easing to 1.1945 in Asia. Recession fears are also complicated by political instability in London now following multiple ministers resigning overnight, with the Bank of England also sounding a loud economic warning as well. That makes constructing a bullish case for sterling challenging and a move back towards the March 2020 lows near 1.1400 can’t be discounted. It has immediate support at the overnight low at 1.1900, followed by 1.1800. Resistance is at 1.2000 and 1.2200. USD/JPY, rather surprisingly, finished almost unchanged at 135.86 overnight but has immediately moved 0.30% lower to 135.45 in Asia today. With the US/Japan rate differential narrowing sharply, long USD/JPY becomes more dangerous by the day and the risks increase of an ugly correction lower to wash out the speculative longs. If US yields find a floor, USD/JPY may cling to its gains for now though. USD/JPY has resistance at 136.65 and 138.00, with support at 134.25 and 132.00. AUD/USD and NZD/USD have also fallen sharply overnight to 0.6800 and 0.6160, where they remain in Asia. The overnight fall in resource prices will be an additional headwind for the Australian dollar in particular, but both remain at the mercy of international investors who use them to express risk sentiment. AUD/USD is in danger of testing 0.6700 this week, and NZD/USD 0.6000. Failure will signal a deeper move lower is in progress. Asian currencies retreated overnight, led by USD/KRW, which gained 1.0% to 1308.00, and USD/PHP, USD/INR, and USD/IDR, which all rose around 0.50%. A weaker Chinese yuan fixing by the PBOC today has kept the pressure up on Asian currencies, as has fears of more China lockdowns. Notably, USD/IDR has breached 15,000.00 this morning and rates hikes from Seoul, Jakarta, Manila, and New Delhi are now a certainty. The price action overnight and this morning does suggest that Asian central banks are around selling US dollars, but with Asian currencies gaining no solace from lower US yields, this looks very much like a risk aversion move that will keep the pressure up on local currencies. Bank Negara should hike by 0.25% this afternoon, but if they don’t, look for extended MYR weakness. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. ​US dollar soars on haven demand - MarketPulseMarketPulse

Asian equities slump on China lockdown fears US equities endured a torrid session overnight, dropping initially, but then rallying hard as US yields fell across the curve. With markets racing to price in a US recession, the US equity performance was somewhat counterintuitive with the rate-sensitive Nasdaq outperforming. If US yields find a floor after the US data released tonight, Wall Street’s recovery could find itself flagging. The S&P 500 finished 0.16% higher, the Nasdaq stormed to a 1.75% gain, while the value-centric Dow Jones closed 0.42% lower. In Asia, US futures are steady, with the S&P 500 and Dow almost unchanged, while the Nasdaq futures have booked a 0.28% gain.   Asian markets are mostly having a bad day at the office as they race to price in both a US recession overnight and also the potential for wider virus restrictions in China following overnight developments. The prospect of more covid zero restrictions in China is an unwelcome dose of reality for Asia and is certainly carrying more weight, although Asian currency weakness is also in play.   Japan’s Nikkei 225 is 1.20% lower, with South Korea’s Kospi dropping by 1.10%. In mainland China, the Shanghai Composite has slumped by 1.25%, with the CSI 300 close behind, falling by 1.10%. In Hong Kong, the Hang Seng has lost 1.40%.   Across regional Asia, Manila is defying the odds once again, jumping by 1.40% this morning. Elsewhere, it is a sea of red. Singapore is relatively steady, down just 0.05%, while Kuala Lumpur is 0.50% lower, Jakarta has lost 1.05%, Taipei has slumped by 1.75%, and Bangkok has eased by 0.20%. Australian markets have been spared the worst of the selloff, despite resource prices tumbling overnight, thanks to its Wall Street correlation of late. The ASX 200 and All Ordinaries are down by 0.30%.   European equities had a terrible day yesterday thanks to natural gas supply fears and political instability in the UK’s case as well. With the Norwegian government stepping in to impose a settlement between the striking oil workers and employers, European markets may gain a temporary reprieve this afternoon. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Asian down on recession, Covid fears - MarketPulseMarketPulse

Recession fears buffeted markets overnight, with the price action across various asset classes looking like a self-sustaining negative feedback loop, triggering more stop losses as prices slumped and dragging in trend-following momentum-hunting fast money. European equities, euro take a tumble Europe endured a torrid day as the Norwegian oil worker strike proved the last straw for an energy-starved Europe. European equities plummeted and rightly so, as Europe’s energy-from-Russia Achilles heel was cruelly exposed. The euro also capitulated, EUR/USD taking out 1.0350 on its way to a 1.50% loss to 1.0260. Sterling and UK equities were also hammered by the extra headwind of political instability as three senior ministers resigned overnight with immediate effect. There may be some respite for Europe today though as the Norwegian government imposed a settlement on both sides effectively ending the strike. It is likely to be temporary. US Bond Yields In the US, equity markets opened much lower, but US bond yields outdid them, slumping on recession nerves overnight and sending the US 10-year down to 2.805%, leaving the 2-year 10-year yield curve teetering on inversion. Perversely, the slump in US bond yields, which might also be due to haven inflows and not just recession fears, saved the bacon of US equity markets. US stocks reversed most of their losses, and ironically, the Nasdaq actually rallied to a 1.75% gain. The still-richly-valued growth stocks of the Nasdaq are the most interest-rate sensitive on US markets, and small moves in the risk-free discount rate have outsized price impacts in these environments. Still, the Nasdaq gains looked like a mechanical rear-guard action and not a brave new dawn. A US and Europe recession won’t do their ambitious valuations any favours either. US Dollar The big winner overnight was the US dollar, which rallied imperiously versus both developed and emerging currencies. A sign of the nerves around US dollar strength came from China today, which set a much weaker yuan fixing rate of 6.7346 versus the US dollar, as it glanced around at the slump in other Asia currencies overnight. The only winner was the Japanese yen. USD/JPY held steady overnight at 135.90, to my great surprise, as the US/Japan rate differential plummeted lower. However, it has immediately fallen by 0.50% to 135.15 in Asian trading. As I have said previously, the long USD/JPY has become a dangerous one as the primary reason for it occurring in the first place, the US/Japan rate differential narrows sharply. Crude Oil Oil prices also slumped overnight on recession hype, and I’ll talk about that later. Ironically, one of the night’s outperformers was bitcoin, which reversed intraday losses to close unchanged at USD 20,200.00. I can only surmise that the Nasdaq’s rally lifted bitcoin as well so that’s the short-term correlation to watch now, although it has already fallen 1.80% to USD 19,800.00 this morning. My line in the sane for bitcoin remains USD 17,500.00, everything above that will be noise, failure should trigger another wave of margin stop outs among the geniuses conjuring 20% returns out of thin air. Commodities - Copper, Gas, Gold And Palladium Commodities also slumped overnight on recession fears, notably copper. But as a grouping, hard and agricultural commodities look to have peaked a few weeks ago except for European natural gas for obvious reasons. Gold finally fell below USD 1780.00 an ounce overnight, an ominous technical development. But spare a thought for palladium. It is trading at USD 1909.00 an ounce this morning; it’s hard to believe it traded at USD 3400.00 an ounce in early March. The City of Xi-an has enacted a series of restrictions overnight, and 9 districts of Shanghai are undergoing mass testing Asian markets are starting the day on the back foot for different reasons. The PBOC USD/CNY fix today will have regional central bankers looking over their shoulders, although looking at the price action of pairs such as USD/INR and USD/IDR overnight, it looks like regional central banks are increasing their US dollar selling. Mostly, though, it is China and Covid zero that are weighing on the sentiment in Asia, which was going to be fragile anyway. As I have said till I am blue in the face, Covid zero means Covid zero in China, not one and down and we all live happily ever after. The City of Xi-an has enacted a series of restrictions overnight, and 9 districts of Shanghai are undergoing mass testing. Chinese authorities will try, initially, a district-by-district approach to restrictions, But nobody should be under any illusion that they won’t go harder and faster if needed. As I’ve said before, China needs to get lucky 100% of the time, omicron has to get lucky once. This remains a key risk factor too often ignored by anybody pondering China markets in 2022. Asia The Asian data calendar is empty today except for Malaysia’s Bank Negara policy decision. The market is locked and loaded for another 0.25% rate hike to 2.25% and I won’t disagree. With USD/MYR testing 4.4200 this morning, they won’t have a choice. No rate hikes likely see USD/MYR starting with 4.50 in double time. South Korea, the Philippines and Indonesia all face the same unsavoury choice in the weeks ahead at their policy meetings, especially with another Federal Reserve hike looming at the end of the month. Fed On the subject of the Fed, the noise will increase that Fed will now have to mollify the pace and size of its rate hikes. Unfortunately, inflation in the US, like elsewhere, is showing no signs of abating and the data recently has really been that bad, much like Australia. This is more likely to be a story for Q4. If the US JOLTs Job Openings remain at 11 million or above, and the US Non-Farm Payrolls is comfortably above 250,000, there will be no sensible reason for the Fed to blink. Most of all, it is a credibility issue. Having got transitory inflation so utterly wrong and stubbornly clung to a dogma past its sell-by date, if the FOMC blinks now, they may as well do an Elvis and leave the building. Puppies and kittens don’t need to be trained to chase their tails, we certainly don’t need it from our central banks, which aren’t even cute to boot. Economic Data This afternoon we get German Factory Orders and Pan-Europe Retail Sales. The releases won’t make good reading and could heap more pressure on the euro and European equities, although I don’t discount the Norwegian oil strike settlement giving both a temporary reprieve. US JOLTs Job Openings will cause recession head-scratching above 11 million, but June’s ISM Manufacturing PMI for June and its activity, prices, new orders, and employment sub-indexes will probably decide the direction of travel in the short-term. The FOMC Minutes afterwards will probably be discounted somewhat, given market developments over the past two weeks. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Recession meltdown - MarketPulseMarketPulse

China’s Covid flare-up weighs on Asian markets US OTC equity markets were closed overnight for the July 4th holiday, but US futures posted consistent gains as markets pinned their hopes on a reduction of US tariffs on Chinese goods this week. S&P 500 futures are 0.40% higher, Nasdaq futures have rallied by 0.85%, and Dow futures have gained 0.55%. That theme saw Asian markets open higher this morning, but that rally seems to have faded as the session marched on. Concerns around the latest China virus flare-up and the prospect of restrictions seem to be weighing on Asian markets and rightly so. Lower tariffed goods to the US will mean little if supply chain disruptions from China occur again. That has led to a mixed day across Asia. Nikkei 225 Japan’s Nikkei 225 is 0.55% higher today, well of the intraday highs, while South Korea’s Kospi has rallied by 1.20%. Mainland China has moved into the red, the Shanghai Composite falling by 0.25%, with the CSI 300 falling by 0.60% despite an impressive recovery by the Caixin Services PMI data. Hong Kong’s Hang Seng has now fallen into negative territory, down by 0.05%. RBA Singapore is 0.30% lower, with Taipei easing by 0.25%, Kuala Lumpur clinging to a 0.05% gain, while Jakarta is outperforming, rising by 0.90%. Manila has also surprised, rallying by 1.20%, with Bangkok adding 0.25%. Australia is clinging onto some of its earlier gains ahead of the RBA policy decision, with 0.50% priced in. Still, its high beta to China means it is well off earlier highs in the day. The ASX 200 and All Ordinaries are 0.30% higher. Europe Europe had a mixed session overnight, and with a US holiday and a slow news day, there will be little to inspire a strong direction move this afternoon. I expect a neutral opening. With US futures gaining during the US holiday, and China tariff cuts expected this week, I expect US markets to focus their efforts on this direction and open higher tonight, potentially lifting European markets later in the day. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Asian equities China tariff rally fades - MarketPulseMarketPulse

Oil is steady in Asia Oil price continued their recovery from Thursday’s recession-fear sell-off as the supply-demand balance in the real world continues to underpin prices in the futures market. Brent crude rose by 2.15% overnight, easing 0.35% to USD 113.40 a barrel in subdued Asian trading. WTI rose by 1.90% to USD 100.55 overnight, easing by 0.30% to USD 110.10 a barrel in Asia. Notably, Brent crude’s retreat last week saw its ascending 2022 trendline support at USD 108.50 a barrel tested and held in textbook fashion. The support line is at USD 109.00 today and we can reasonably assume that Brent crude’s downside is limited unless we get a couple of daily closes below it. That would open a deeper test lower, potentially extending to USD 100.00. On the topside, the USD 120.00 region looks unlikely to break thanks to global recession nerves, unless we get more negative developments related to Russia. WTI looks the more vulnerable of the two, as recession nerves rachet up in the United States. Again, US data this week has upside risks in this respect. WTI is ranging each side of its 2022 ascending trendline support, today at USD 108.50 a barrel. A close below the 100-day moving average at USD 106.95 likely signals a test of USD 104.00 and potentially USD 100.00 a barrel. Resistance lies at USD 112.00 and USD 114.00 a barrel for now. Gold underwhelms again Gold fell to USD 1784.00 an ounce last Thursday in what looked like a series of stop-losses going through the market after USD 1800.00 failed. It immediately recouped those losses and has been trading sideways around USD 1810.00 an ounce since then. Gold has risen slightly to USD 1811.00 in Asian trading today. Overall, gold bugs will have taken a modicum of comfort that the fall below USD 1800.00 an ounce was short-lived, but the ensuing rally is uninspiring, to say the least. It suggests that any further US dollar strength this week could see the downside tested once again as it refuses to react positively to the flattening and move lower by the US yield curve. The series of lower daily highs traced out over the last month continue to warn of the path of least resistance for gold. Gold has resistance layered at USD 1820.00, its sloping downtrend line, then USD 1840.00, USD 1860.00, and USD 1880.00, the latter appearing an insurmountable obstacle. Support is at USD 1784.00 and then USD 1780.00 an ounce. Failure of the latter sets in motion a much deeper correction, potentially reaching USD 1700.00 an ounce. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Oil stable, gold vulnerable - MarketPulseMarketPulse

US dollar steady after July 4th holiday A US holiday overnight torpedoed volatility in currency markets, but overall, the US dollar continues to maintain its gains versus the DM and EM currency space, despite insipient bullish sentiment in other asset classes and falling US yields. It seems that while markets tie themselves in knots in other asset classes, the US dollar remains the favoured seat to watch the fun and games from in the stadium. The dollar index was almost unchanged at 1.0516 overnight, where it remains in Asia. ​ Support remains at 1.0350 and 102.50. ​ With resistance at 105.00 now eroded, the index’s next resistance is at 1.0585. Euro To US Dollar EUR/USD is steady at 1.0430 in Asia. Resistance is well and truly in place at 1.0600, followed by 1.0650. It remains uncomfortably close to the critical 1.0350 support region. Failure signals further losses to 1.0200 initially and potentially to parity in the weeks ahead. British Pound Sterling has edged 0.10% higher to 1.2110 in Asia. A probe of the 1.2200 upside came to nought overnight and it remains initial resistance, followed by 1.2300. Support at 1.2080 and then Friday’s low at 1.1975. More important support at 1.1950 held and failure now signals a test of the 1.1400 pandemic low. USD/JPY USD/JPY climbed by 0.35% to 135.70 overnight, adding another 0.35% to 136.20 in Asia. The resilience of USD/JPY continues to surprise, given the moves lower by US yields. Perhaps markets are pricing in an imminent inversion of the US yield curve and sharply higher short-term rates, but the excessive bullishness of USD/JPY is, in my opinion, becoming a dangerous trade if the US/Japan yield differential narrows. Perhaps US data this week will show a healthier US economy and put inflation-fighting back on track, perhaps not. Additionally, far too many “experts” are now calling for 140+, always a dangerous sign in my books. USD/JPY has resistance at 136.65 and 138.00, and support at 134.25 and 132.00. Asian currencies are steady today, with a US holiday overnight giving Asian currency markets a reason to sit this session out. The US dollar is maintaining its gains across the Asian FX space, with USD/PHP now at 55.000, while USD/IDR is approaching 15,000, and USD/KRW trading on each side of 1300.00. The India trade data did the INR no favours and USD/INR remains near record highs at 78.930 this morning. The Chinese yuan remains a paragon of managed currency stability, thanks to components in its index slumping. USD/CNY is at 6.6935 today, comfortably in the middle of its two-month 6.6400 to 6.8100 range. If US data and/or the FOMC minutes come in on the firmer side this week, receding recession fears and higher rate expectations will leave Asian FX vulnerable to another bout of downside pressure. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. US dollar remains firm - MarketPulseMarketPulse

One of the more pleasing aspects of being aboard a slow boat into the rainforests of Borneo these past few days was the complete loss of mobile telephony signals. The temptation to look at emails, chats, social media, or news from the markets was compulsorily removed, thanks to the national park being bigger than all of Bali. Bank Holiday I certainly haven’t missed much in my short absence. Yes, volatility remains elevated across every asset class to be sure, although a US holiday overnight meant a 12-hour break from the noise (New Yorkers don’t do 8-hour days, lunch is for wimps). What is clear is that the strategy of watching the rooster fight from the sidelines instead of getting involved remains the sensible one. Financial markets looking for direction The financial markets continue to tie themselves in knots so complicated, that they would give even the saltiest mariner a headache, as they try to price in a recession/no recession and its impact on asset prices. Nobody is saying it, but really, it is a cover for looking for an excuse to pick the low in the stock market, which is struggling still to cope with the transition back to the real world after being back-stopped by the world’s central banks for the past 20 years. US Yields Other asset classes are trying to price in a recession as well. US 10-year yields are now back to near 3.0% and I must say I got this one completely wrong, I thought it would be nearing 4.0% by now. That said, the US yield curve from 2-year to 30-year continues to flatten dramatically, with only a 24 bps difference as of Friday. We seem to be on the way to an inversion sooner than later, signalling a recession. Not much of a reason to bottom-fish equities I’d have thought. Crude Oil Oil fell by over 5.0% on Friday for much the same reason, but frankly, with Russian sanctions and OPEC’s production targets merely a fantasy on paper, we’re going to have to see things get a lot worse in the world economy to see Brent crude under USD 100 a barrel. That ties in nicely with my outlook that inflation may be nearing a peak, but the risk is that it stays elevated for longer than the market is pricing, even if it peaks in the US. Don’t consign stagflation to the cupboard just yet. Elsewhere inflation in the world is still on its way up, as evidenced by European data last week and yesterday’s Indonesian inflation numbers. Cryptocurrencies And Bitcoin Price The crypto space is also in the Accident and Emergency department still, waiting to be seen by a doctor. Bitcoin flirted with USD 18,000.00 while I was away but held the crucial USD 17,500.00 region. The dead cat bounce to USD 20,000.00 isn’t inspiring confidence with another crypto lender halting withdrawals, deposits, and trading on its platform yesterday. This one, I believe, was conjuring up to 40% potential returns through the magic of Defi. Cryptos have proven to be neither a hedge for deflation, stagflation, or inflation; even gold has done a better job and that’s saying something. Nor have they usurped the US dollar or other fiat currencies. All I can say about the crypto space is a saying I heard before the global financial crisis and used a lot during it when a bank CEO would proclaim “we have plenty of capital.” That is “there is never just one cockroach.” USD/JPY And Other FX Pairs Perhaps the biggest surprise is that despite US yields tanking last week on recession fears, USD/JPY remains near 136.00. That is becoming a dangerous trade in my opinion, especially if US 10 years fall below 3.0%. Still, the US dollar remains firm across the board, with the modest recovery in risk sentiment recently not translating into material strength in Asia currencies or major currencies versus the greenback. In fact, looking at the likes of the euro, yen, Aussie or won, you might argue the opposite. The price action in the currency markets is perhaps a less-than-subtle warning to temper those bullish animal spirits in other asset classes. That said, it looks like the bottom-fishers of the equity, bond and crypto-space may hold the reins in the first part of the week. US Treasury Yellen and China Vice-Premier Liu held a construction phone call this morning and the market is alive with speculation that US President Biden will cut tariffs on a swath of Chinese goods this week to lower inflation. ​ Following on from an impressive recovery by US manufacturing PMIs last week, China’s Caixin Services PMI leapt massively to 54.5 this morning for June, a giant recovery from May’s 41.4. Japan’s Jibun Bank Services PMI for June also rose to 54.0 from 52.3 in May. Both China and Japan are emerging from varying degrees of virus restrictions, but the strength of China’s PMI recovery is a surprise. Whether it can last is another matter and once again I’ll focus on China once again and beat the drum of warning. China’s covid-zero policy is NOT one and done and President Xi said as much last week. Already, a flare-up of virus cases elsewhere has led to some restrictions being reimposed. Readers should be under no illusion that flare-ups in Beijing and Shanghai will not lead to a reimposition of movement restrictions. Tread carefully on bottom-fishing in China asset markets. And I have even mentioned the still ongoing implosion in the private property developer sector there. Elsewhere in Asia, inflation warning signs continue to make some noise. Having started the post-covid recovery later than the United States and Europe, Asia is starting to see the inflation pass-through happening. South Korean Inflation YoY for June rose to 6.0% today from 5.40% in May; you can lock and load a Bank of Korea rate hike at the next meeting, it’s just by how much. Philippine Inflation YoY for June has risen to 6.10% from 5.90% in May as well. On Friday, Indonesian inflation jumped to 4.40%, led by food inflation. An ominous development for a country of 270 million, mostly poor citizens. Although core inflation remained benign, two of the most reluctant rate hikers, the Philippines and Indonesia, are going to be forced to act, or see pressure mounting on their currencies, causing a negative feedback loop of involuntary tightening via a lower currency. Likewise, India may need to accelerate hikes while soaring energy prices torpedoed the current account yesterday, which slumped to USD-25.64 billion. And that’s with cheap Russian oil. This might partially explain why lower US yields are producing no peace dividend for Asian currencies against the US dollar. Reserve Bank Of Australia (RBA) Another central bank facing the music in a couple of hours is the Reserve Bank of Australia. Home Loan and Building Permits soared yesterday, as did ANZ Job Advertisements. S&P Global Services PMI for June edged only slightly lower to 52.6, with the Composite PMI also printing at 52.6 from 52.9 last month. The lucky country remains far too lucky it seems, and despite a 50bps hike last month, the battlers aren’t going down without a fight. Another 50bps is priced in for the RBA today, and if they stay on the fence and do just 25bps, the Australian dollar is going to have a very bad day. It will probably only book modest gains anyway with 50bps unless the RBA statement is very hawkish. There is an outside chance the RBA could look at the data and go 75bps and surprise markets, I’m not betting my remaining hair on it though. Although I said the stock market bulls may have the momentum in the first half of the week, the first challenge to that will loom in the dark hours of tomorrow evening Singapore time. Wednesday sees the release of May JOLTs Job-Opening data, expected to still be just above 11.0 million jobs. JOLTs Job Quits should come in around 4.4 million. That is hardly consistent with a US economy on the verge of a recession although some may argue that May is now history. Junes ISM Non-Manufacturing PMI, Activity, Employment, New Orders and Non-Manufacturing sub-indexes might take the heat out of a high JOLTs number unless they surprise to the upside. FOMC Minutes Later that evening, the FOMC Minutes are due to be released, although I would be surprised if the committee is blinking on its inflation fight yet. That would create an intolerable credibility gap that already has a few holes below the waterline after the past 12 months. Before we know it, Friday is here and another US Non-Farm Payrolls release for June. Time flies when you’re getting whipsawed every day. Jobs are expected to fall from last month’s monster 390,000 print to a still-healthy 270,000. Maybe there is some risk of downward back-month revisions, but that forecast is still not consistent with a US economy on the verge of a big slump. The scope for bond market volatility is high and “peak-Fed” has to be revised higher again. The US dollar will lap it up like a cat with a plate of high-fat milk, but equity markets are unlikely to feel the same love. It looks like another week to be patient and observe from the sidelines. Otherwise, strap in everybody, and keep practising those complicating sailing knots, they will be used this week. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Knot-tying masterclass continues - MarketPulseMarketPulse

Oil retreats on delayed EIA data Oil prices reversed course overnight as the delayed US official EIA crude inventory data was released. With two weeks of data released at once, net crude inventories fell by 3.15 million barrels, but gasoline inventories rose by 4.13 million barrels for the fortnight. Brent crude had tested USD 120.00 intraday but fell back to finish 2.15% lower at USD 115.60 a barrel. WTI tested USD 114.00 intraday but also slumped to finish 2.15% lower at USD 109.55 a barrel. In Asia. Both contracts have added 0.40% to USD 116.05 and USD 110.00 a barrel. Although OPEC+ meets today, the meeting is likely going to be just a rubber stamp exercise this month. Looking under the bonnet of the two-week EIA release, some of the headline numbers flatter to deceive. The net drop in crude oil inventories was flattered by SPR releases, while the gasoline stock jump is because US refineries are running at over 95.0% capacity. This is an unsustainable run rate in the medium-term and the underlying numbers suggest the supply situation is as challenging as ever. With Ecuadorian and Libya production plummeting and no progress in Europe/Iran nuclear talks, any downside in oil prices should be limited. Brent crude has support here at USD 116.00, followed by USD 111.30, the 100-day moving average (DMA) at USD 109.80 and then the rising 2022 support line, today at USD 108.30 a barrel. It has resistance at USD 120.00 and USD 121.25 a barrel. WTI has support at USD 109.25, then its rising 2022 support line at USD 108.00, followed by the 100-DMA at USD 106.50 a barrel. It has resistance at USD 112.50, USD 114.00, and then USD 116.00 a barrel. Gold underwhelms again Gold staged an intraday rally towards USD 1833.00 overnight, but it once again ran out of steam as US dollar strength swept the markets on haven inflows. That reversed the weak rally and sent gold to a weak close, falling 0.12% to USD 1818.00 an ounce. Gold continues to trace out lower highs which suggests that risks are increasing of a large downside move. Gold has seen no haven inflows, which seem to all be heading into US dollars and the US bond market. Gold has resistance at USD 1840.00, USD 1860.00, and USD 1880.00, the latter appearing an insurmountable obstacle for now. Support is at USD 1805.00 and then USD 1780.00 an ounce. Failure of the latter sets in motion a much deeper correction, potentially reaching USD 1700.00 an ounce. On the topside, I would need to see a couple of daily closes above USD 1900.00 to get excited about a reinvigorated rally. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Oil falls on EIA, gold pares gains - MarketPulseMarketPulse

US dollar climbs higher The US dollar staged another impressive rally overnight, this one much broader-based than the day before. with the dollar index unwinding much of the last week’s retreat in just one session. Notably, US yields actually eased overnight, particularly at the long end and it looks like currency markets were positioning for both recessions and haven inflows in UK bonds. The dollar index rose by 0.59% to 1.0510 overnight, easing to 105.01 in Asia. ​ Support remains at 1.0350 and 102.50. ​ With resistance at 105.00 now eroded, the index’s next resistance is at 1.0585. EUR/USD slumped by 0.77% to 1.0440 overnight on Eurozone recession fears, rising to 1.0450 in Asia. Resistance is well and truly in place at 1.0600, followed by 1.0650. The failure of 1.0500 and 1.0450 overnight bring the critical 1.0350 regions into focus again. Failure signals further losses to 1.0200 initially and potentially to parity in the weeks ahead. Sterling fell 0.50% to 1.2125 overnight, being unchanged in Asia. GBP/USD has initial resistance at 1.2300, 1.2360 and 1.2400, with support at 1.2175 and 1.2160. Failure of 1.2160 on a closing basis suggests a renewed move lower towards 1.1950. USD/JPY climbed again overnight, and given US yields eased lower, I can only assume risk aversion drove part of the rally. USD/JPY climbed 0.33% to 136.60 overnight, where it remains in Asia, seeing none of the slight US Dollar weakness in other parts of the currency space in Asia today. USD/JPY has support at 134.25 and 132.00, with resistance at 136.65 and 138.00. If the US yield curve is about to pivot to an inverse shape, the end of the USD/JPY rally could be in sight and a move above 140.00 could be a bridge too far. Asian currencies also buckled overnight, led by the Korean won, and Philippine peso, with USD/KRW and USD/PHP rising above 1300.00 and 55.000 respectively. The Indian rupee remains near record lows with USD/INR at 78.764 this morning. In contrast, the Chinese yuan remained unmoved thanks to offsetting moves in its fixing basket. Asian currencies have rallied somewhat this morning and the price action in USD/KRW, USD/INR, USD/THB, and USD/PHP hints there are a few central banks around today selling US dollars. Asian foreign currency reserves remain ample, but the region’s central banks will not be trying to draw lines in the sand, choosing their battles carefully. With risk aversion around recessionary forces finally spilling into the Asian currency space more broadly, further weakness into next week seems likely. ​ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. US dollar stages impressive rally - MarketPulseMarketPulse

Asian equities a real mixed bag of lollies today US markets took a breather overnight after tying themselves up in knots for the last week. The S&P 500 closed just 0.07% lower, the Nasdaq was almost unchanged, edging down 0.03%, while the Dow Jones rose by 0.27%. In Asia, US futures are mixed again. S&P 500 and Dow futures have slipped by 0.15%, while Nasdaq futures have gained 0.10%. Personal Income and Expenditure data, and month and quarter-end rebalancing flows are likely to make for a messy Wall Street session this evening. The inconclusive Wall Street close has left Asia to its own devices today, leading to a very messy mixed session so far, and month and quarter-end flows could be playing their part, along with local data releases. Weak industrial production data and rising covid infections in Tokyo see the Nikkei 225 down by 0.90% today. In South Korea, the Kospi has suffered from weak MoM Industrial Production data, falling by 0.60%. In mainland China, markets had reacted negatively to President Xi’s reiteration of covid-zero yesterday, but early selling was reversed after strong PMI data this morning. The Shanghai Composite has rallied by 1.15%, with the CSI 300 jumping 1.35% higher. Hong Kong’s Hang Seng is up just 0.50% in comparison. In regional markets, Singapore is down 0.40%, with Taipei slumping by 2.05%. Kuala Lumpur has risen by 0.55%, Jakarta by 0.35% and Bangkok by 0.15%. Manila has fallen by 0.40% after the BSP Governor raised the prospect of harsher rate hikes. China Iron ore futures are now down 7.20% as I write, and that seems to be weighing on Australian markets. The All Ordinaries and ASX 200 have fallen by 0.75%. European markets fell heavily overnight as a hawkish Lagarde and increasing recession fears eroded confidence. Nothing has happened overnight to materially change that outlook and they are set for another weak opening this afternoon. US markets will be a turkey shoot over US data and month and quarter-end rebalancing flows.   This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Asian markets mixed - MarketPulseMarketPulse

US equities struggled for direction overnight, with the S&P 500 and Nasdaq almost unchanged, while the Dow Jones eked out a small gain. The outcome is hardly surprising with Wall Street tying itself up in knots and whipsawing itself over the last week under the deluge of inputs from the geopolitical, central bank and data space. The emerging theme seems to be that higher-for-longer inflation will see central banks continuing to tighten economies into a recession, before having to reverse course again into 2023. Something seemingly hinted at by both Jerome Powell and Christine Lagarde at the ECB forum overnight.   US bond markets are certainly seeing it that way, with short-dated yields holding steady while yields in the longer part of the curve headed downwards once again. It might also be that longer-duration bonds are seeing haven inflows as investors give up on the histrionics of the equity market and lock in some semi-decent long-duration yields. US dollar rebounds Amongst all of this, the US dollar rallied overnight, a somewhat counterintuitive move given that longer-dated rate expectations are being tempered on recession fears. Notably, the greenback rallied not only versus the G-20 space, but it also did well versus the Asian currency space ex-China, and even USD/JPY continued its rally. That suggests to me that we are seeing a broader move to safety, benefiting both the US dollar and depressing US yields. Having said that, it does look like a few regional central banks are selling a few more US dollars into the market today to smooth the Asian FX selloff.   One caveat today though is we are at the month and quarter-end. We are likely to see some chunky rebalancing flows from institutional investors across multiple asset classes. That may distort price movements and throw up a few false positives in markets today.   With Wall Street sitting on the fence, Asia has been left to its own devices today with local data appearing to dominate price moves, especially in the equity space. China equities had a negative start today but have since bounced. China’s President Xi reiterated the government’s commitment to covid-zero yesterday, a risk I have been telegraphing constantly. However, both the official Manufacturing and Services PMIs have staged a handsome reopening bounce today. June Manufacturing PMI climbed to 50.5, while the Non-Manufacturing PMI leapt to 54.7 from 47.8 in May. The climb above 50 into expansionary territory has put a floor under mainland equity markets for now. Just remember, the virus only has to get lucky once.   South Korean data has also been pretty impressive. Construction YoY for May jumped by 8.20%, Industrial Production rose by 7.30%, and Manufacturing also rose by 7.30%. All were well above forecast. Business Confidence slipped to 83.0 though, suggesting clouds ahead, while Retail Sales YoY for May rose only 0.70%, with the MoM slipping by -0.10%. Overall, it suggests that demand remains robust for South Korean products internationally with the sub-sectors also broadly recovering, but the South Korean consumer continues to grapple with cost-of-living increases. A reopening by China should boost this data in the coming months and partly explains the Korean won unwinding some of its overnight losses today.   In contrast, Japanese data was a mixed bag. Industrial Production MoM in June slumped by 7.20%, but the YoY number fell by -2.80%, still better than May’s -4.90% tumble. Once again, China’s restrictions continued to impact the numbers but assuming they stay covid-zero, could provide a positive tailwind for Japan’s exporters and manufacturers in the quarter ahead.   It is early days yet, but if the pattern in US bond markets continues, i.e., a rotation to an inverse yield curve as a US recession and Fed rate cut in 2023 are priced in, and Japan’s modest recovery continues, I believe the end is in sight for the USD/JPY rally. The 140.00 to 145.00 zone should remain intact. I will be watching this closely over the coming weeks.   Elsewhere, the Philippine PPI for May rose by 6.90% YoY, above expectations. The peso has been one of the worst performers in the Asian FX space of late, partially due to the central bank’s reluctance to aggressively hike into surging inflation. The new head of the BSP appeared to concede on this point yesterday, suggesting harsher hikes could be on the way if currency weakness persists. He might not be the last one in the region to have to concede on this point. Malaysian and Indonesian inflation is benign and may be saved at the bell from accelerating if recessions in key export markets occur. India may be a different story and the rupee has also been struggling.   Australian equity markets are lower today, with the Australian and New Zealand dollars pummelled by negative sentiment overnight. The euro also had a torrid night after high German and Spanish inflation and a hawkish Lagarde. Although the Chinese PMI data should be a positive for Australian markets, I do note that Singapore’s iron ore futures on China contracts have gapped lower by 6.0% today. That could be a knock-on impact from President Xi’s covid-zero affirmation yesterday, but resource-heavy Australian markets don’t seem to like it.   In the crypto space, bitcoin is flirting with the USD 20,000.00 level once again as small exchange delays reopening to withdrawals, and credit concerns in the sector rise once again. Although the USD 20,000.00 level may have some psychological impact, I believe the 18th of June lows just ahead of USD 17.500.00 is the real level now. The charts have resistance at USD 22,000.00 but it really needs to regain USD 28,000.00 to move out of the danger zone. Failure of USD 17,500.00 signals another moves lower to around USD 12,500.00. In an industry that conjures up 17.0% returns out of nothing, this weekend’s trading session looms as potentially emotional.   This afternoon, German Retail Sales are released, as well as Import Prices. Retail Sales are expected to rebound with Import Prices remaining above 31.0% YoY. Yesterday’s lower inflation numbers were distorted lower by the government’s temporary energy subsidy so don’t be fooled, currency markets weren’t. The Retail Sales data has downside risks and could keep the pressure up on the euro. French inflation data and UK GDP Growth today could keep the bad news flowing.   The evening’s most closely watched data point will be May’s US Personal Spending and Personal Income, along with the Core PCE Price Index. May data almost seems like old news at the moment, but it is closely watched by the Fed. Income growth is expected to hold steady, while spending is expected to fall. That would give the lower Fed terminal rate club a reason to buy equities I suppose but there are plenty of combinations of the three data points that could drive direction either way. I’ll not second guess the data or the market’s reaction; all I know is that Wall Street is unlikely to have another inconclusive close like the one overnight. And don’t forget the month and quarter-end rebalancing flows. I will be away on holidays and shall return on Tuesday the 5th of July. Stay funky. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Local data releases dominate Asia - MarketPulseMarketPulse

Oil’s rally continues Oil’s march higher continued unhindered overnight, with Brent and WTI posting another set of impressive gains. A surprise drop by US API Crude Inventories by 3.8 million barrels helped the bullish momentum, with markets ignoring the rise in refined product stocks. Disruptions to Libyan and Ecuadorian production were supportive, but the Macron remarks yesterday around Saudi Arabia and the UAE’s limited production capacity seems to have been the main driver.   OPEC meets today and tomorrow, but the meeting is likely going to be just a rubber stamp exercise this month. More important will be tonight’s US official Crude Inventory data from the EIA, which is a double header release, including last week’s delayed release due to technical issues. With two weeks of data coming out, it will be a bit of a turkey shoot tonight and we can expect plenty of volatility around the release. I am not going to predict the outcome on this one, but I believe the oil price downside remains limited.   Brent crude rose by 2.40% to USD 118.15 overnight but has retreated by 1.30% to USD 116.70 a barrel in Asia today. WTI rose by 1.90% to USD 111.90 overnight, falling 0.90% to USD 111.00 a barrel in Asia. The price action seems to be in line with the general correction lower by the US dollar in Asia today. ​   Notably, Brent crude tested and held its rising longer-term support line, today at USD 108.00, and its 100-day moving average (DMA) last week. That is a technical development that should be respected. Brent crude has support at USD 115.75, and then USD 111.50. Resistance here is at USD 118.50, and then USD 120.00 a barrel.   WTI’s technical picture has improved markedly overnight after regaining its rising 2022 support line at USD 108.00 a barrel. It has resistance at USD 112.50 which clears the way for a retest of USD 116.00. Support is at USD 109.75 and then USD 108.00 a barrel.   Gold is sleepless in Singapore Gold remains the forgotten asset class, finishing 0.15% lower at USD 1820.00 overnight, before creeping up to USD 1821.00 an ounce in Asia today. A series of lower daily highs suggests that downside risks are increasing for gold prices, although it still lacks momentum to break out of the USD 1800 to USD 1900.00 range. Bring a good book until we see a large directional move by the US dollar.   Gold has resistance at USD 1840.00, USD 1860.00, and USD 1880.00, the latter appearing an insurmountable obstacle for now. Support is at USD 1805.00 and then USD 1780.00 an ounce. Failure of the latter sets in motion a much deeper correction, potentially reaching USD 1700.00 an ounce. On the topside, I would need to see a couple of daily closes above USD 1900.00 to get excited about a reinvigorated rally. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Oil marches higher, gold yawns - MarketPulseMarketPulse

US dollar rises as equities lose appeal The US dollar rallied overnight, with the dollar index unwinding much of the last week’s retreat in just one session. A slump by US equities sparked a rush to safety in the greenback, even as US yields were almost unchanged. The price action suggests that bounces in risk sentiment lack conviction at this stage. The dollar index rose by 0.50% to 1.0450 overnight, easing to 104.41 in Asia. ​ Support remains at 1.0350 and 102.50, with resistance at 105.00 and 1.0570. EUR/USD fell by 0.575 to 1.0503 overnight, rising to 1.0525 in Asia with US equity futures. Resistance at 1.0600 and 1.0650 has once again proved insurmountable and failure of 1.0500 sets up a test of support at 1.0450 and 1.0400. The single currency still looks rangebound overall and volatility will be driven by comments from Lagarde and Powell this afternoon. Sterling fell 0.67% to 1.2185 overnight, rising to 1.2200 in Asia. It has shown surprisingly little response to Scotland’s court challenge to hold another separation referendum, with the fall overnight mostly due to US dollar strength. GBP/USD has initial resistance at 1.2300, 1.2360 and 1.2400, with support at 1.2175 and 1.2160. Failure of 1.2160 on a closing basis suggests a renewed move lower towards 1.1950. USD/JPY is back above 136.00 this morning, a notable signal of further yen weakness ahead after US yields were unmoved overnight. USD/JPY climbed 0.50% to 136.15 overnight, where it remains in Asia, seeing none of the slight US dollar weakness in other parts of the currency space in Asia today. USD/JPY has support at 134.25 and 132.00, with resistance at 136.65 and 138.00. Asian currencies were surprisingly resilient overnight, hardly moving as the US dollar strengthened in the DM space. The exception was the Indian rupee, with USD/INR climbing 0.75% to 78.922 overnight, another record low. US dollar long-covering in Asia has pushed USD/INR lower to 78.676 today but it remains well above its previous day’s close at 78.338. An easing of inward quarantine restrictions by China yesterday seems to be providing some support to regional currencies, as it is equities, and central banks have likely been smoothing via US dollar sales. If the US dollar rally continues this week, Asian currencies are likely to start buckling again. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. US dollar stages impressive rally - MarketPulseMarketPulse

Asian equities resilient after Wall Street retreat Wall Street retreated sharply overnight as the FOMO gnomes decided that weak consumer confidence numbers and forward expectation sub-indices were perhaps not good for stock prices after all. The S&P 500 fell by 2.01%, the Nasdaq slumped by 2.98%, while the Dow Jones slipped by 1.58%. In Asia, the usual dip-buyers have appeared, lifting Nasdaq futures by 0.50%, and S&P and Dow futures by 0.20%. Asian markets are mostly steady today, except for the Nasdaq correlated, retail-dominated ones such as Japan, South Korea, and Australia. China’s shortening of hotel quarantine requirements to a week announced yesterday is proving a supportive factor in the region today, although I can’t imagine it will result in a sharp increase in inbound visitors. Overall, although Asian markets are fairly much flat to lower, the falls are nowhere near reflecting the scale of the retreat by Wall Street overnight. Japan’s Nikkei 225 has fallen by 1.05%, with South Korea’s Kospi slumping by 1.77%, the latter perhaps complicated by Bank of Korea rate hike fears. Mainland China markets have retreated more modestly, with the Shanghai Composite and CSI 300 both 0.50% lower. Hong Kong’s Hang Seng, meanwhile, has fallen by 1.0%. In regional markets, Singapore, Kuala Lumpur and Manila have edged 0.15% higher, with Jakarta unchanged. Taipei has fallen by 0.80%. Australian markets have coat-tailed Wall Street south, the All Ordinaries falling by 1.25%, while the ASX 200 has lost 1.05%. European markets appear set for a soft opening this afternoon after the Wall Street tumble overnight, although a move sensible response from Asia may take the edge off the negativity. Scandinavian markets could outperform once again after Turkey’s President Erdogan dropped his objections to NATO membership for Sweden and Finland overnight. Higher than expected German inflation could increase hiking fears by the ECB and weigh on equities, but realistically, it will all come down to the comments this afternoon by Ms Lagarde and Mr Powell at the ECB summit. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Asian markets steady despite Wall Street decline - MarketPulseMarketPulse

Readers should probably stop watching US stock markets for economic wisdom, as the price action overnight confirmed that part of the financial world has as little future insight as anywhere else. Last week, US equity markets rallied on the back of the arcane logic that a US recession would mean a lower terminal Fed funds rates and thus, was bullish for stocks, especially bombed-out tech stocks. That premise was boosted by weak Michigan Consumer Sentiment data last week.   Overnight, even weaker US Conference Board Consumer Confidence data provoked the opposite reaction, with US stocks plummeting. The nervous outlook was helped along by the Richmond Fed Manufacturing Index plummeting to -19 overnight, joining the ugly numbers from the Dallas Fed the night before. Both the Richmond and Dallas Services Indexes also fell heavily overnight. Equity investors continue to conjure up excuses to buy the dip, and I’m sure China cutting hotel quarantine to one week yesterday will elicit a similar reaction over there. Just remember, the virus only has to only get lucky once in China’s covid-zero world.   If the equity market’s hope versus reality keeps revealing itself to be a paper tiger, currency markets appear to be something resembling the adult in the room. With the stock market rallies last week boosting risk sentiment across asset classes, the US dollar traced out a modest retreat as Fed hiking zeal was downgraded. As equity markets decided that a recession isn’t good for stocks, after all, the US dollar index managed to unwind almost all of last week’s retreat in just one session. USD/JPY is back above 136.00 this morning, and the Indian rupee took a pasting to a new all-time low. Notably, US yields barely moved overnight so the yen and INR have no excuse on that front. It seems that markets are far more comfortable rushing into the apparent safety of the US dollar at the first sign of trouble, and I suspect that it was only a few Asian central banks’ offers around that stopped the rest of USD/Asia from rallying. G-7 eyes Russian oil cap The G7 Summit continues to be very busy with most attention focused on a mechanism to cap the price of Russian oil on international markets. Reuters is reporting that talks with China and India, about participating in the measures were “positive.” I’m still unsure about how such a mechanism would work, it seems to involve ramping up insurance premiums for seaborne cargoes so high that it drops the net price Russia would receive. It would need to be high enough to keep Russia pumping, but low enough to entice China and India to sign on, and not open arbitrage opportunities that would upset the other OPEC+ members. Game theory supercomputers will be burning the midnight oil, me thinks. I’m not sure how that plays with Russia and China’s “unlimited” partnership mind you?   For you and I, it would mean very little price-wise, and that’s certainly what the oil market thinks as well, as Brent and WTI futures rose once again overnight. The sell-off early last week looks increasingly like a culling of speculative positioning and I won’t buy a material fall in oil prices until the backwardation in the Brent and WTI futures curves shrinks markedly. That didn’t happen last week. OPEC and OPEC+ meet today and tomorrow, but we should expect a rubber stamp. Given that OPEC+ can’t even meet its present targets, and hasn’t for a long time, I expect no bearish surprises.   Today has been a mixed bag for Asia data-wise. South Korean Consumer Confidence fell sharply to 96.4, although local markets are likely more focused on reports that the Bank of Korea may enact a large interest rate hike if this month’s inflation data is above 6.0%. In contrast, Japan’s Retail Sales climbed to 3.60% YoY in May, with April’s number revised up slightly to 3.10%. The gradual reopening of the economy still seems to be playing out well domestically. However, Bank of Japan Governor Kuroda stated today that the increase in Core CPI above the targeted 2.0% was almost entirely due to the rise in energy prices. With that in mind, hold off on taking on the BOJ in the JGB market I say.   Elsewhere, Australian consumers are refusing to go quietly. Despite sharp cost-of-living increases, Australian Retail Sales unexpectedly rose by 0.90% this morning for May, the same as last month’s number. I suspect this might be as good as it gets though, and with the Australian dollar barely reacting to the data, the markets seem to think so as well.   Vietnam Industrial Production has outperformed today, and if Thailand Industrial Production does the same, as expected, this afternoon, that bodes well for the Asian ex-China PMI releases on Friday, although China’s PMI releases tomorrow and Friday have downside risks. Equity markets are holding up fairly well in Asia today, so either Asia is getting fed up following Wall Street’s histrionics, or the easing of inbound covid quarantine restrictions announced by China yesterday, is providing support.   This afternoon sees a slew of European business and consumer confidence data releases, as well as German Inflation for June. But all eyes and ears will be on the ECB summit in Portugal. ECB Chair Christine Lagarde will be speaking again after hawkish remarks yesterday. The main event will be Federal Reserve Chair, Jerome Powell, who is also speaking at the summit. As ever, markets will be dissecting his every word, looking for hints in this case, that the Fed is wavering on its hawkish bias as recessionary fears rise. They are likely to be disappointed, but it should be good for some intraday vol. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Dumb and dumber - MarketPulseMarketPulse

Oil prices rally on supply concerns Oil prices rallied once again overnight as a Reuters story over Saudi Arabia and UAE capacity constraints, as well as disruption of supplies from Libya and Ecuador overrode US recession concerns. Another lesson is that markets ignore crude futures backwardation at their peril when trying to pick a top in oil prices. Brents’s backwardation actually widened during the sell-off early last week.   Brent crude rose by 2.60% to USD 115.40 overnight, gaining another 0.90% to USD 116.300 a barrel in Asia today. WTI rose by 2.30% to USD 110.00 overnight, rallying another 0.80% higher to USD 110.70 a barrel in Asia. The rhetoric around declaring victory in Shanghai over omicron seems to be prompting Asian traders to continue buying this morning.   Notably, Brent crude tested and held its rising longer-term support line, today at USD 108.00, in the early part of last week. Nor was its 100-day moving average (DMA) tested either. That is a technical development that should be respected. Brent crude has support at USD 111.35, its 100-DMA at USD 109.40, and the six-month support line at USD 108.00. It is testing resistance here at USD 116.50, and a daily close above here would clear the way for a retest of USD 120.00 a barrel.   WTI’s technical picture has improved markedly overnight, regaining its rising 2022 support line today at USD 107.50 a barrel and initial support. A close above USD 111.25 this evening clears the way for a larger rally to USD 116.00 a barrel.   Gold fades overnight Gold attempted to rally overnight as the G-7 announced a ban on Russian gold imports. That was a rubber stamp exercise though, and although gold climbed intraday, it faded ahead of USD 1840.00 an ounce. It then proceeded to give back all those gains, finishing 0.25% lower at USD 1823.00 an ounce. Although US yields rose slightly, the US dollar was generally slightly weaker overnight, making the price action by gold even more disappointing. It appears that the downside is increasingly gold’s path of least resistance.   Gold has resistance at USD 1840.00, USD 1860.00, and USD 1880.00, the latter appearing an insurmountable obstacle for now. Support is at USD 1805.00 and then USD 1780.00 an ounce. Failure of the latter sets in motion a much deeper correction, potentially reaching USD 1700.00 an ounce. On the topside, I would need to see a couple of daily closes above USD 1900.00 to get excited about a reinvigorated rally. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Oil gains ground, gold fades - MarketPulseMarketPulse

US dollar shows muted reaction to US releases A rise in US yields overnight boosted the USD/JPY slightly, but elsewhere, the greenback continued its modest retreat versus the G-20 space as currency markets showed very little reaction to the US data. The dollar index eased 0.17% lower to 103.95, where it remains in Asia. The charts do suggest the downward correction still has more to run, with a failure of 103.50 signalling a deeper correction. The dollar index has support at 1.0350 and 102.50, with resistance at 105.00 and 1.0570. Elsewhere, currency markets are comatose in Asia, with both DM and Asian currencies almost unchanged from their overnight closes. EUR/USD rose by 0.25% to 1.0580 overnight, where it remains in Asia. It continues showing resilience as the Russian natural gas exports to Europe situation deteriorates, but initial resistance at 1.0600 and 1.0650 remains challenging. Support is at 1.0450 and 1.0400. Sterling was unchanged at 1.2275 overnight once again, unmoved in Asia. GBP/USD has initial resistance at 1.2360 and 1.2400, with support at 1.2200, 1.2160, and then 1.1950. USD/JPY edged 0.25% higher to 135.45 overnight as US yields moved slightly higher. It has fallen slightly to 135.30 in Asia. USD/JPY has support at 134.25 and 132.00, with resistance at 136.65 and 138.00. The short-term direction remains at the mercy of US yields, although a fall by the US 10-year through 3.0% could provoke an unwinding of USD/JPY longs. Asian currencies continued to trade sideways overnight, mostly booking some small gains, but overall, remaining near recent lows versus the US dollar. That suggests that the rise in investor sentiment in equity markets is yet to spill out into the broader EM complex. The Chinese yuan has had zero reaction once again to another large liquidity injection by the PBOC this morning. Markets are clearly anticipating the PBOC draining all the liquidity via the repo next week after the quarter-end has passed. Reserves data suggests that Asian central banks have been busy selling US dollars recently to smooth out currency volatility, but it looks like any consistent rally is going to need a big US dollar move lower. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. US dollar mixed - MarketPulseMarketPulse

Asian markets edge lower A surprisingly robust US Durable Goods number prompted a few doubts around the lower terminal Fed Funds rate so buy equities strategy overnight. The soft US pending home sales and Dallas Fed manufacturing data may also have sparked recession isn’t good for equities thoughts. With sentiment wavering, Wall Street lightened up some recent longs, sending the equity markets to a negative close. The S&P 500 eased 0.30% lower, the Nasdaq fell by 0.83%, and the Dow Jones fell by 0.20%. US futures are holding steady in Asia this morning.   Across Asia itself, markets appear content to follow Wall Street’s lead, as they have done recently, with markets locally moving lower in response, although not markedly so. Japan’s Nikkei 225 is unchanged, with South Korea’s Kospi down just 0.10%. In mainland China, the Shanghai Composite and CSI 300 are 0.05% lower. In Hong Kong, the Nasdaq-following Hang Seng is down 0.75%, retracing some of yesterday’s rally.   In regional markets, Singapore is 0.20% lower, with Taipei slipping by 0.75%, reacting to an impending 8.40% increase in electricity prices announced yesterday. Kuala Lumpur is 0.10% lower, Jakarta had fallen by 0.60%, Bangkok is 0.15% lower, and Manila has eased just 0.10%.   Australian markets are bucking the trend by rising today. Although most sectors are lower, resources have rallied, perhaps on statements from Shanghai yesterday declaring victory over its latest Covid-19 outbreak. Less restrictive China equals they will buy more resources I suppose, until their next outbreak. The ASX 200 is 0.50% higher, while the All Ordinaries is 0.40% higher.   Europe had a mixed session overnight, showing modest gains with Scandinavian markets outperforming, Stockholm and Helsinki rising by over 3.0%. I am assuming that is because the leaders of Turkey, Sweden and Finland are meeting to thrash out their differences and open NATO membership for the latter two. With Asia in wait-and-see mode today and oil prices rising sharply overnight, Europe is probably going to start its session on the back foot. Month and quarter-end rebalancing flows will potentially distort the price action in both the US and Europe markets this afternoon and for the next couple of days. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Asian equities ease with Wall Street - MarketPulseMarketPulse

Markets stewed in their own juices overnight leaving equities and currencies and precious metals trading in noisy ranges, but ultimately finishing not too far from where they started. The big mover overnight was oil, which had another impressive rally, this time helped along by a Reuters story where France’s President Macron was overheard telling US President Biden at the G7 meeting, that a call to the UAE had informed him that both they and Saudi Arabia were maxed out on production capacity. That is probably the last thing the world needs to hear right now, given that Saudi Arabia and the UAE are regarded as the world’s two available swing producers at the moment. The UAE released an official response stating that they were indeed near-maximum capacity, although this was crouched as within the context of its allowable OPEC+ quota. If true, President Biden’s upcoming cap-in-hand trip to Saudi Arabia may have lost one of its raisons d’etre. The pain doesn’t stop there for energy markets. Along with reduced Russian gas flows to Europe, Libya also announced it may declare a force majeure on over half of its daily production shortly. Ecuador said over the weekend that it may cease production entirely due to domestic cost-of-living protests, something we’re going to see a lot more of frontier/emerging markets this year sadly. By my rough calculations, Ecuador and Libya will add up to around 1.1 million barrels per day. Not a deal-breaker normally, but much more so in these abnormal times. The reality that energy price inflation isn’t going anywhere anytime soon may partially explain the modest retreat by equities in the last 24 hours. US Durable Goods outperforms US data was mixed overnight. US Durable Goods surprised to the upside, rising by 0.70% MoM in May, well above the 0.10% rise forecast. Even the numbers ex-defence and transport (read Boeing), exceeded forecasts easily. In contrast, US Pending Home Sales came in worse at -13.60% YoY for May, while the June Dallas Fed Manufacturing Index slumped to -17.70. With US and German yields also rising overnight, the rally in oil prices, and the Durable Goods, in particular, forced the FOMO gnomes of Wall Street to reassess the lower terminal Fed Funds excuse to buy equities. We could still see the equity bounce continue, though. Markets are in a schizophrenic frame of mind day-to-day, but underlyingly, are still desperately keen to buy this medium-term dip. Additionally, it is the month and quarter-end this week, and that will prompt no small amount of portfolio rebalancing by institutional investors globally. We should expect the back-and-forth chop-fest to continue this week in the equity space, and possibly, the currency space. In Asia today, the calendar is as empty as I have seen it for a while. Japan’s 2-year JGB auction and Malaysian PPI are unlikely to move the needle. ECB President Lagarde and Chief Economist Lane both speak this afternoon, and we can expect their comments to be dissected for clues on both monetary policy direction and their anti-fragmentation tool to manage bond spreads between members. Fed Chairman Jerome Powell also speaks tomorrow at an ECB event, along with Ms Lagarde, which could up the ante on mid-week volatility. In the US, most attention is likely to be on Wholesale Inventories and the Case-Shiller House Price Indexes. Markets are becoming nervous that corporate America may end up with lots of inventory they can’t sell, and the nerves around the US housing market are well known. Given the poor Dallas Fed Manufacturing Index overnight, the Richmond Fed Manufacturing Index may garner more attention than usual as well, especially if it is weak. Overall, it looks like Asia will settle for a sideways session, with equities content to mirror Wall Street’s direction, and currencies, precious metals and cryptos staying comatose. A lack of data in Asia today leaves markets vulnerable to headline bombs on the news ticker. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Maxed out - MarketPulseMarketPulse

Oil prices bounce Oil prices rose on Friday and Brent crude and WTI has unwound most of early last week’s losses. The futures curves remain in very firm backwardation and in the real world, supplies are as tight as ever with increasing risks around Russia and European natural gas exports. As I said last week, we are unlikely to see Brent crude below USD 100.00 in this environment, whatever noise we are hearing from other asset classes. OPEC should be a non-event this week, having increased production slightly last month. A potential full loss of Ecuadorian production is having no impact on markets today.   Brent crude rose by 2.55% to USD 112.40 on Friday, gaining 0.75% to USD 113.30 a barrel in Asia. WTI rose by 3.45% to USD 107.50 on Friday, edging 0.15% higher to USD 107.70 a barrel in Asia.   Notably, Brent crude tested and held its rising longer-term support line, today at USD 107.70, in the early part of last week. It did not reach the 100-day moving average DMA either. That is a technical development that should be respected and talk emerging from the G-7 about a cap on Russian oil prices, is likely to be more supportive of Brent crude over WTI.   WTI’s technical picture continues to look the more vulnerable. Having closed below its rising 2022 support line and its 100-DMA last week, the rally on Friday has only lifted it back to this region today. The support line is at USD 107.10, with the 100-DMA at 105.85 a barrel. Although the worst may be over for the WTI sell-off as well, we can’t rule out more corrections lower this week. It has resistance at USD 110.00 a barrel.   Gold rises on Russian gold ban Gold rose with general investor sentiment on Friday, as the US dollar eased. It ground out a modest 0.25% gain to USD 1827.50 an ounce, adding another 0.45% to USD 1835.50 an ounce in Asia today. The gains today have been driven by a G-7 announcement of a formal ban on Russian gold imports. In reality, this is a mere rubber-stamping exercise of unofficial policies already in place and is unlikely to meaningfully change the outlook for gold. ​ It remains adrift in the month-long USD 1800.00 to USD 1880.00 range.   Gold has resistance at USD 1860.00 and USD 1880.00, the latter appearing an insurmountable obstacle for now. Support is at  USD 1805.00 and then USD 1780.00 an ounce. Failure of the latter sets in motion a much deeper correction, potentially reaching USD 1700.00 an ounce. On the topside, I would need to see a couple of daily closes above USD 1900.00 to get excited about a reinvigorated rally. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Oil recovers, gold inches higher - MarketPulseMarketPulse

Markets price in earlier end to rate moves The US dollar moved slightly lower on Friday as investor confidence ended the week on a high as the street priced in an earlier end to interest rate hikes, and US yields held steady. The dollar index continued grinding lower, falling 0.27% to 104.12, where it remains in another dead Asian session. The dollar index has support at 1.0350 and 102.50, with resistance now distant at 1.0570. EUR/USD rose by 0.33% to 1.055 on Friday, where it remains in Asia, as investor sentiment continued rebounding. It continues showing resilience as the Russian natural gas exports to Europe situation deteriorates, but initial resistance at 1.0600 and 1.0650 remains challenging. Support is at 1.0450 and 1.0400. Sterling was unchanged at 1.2275 on Friday, not moving in Asia. GBP/USD has initial resistance at 1.2360 and 1.2400, with support at 1.2200, 1.2160, and then 1.1950. USD/JPY finished sideways at 135.25 on Friday as US bond yields remained steady. It has fallen 0.40% to 134.80 in Asia and if rising investor sentiment pushes US 10-year yields back below 3.0%, a sharp move lower to 132.00 cannot be ruled out. ​ USD/JPY has support at 134.25 and 132.00, with resistance at 136.65 and 138.00. AUD/USD and NZD/USD booked decent gains on Friday as the stock market rally spilt over into the Australasians. However, today, both have moved sharply lower slightly to 0.6920 and 0.6305, and it looks like some decent-sized AUD/JPY and NZD/JPY selling has gone through the market. The outlook remains negative for AUD/USD while it holds under 0.7000. Support is at 0.6850. Asian currencies traded sideways on Friday, booking some small gains, but overall, remaining near recent lows versus the US dollar. That suggests that the rise in investor sentiment in equity markets is yet to spill out into the broader EM complex. The weakest of the pack has been the Philippine peso with USD/PHP rising above 55.00 this morning to 55.12. The inauguration of the new Marcos President this week and a dovish rate hike last week are likely the contributing factors. The Chinese yuan has had zero reaction to the liquidity injection via the reverse repo this morning, or weekend news that a yuan liquidity pool has been created at the BIS. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. US dollar edges lower with US yields - MarketPulseMarketPulse

Asian equities rally with Wall Street Wall Street had an impressive session on Friday, rallying powerfully once again as markets priced in a US recession, meaning US interest rate hikes would end sooner than expected. That perverse logic saw the S&P 500 jump 3.07%, the Nasdaq rally 3.34% higher, while the Dow Jones gained 2.70%. Much the same pattern is playing out in US futures in Asia. S&P 500 have added 0.35%, Nasdaq futures have jumped by 0.85%, while Dow futures have gained 0.10% as the FOMO gnomes of Wall Street go hard on growth over value.   That sees Asian stock markets coat-tailing New York higher today. The Nikkei 225 has risen by 1.20%, with South Korea’s Kospi rallying by 1.80%. Mainland China’s Shanghai Composite is 0.90% higher, and the CSI 300 has risen by 1.25%. China stocks benefiting additionally from a large CNY 90 billion liquidity injection ahead of the quarter-end vis the 7-day reverse repo. The ever-effervescent Hong Kong market has seen the Hang Seng making an outsized 3.30% gain today.   Regionally, Singapore is up by 0.70%, the tech-centric Taipei by 1.90%, Kuala Lumpur by 0.25%, and Jakarta has fallen by 0.75%. Bangkok has added 0.75%, and Manila is down slightly by 0.15%. Australian markets are slavishly following the S&P 500 and Nasdaq as well, very much their want of late. The All Ordinaries have rallied by 1.90%, with the ASX 200 rallying by 1.95%.   The G-7 meeting probably has potentially a much greater bearing on Europe right now than other areas, thanks to the Ukraine/Russia war. European markets piled into the buy-side with the US on Friday after a very mixed week, and with the G-7 springing no surprises thus far, we can expect a positive opening from European markets this afternoon. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Asian markets follow Wall Street higher - MarketPulseMarketPulse

Markets continue to price that the worst is over for US bond markets and that the end of Fed rate hikes will occur sooner as the economy in the US, and elsewhere, slow sharply in H2 2022. US stock markets had a banner week based on that theory, which continued Friday with Wall Street posting another day of sharp gains. Equity markets rally on recession expectations It is not just US yields that have retreated sharply over the last week, oil retreated, and this month, industrial metals have taken a beating as well. I’ll not argue with the slow-down predictions although they’re not alone. China has already had one, Europe and the UK are going through one, New Zealand is going to have one, and from Ecuador to Peru, Sri Lanka, and plenty of points in between, emerging markets are feeling some serious pain from inflation and the stagflation shock and disruption to staple supplies like food and energy.   The backwardation in oil futures markets has widened, not lessened, suggesting that despite least weeks’ price falls, energy supplies are as tight as ever. Europe is suffering from reduced Russian natural gas flows; Ecuadorean oil production is expected to go completely offline this week due to cost-of-living protests, and I’m guessing in the US, Honda Civics (a hybrid of course) are this season’s new automotive black as American’s face the reality of owning and running a 10-litre pickup truck. And don’t get me started on the downstream impacts of high natural gas and oil prices on the manufacturing of fertilisers, exacerbated by Russian and Belarus sanctions.   We are already seeing winters of discontent sweeping the UK and Europe and places elsewhere as workers strike over pay increases. None of this adds up to a reason to be piling into equity markets in my mind, because even if bond yields from early hikers start topping out with the US, the real world where companies sell their products isn’t looking too special for H2.   Still, one of the wisest sayings an investor can ever listen to is from John Maynard Keynes. He said that “the market can stay irrational longer than you can stay solvent.” Nary a truer word has been said and as such one should always respect the short-term momentum is that’s the space you play in, and it seems that many do in this gamified investment day and age. The stock market rally could run for another couple of weeks, US yields and the dollar could continue falling, and even USD/JPY might make it back to 130.00 if US 10-years fall back below 3.0%.   Helping the bounce in sentiment on Friday were US New Homes surprising to the upside, rising by 11% in April. The consensus seems to be that this is an outlier in a downward trend though. On the negative side, Michigan Consumer Sentiment for June fell to a record low of 50.0, with the only tenuous positive being that Inflation Expectations held steady at 5.30% and didn’t move higher.   This week, we have the Fed’s Powell, ECB’s Lagarde, and BOE’s Bailey, all speaking on Wednesday at an economic policy panel discussion at the ECB junket, I mean forum in Portugal. We may well get some tasty snippets to generate short-term vol. Otherwise, data is heavily skewed towards the end of the week. The highlights will be China and US PMI readings released over Thursday and Friday, German Retail Sales on Thursday, and US Personal Income and Expenditure, also on Thursday.   Barring a chock fall in US Personal Income and Expenditure, I can’t see any of that moving the dial on the global risk sentiment rebound. It is clear the market wants to buy the dip, and it’s best to let them get it out of their system. Next week’s JOLTs Job-Opening data and the US Non-Farm Payrolls will provide a sterner test. Tonight’s US Durable Goods may also give the FOMO gnomes an early stress test.   In Asia this week, the ongoing G-7 meeting could be the most relevant one in a decade with Ukraine and Russia at the centre of the agenda. China has already released Industrial Profits this morning, which fell by 6.50% YoY in May, a slight improvement over April. The official and Caixin PMIs at the end of the week are what matter though. Australian Retail Sales on Wednesday are always good for some intra-day AUD vol, but both AUD and NZD are slaves to global sentiment perception, and Australian stock markets are just cost-tailing Wall Street right now. Friday also sees a slew of Manufacturing PMIs released from across Asia, which are usually a decent short-term directional play for local equity markets.   South Korea releases Industrial Production, Manufacturing Production and Retail Sales on Thursday. Retail Sales will remain under pressure as the cost of living increases bite. Industrial Production and Manufacturing should hold steady, but weaker data may see renewed pressure on the won and other Asian currencies on slowdown fears.   Japan has a packed calendar. Retail Sales and Consumer Confidence should continue to improve as the reopening momentum domestically continues. A weaker yen should help Thursday’s Industrial Production data, but Friday’s Tankan Large Manufacturing Index has downside risks. Arguably the most closely watched item will be Friday’s Tokyo CPI data where June Inflation YoY could breach above 2.0%. It’s a strange old world when markets get excited about 2.0% inflation anywhere but especially in Japan. Although I believe after over two decades, the Bank of Japan has no intention of altering monetary policy, a CPI reading above 2.0% could see temporary pressure on 10-year JGBs and the USD/JPY. That’s all it’s likely to be, temporary.   Finally, it’s Monday so I suppose I have to talk about cryptos for a little bit in their role as a “tradeable asset,” instead of an “investable asset.” Thanks to the rebound in US stock markets and the fall in US yields, bitcoin looks to have traced out a low of around USD 18,000.00 for now. From a technical perspective, a rise above USD 22,000.00 looks possible, extending onwards to USD 24,000.00. However, in the medium-term, bitcoin remains in the danger zone, and only a rise above USD 28,000.00 negates. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. The risk rebound continues - MarketPulseMarketPulse

Disconnect or Rebound? Jonny Hart speaks to APAC Senior Market Analyst Jeffrey Halley about news impacting the market and the week ahead. It’s another blockbuster episode today, and we are covering a LOT of ground. Firstly, the stock markets are rallying impressively despite recession expectations rising. Is this a dead cat bounce? A bear market rally? Or is the worst over? Jeff discusses the reasons behind the stock market rally and what’s happening in Asia, then ponders its sustainability. Then it’s over to oil markets which have recovered after the sell-off early last week. Jeff takes us through the nuances of oil futures curves and why backwardation matters! We discuss oil’s recovery in the context of the global economy and what lies ahead for black gold. As an add-on, the discussion moves to the G-7 meeting and the commodities space, where base metals have fallen heavily in June. Then it’s Jeff’s old favourite, Bitcoin. We discuss the crypto space and Bitcoins recovery. Jeff then delves into the Bitcoin chart and what it’s suggesting could happen this week. (hint: for once, Jeff isn’t a mega-bear) Finally, it’s back to planet earth and the main data points for the week ahead for markets, led by the global PMI releases at the end of the week.   This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Market Insights Podcast (Episode 346) - MarketPulseMarketPulse

Oil prices are noisy but unchanged Oil prices had another noisy overnight session, trading in wide intraday ranges. Ultimately, as the dust settled, both Brent and WTI finished almost unchanged for the second day in a row. The unexpected postponement of the official US Crude Inventory data set due to technical issues likely played a major role in the neutral close, as the data set is one of the most closely monitored in the global energy sphere.   Brent crude fell 0.30% to USD 109.65 overnight, gaining 0.40% to USD 110.10 a barrel in Asia. WTI fell 0.45% to USD 103.95 overnight, before rising 0.55% to USD 104.55 a barrel in Asia. The net result is that oil prices are almost unchanged on a 24-hour basis.   Looking at the respective futures curves, both Brent and WTI are still heavily in backwardation, suggesting that prompt oil supplies remain as tight as ever, even as prices across the curves fall. Increasing recession fears appear to be prompting a culling of heavy speculative long positioning in both contracts, even as in the real world, energy tightness is as real as ever.   The technical picture is interesting. Brent crude has tested its 100-day moving average and the 2022 support line at USD 107.30, but managed to bounce back to USD 110.00 a barrel. A daily close under USD 107.30 implies a deeper move potentially reaching USD 100.00 initially.   WTI’s technical picture is much softer, having closed below its 2022 support line at USD 106.30, and its 100-DMA, today at USD 105.50 a barrel. Failure of its weekly low at USD 101.50 could trigger a capitulation by speculative longs that moves WTI under USD 100.00 a barrel, although I suspect a lot of the damage has already been done.   Gold falls overnight Gold bugs once again appear to have lost patience, as gold fell by 0.82% to USD 1822.50 overnight, edging slightly higher to USD 1824.00 an ounce in Asia. Probably most concerning was that gold fell as the US dollar remained mostly unchanged and US yields had another big move lower. Even cryptos managed to move slightly higher overnight. With that in mind, it appears that gold is going into the end of the week looking vulnerable, although I am not betting against the USD 1800.00 to USD 1870.00 range trade continuing.   Gold has resistance at USD 1860.00 and USD 1880.00, the latter appearing an insurmountable obstacle for now. Support is at USD 1805.00 and then USD 1780.00 an ounce. Failure of the latter sets in motion a much deeper correction, potentially reaching USD 1700.00 an ounce. On the topside, I would need to see a couple of daily closes above USD 1900.00 to get excited about a reinvigorated rally. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Oil almost unchanged, gold falls - MarketPulseMarketPulse

Currency markets continue their sideways trading Currency markets remained steady once again overnight and seem to be finding the back-and-forth histrionics in the stock and bond markets a bit tiresome. Currency markets seem to be adopting a step out of the noise, wait-and-see approach into the end of the week. ​ Thanks to a rise by the yen and a fall by the euro cancelling each other out, the dollar index remains almost unchanged on a 24-hour basis at 104.29 today. The dollar index has support at 1.0350 with resistance now distant at 1.0570.   EUR/USD fell by 0.45% to 1.0520, creeping up to 1.0530 in slow Asian trading. It is showing surprising resilience as the Russian natural gas exports to Europe situation deteriorates. Because of this, risks have shifted to the downside for the single currency. It has initial resistance at 1.0600, with challenging resistance at 1.0650. Support is at 1.0450 and 1.0400. Sterling probed the 1.2200 downside once again overnight but is almost unchanged over the past 48 hours at 1.2275 in Asia. GBP/USD has initial resistance at 1.2360 and 1.2400, with support at 1.2200, 1.2160, and then 1.1950.   USD/JPY mechanically fell by 0.93% to 134.95 overnight in lockstep with lower US yields. In Asia, it has eased to 134.70. If bond yields ease again tonight, a deeper correction by USD/JPY is possible, potentially targeting the 132.00 regions. ​ USD/JPY has support at 134.25 and 132.00, with resistance at 136.65 and 138.00.   AUD/USD and NZD/USD were mostly unmoved overnight. Overnight, AUD/USD has eased by around 0.40% overnight to 0.6900, while NZD/USD is unmoved at 0.6295 thanks to a local holiday. Both are finishing the week near their lows and risk more losses in New York time if sentiment remains negative. Support is at 0.6850 and 0.6200 respectively.   Asian currencies finished almost unchanged overnight, but with USD/Asia remaining near recent highs. That reflects fears that a US recession will have an immediate knock-on impact on Asian growth and notably, lower US yields and a stock market recovery this week have given no support to local currencies. Looking at the price action overnight and today, I wouldn’t be at all surprised if quite a few of the region’s central banks are quietly on the offer, capping the USD/Asia upside. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Dollar trading sideways - MarketPulseMarketPulse

Asian equities are content to follow Wall Street’s rally Wall Street booked another session of decent overnight gains as somewhat counteractively, lower US yields on recession fears prompted more equity buying. The S&P 500 rose by 0.95%, the Nasdaq jumped 1.62% higher, while the Dow Jones gained 0.66%. The rally continues unabated in Asia, with US futures booking more gains in Asia, suggesting the overnight rally in the OTC markets still has legs. S&P 500 futures are 0.50% higher, the Nasdaq is loving lower US yields and Nasdaq futures are 1.0% higher in Asia. Dow futures have added a respectable 0.30%. Asian markets are content to follow the leader, with the overnight rally on Wall Street lifting Asian markets higher into the end of the week. Japan’s Nikkei 225 is 0.95% higher, while South Korea’s Kospi has leapt 1.70% higher thanks to Nasdaq’s outperformance. In mainland China, the Shanghai Composite has climbed by 0.45%, with the CSI 300 gaining 0.55%. Hong Kong’s Hang Seng has jumped by 1.50%. In regional markets, Singapore is 0.35% higher, with Taipei rising by 0.85%. Kuala Lumpur has gained 0.45%, Jakarta 0.80%, Bangkok 0.55%, and Manila 1.30% after a dovish rate hike yesterday. Australian markets are showing no ill effects from the resource price retreat. The All Ordinaries has risen by 0.55%, and the ASX 200 by 0.35%. European markets took fright at the German activation of its phase two emergency energy plan and reducing Russian gas flows is bad news for Europe as a whole. As a result of this, it is unlikely that European markets will find any reason for cheer into the weekend. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Asian markets higher as Wall Street climbs - MarketPulseMarketPulse

Markets pricing in a US recession The second day of Jerome Powell’s semi-annual testimony on Capitol Hill passed without incident, in contrast with the frenzy on Wednesday. He reiterated an unconditional commitment to fight inflation by the Federal Reserve, but markets instead continued to price in a recession, stopping rate hikes in their tracks much sooner. US yields fell once again, equities firmed once again, cryptos crept higher, while currency markets did almost nothing unless we are talking about USD/JPY.   Assuming that the Fed will have to change course sooner than late 2023 isn’t an unreasonable assumption. The Fed and a procession of central banks around the world got inflation completely wrong and have been scrambling to reverse the mistake. Given their track record, assuming they are going to be wrong the other way is completely reasonable in that context.   The commodity space is also pricing in the recession outcome. Copper prices plummeted overnight, and that has been the case recently with most industrial metals. Even soft commodity prices have fallen, and I’ve even seen a few headlines here in Indonesia about small palm oil farmers’ incomes taking a hit. Oil has taken a bath this week as well, and the increase in natural gas inventories overnight from the EIA data saw US natural gas prices fall as well.   Still, I remain unconvinced that inflation will magically just stop in its tracks just because Mr Powell mentioned the word recession. Oil futures curves on both Brent crude and WTI remain in backwardation, which tells us prompt supplies are tight. The curves moved down in totality but didn’t really change shape. We are getting plenty of headlines from around the world about potential blackouts as energy supplies and power generation capacity remain under stress. Russian oil and gas production will decrease as well as they run out of Western parts to maintain production. Most significantly, Germany activated phase two of its emergency energy plan overnight, as Russian gas flows continued slowing. If Europe is heading to international markets at short notice to hunt for supplies, energy prices aren’t going to fall much further.   The moves this week could still turn out to be the result of a financial market genetically pre-programmed to buy dips in equity and bond prices, thanks to two decades of central bank largesse. It could also be a bear market correction as the stampede for the exit door got overdone in the short term, leading to a short-squeeze. Maybe next week’s PMIs will give markets a better clue, or perhaps the July Non-Farm Payrolls and JOLTS data. It would be foolish to price out geopolitical stresses related to Ukraine/Russia conflict either, particularly in relation to European energy or Ukrainian food exports. The FOMC meeting on the 26-27th of July may as well be next year at present; we can expect a lot more volatility between now and then.   Yesterday, the central banks of Indonesia and the Philippines sprung no surprises. BI kept policy rates unchanged thanks to a benign inflation landscape for now. BSP hiked by 0.25% as expected. The Indonesian rupiah eased overnight, but overall volatility in the Asian FX space was flatlined.   Today has a Friday feel to it with an extremely light data calendar in Asia. Japan Inflation is already out, with the headline for May unchanged at 2.50%, and core unchanged at 2.1% YoY. That is the second month above the BOJ’s 2.0% target for headline inflation. But before we all get excited, that’s two months after trying to achieve it for over 20 years. Nobody should expect it to prompt a sudden change of direction in monetary policy, especially as much of the increase is due to higher imported PPI inflation, and a weaker yen.   Malaysian Inflation is expected to remain benign at 2.60% YoY, while Singapore Industrial Production should remain steady at 6.0% YoY. Neither will move the needle in volatility terms today in Asia. China’s Final Current Account for Q1 this afternoon is already old news. This afternoon’s UK Retail Sales and German IFO Business Climate survey both have downside risks. And given the escalation of the energy situation in Germany, both Euro and Sterling could go into the weekend looking shaky once again. US New Home Sales and Michigan Consumer Sentiment also have downside risks. Weaker than expected numbers do not provide a fertile ground for stock market exuberance, lower interest rates or not. If the data is disappointing, US equities could unwind some of this week’s gains. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Markets are betting the Fed has it wrong again - MarketPulseMarketPulse

Oil prices edge lower in Asia Oil prices tumbled in Asia yesterday morning but managed to recover some of their losses throughout the rest of the day. Nevertheless, oil still recorded a substantial loss for the session. Brent crude finished 4.0% lower at USD 110.00 a barrel, while WTI finished 4.75% lower at USD 104.40 a barrel, with the Brent premium over WTI widening substantially. In Asia, oil prices have started moving lower once again, Brent crude and WTI losing 1.10% to USD 108.90 and USD 103.20 a barrel respectively. Looking at the respective futures curves, both Brent and WTI are still heavily in backwardation, suggesting that prompt oil supplies remain as tight as ever, even as prices across the curves fall. Increasing recession fears appear to be prompting a culling of heavy speculative long positioning in both contracts, even as in the real world, energy tightness is as real as ever. WTI’s underperformance can be laid at Powell’s overnight comments, President Biden calling for a suspension of federal fuel taxes, and the surprise jump to 5.6 million barrels by the overnight US API Crude Inventories. Still, even the US API number didn’t provoke a heavy negative response. Part of this could be that the US issue isn’t enough crude, it is enough crude refining capacity, which is running at an unsustainable 96.0% across the country already. If the official US Crude Inventory number jumps like the API one tonight, WTI may come under more sustained selling pressure than Brent crude, though. The technical picture is interesting. Brent crude tested its 100-day moving average at USD 108.45, and the 2022 support line at USD 107.30 overnight but managed to bounce back to USD 110.00 a barrel. It may only be a reprieve though as oil prices start moving lower in Asia once again. A daily close under USD 107.30 implies a deeper move potentially reaching USD 100.00 initially. WTI’s technical picture is much softer, having closed below its 2022 support line at USD 106.30, and its 100-DMA at USD 105.50 a barrel overnight. Failure of its overnight low at USD 101.50 could trigger a capitulation by speculative longs that moves WTI under USD 100.00 a barrel, although I suspect a lot of the damage has already been done. How well oil performs tonight likely relies on how many times Jerome Powell says recession, and what the headline and gasoline stocks numbers are from the US Crude Inventories data set. I still can’t get past the heavy backwardation in both Brent and WTI futures contracts, which imply tight supplies in physical markets, something that makes complete sense when you look at its drivers around the world. Although I have never subscribed to the panic-mongering predictions of USD 150.00 and USD 200.00 a barrel of oil, I remain sceptical as to whether this is a structural turn in oil prices or just a culling of massive speculative positioning. As such, I believe for now, that oil will behave much like inflation, topping out as the year goes on, but not really falling by that much. A USD 100.00 to USD 120.00 a barrel medium-term range seems as sensible an outlook as ever. Gold’s range continues There isn’t much to say with gold, a slightly softer US dollar saw gold edge higher by 0.26% to USD 1838.00, while Asia has seen it drift 0.26% lower to USD 1833.00 an ounce, leaving gold in its usual nil-all draw. Admittedly, gold did trade in a USD 22.00 range overnight, but it is telling that it failed ahead of USD 1850.00 and finished almost unchanged once again. Until we get a material directional move by the US dollar, it seems unlikely that gold will sail out of the equatorial doldrums. Gold has resistance at USD 1860.00 and USD 1880.00, the latter appearing an insurmountable obstacle for now. Support is at USD 1805.00 and then USD 1780.00 an ounce. Failure of the latter sets in motion a much deeper correction, potentially reaching USD 1700.00 an ounce. On the topside, I would need to see a couple of daily closes above USD 1900.00 to get excited about a reinvigorated rally. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Oil falls, gold continues range-trade - MarketPulseMarketPulse

Currency markets continue their sideways trading With the notable exception of the Japanese yen once again, currency markets in the DM space continued to range trade. The overnight move lower by US yields after Powell’s recession remarks saw the US dollar most falling versus the G-20 space, the notable exception being the Australasian sentiment currencies. The dollar index finished 0.23% lower at 104.18, edging lower to 104.14 in Asia. The dollar index has support at 1.0350 with resistance now distant at 1.0570.   EUR/USD rose just 0.32% to 1.0570 overnight, an intraday rally fading ahead of 1.0600 once again. It is unchanged in slow Asian trading. It has initial resistance at 1.0600, with challenging resistance at 1.0650. Support is at 1.0450 and 1.0400. Sterling is almost unchanged over the past 24 hours at 1.2250 in Asia. GBP/USD has initial resistance at 1.2360 and 1.2400, with support at 1.2200 and then 1.1950.   USD/JPY fell 0.32% to 136.22 overnight as US yields moved lower. In Asia, the selloff continues, USD/JPY falling another 0.53% to 135.50 today, helped along by a 0.91% yield at the just-announced 20-year JGB auction. I don’t rule out some nasty downside corrections, but they are likely to be short-lived in the current environment. Only a sharp fall in US yields is likely to stop the USD/JPY rally. Notably, a move by US 10-years back below 3.0%. USD/JPY has support at 135.00 and 134.50, with resistance at 136.65 and 138.00.   AUD/USD and NZD/USD both fell on US recession comments overnight, and both remain default ways to express sentiment by global currency traders. Overnight, AUD/USD fell 0.67% to 0.6925, losing another 0.57% to 0.6885 in Asia. NZD/USD slumped 0.72% to 0.6288 yesterday, losing another 0.50% to 0.6255 this morning. While supports at 0.6850 and 0.6200 hold respectively, further gains to 0.7150 and 0.6450 cannot be ruled out, but that prospect is looking increasingly remote as recession noise rises globally. The risks have skewed towards another sizeable move lower.   Asian currencies took no solace from US weakness in the G-20 space overnight, with their export-driven economies having a far greater correlation to slowdowns in major export markets. i.e., the US and Europe. The THB, SGD, IDR, PHP, and KRW were the worst performers, with USD/KRW notably, climbing over 1300.00 overnight, trading at 1301.70 this morning. That may raise the ire of the Bank of Korea and I expect to see them a likely a few other regional central banks selling a few US dollars this week. In particular, the won seems to be becoming a regional substitute, like the Aussie and kiwi, for investors to express risk sentiment. With another round of Powell testimony tonight, any more retreats by US yields are going to be offset by recession comments by the big man, leaving Asian currencies under pressure. Hikes by BSP and BI, with hawkish outlooks, could relieve near-term pressures on the PHP and IDR. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. US dollar continues range-trading - MarketPulseMarketPulse

Asian markets directionless after Powell testimony Wall Street had an inconclusive session overnight with the major indexes closing barely changed after being sandwiched by Powell’s recession comments on one side and falling US yields on the other. The S&P 500 eased 0.13% lower, the Nasdaq slipped just 0.15%, while the Dow Jones was down just 0.18%. With a slow news day post-Powell, US index futures have continued their modest pullback. S&P 500 futures are 0.25% lower, Nasdaq futures are unchanged, and Dow futures are 0.25% lower.   With little to pick from the bones of the overnight session, Asian markets have gone their own way today. Japan’s Nikkei 225 is unchanged, but both South Korea and Taipei are sharply lower again and seem to be becoming a proxy in Asia for the health of the US economy, having a high beta to that region. The Kospi is down by 0.55%, while Taipei is sharply lower by 1.10%.   In mainland China, sentiment appears to have been boosted by hopes that Ant Financial will soon be given the regulatory all-clear, and President Xi reiterating his commitment to this year’s growth targets. That sees the Shanghai Composite and CSI 300 adding 0.55% today, while Hong Kong’s Hang Seng is 0.95% higher.   In regional markets, Singapore has gained 0.55%, while Kuala Lumpur is just 0.10% higher. Jakarta has retreated by 0.75% ahead of today’s BI policy meeting, with Manila losing 1.10% ahead of the BSP policy meeting. Bangkok is just 0.10% higher. Australian markets have booked modest gains after a steady Wall Street session. The All Ordinaries are 0.05% higher, while the ASX 200 has risen by 0.30%.   As expected, the music stopped for European equities overnight, which endured a torrid session. A lack of direction from the US and Asian markets is likely to spur a soft opening once again from Europe as its energy security, inflation and growth problems reassert themselves. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Asian equities are very mixed today - MarketPulseMarketPulse

Markets looking for direction after Powell testimony Federal Reserve Chairman Jerome Powell’s semi-annual testimony on Capitol Hill was the centre of attention overnight. Mr Powell finally dispensed with soft landings, describing them as challenging, and instead said that a recession is “certainly a possibility.” That should have been enough to spark a somewhat counterintuitive risk sentiment rally as Fed hiking expectations were dialled back, but instead, we got a mixed response as Mr Powell asserted, quite forcefully, that soaring inflation had to be brought back to earth.   That left markets in somewhat of a no man’s land. US equities were clearly dying for any excuse to hit the buy button, such is their genetically pre-programmed disposition. But while Mr Powell was talking recession possibilities and being “nimble” from FOMC meeting to FOMC meeting, the reality that a recession probably isn’t great for stocks tempered animal spirits. US yields flopped overnight on the recession words, notably at the long end, which is a bit of a concern, given the market’s infatuation with inverse yield curves. The fall in yields was enough to stop the rot in equities, leaving them roughly unchanged, but the US dollar fell slightly versus the euro and yen.   The Bank of Japan would have been breathing a sigh of relief as lower US yields took USD/JPY back below 136.00, but in the Asian EM space, regional currencies generally weakened. Notably the Korean won, with a high beta to the health of the US economy, had a tough day at the office. Notably, the Australian and New Zealand dollar, both global sentiment indicators like the won, both finished the day lower as well.   Gold, of course, did nothing, while in the crypto space, bitcoin had another almost unchanged day, hovering once again, just above USD 20,000.00. Depending on your point of view, bitcoin is tracing out a major bottom in prices before the new dawn, or it is consolidating a dead cat bounce before heading lower. To help readers understand my point of view, here is a story from Thailand overnight. https://www.nationthailand.com/in-focus/40016806 Basically a chap in Bangkok robbed a gold store to cover his crypto losses. I’m humming “Ironic” by Alanis Morissette.   We have another day of Powell testimony on the Hill this evening, so stand by for more intraday choppiness and analysis paralysis of his every word. In Asia, we have a busy day ahead. South Korean PPI YoY for May held steady at 9.70%, although the MoM number fell to 0.50%. Australian Manufacturing and Services Flash PMIs for June were steady at 55.8 and 52.6 respectively. Japan Jibun Bank June Flash Manufacturing PMI edged lower to 52.7, but the Services PMI rose from 52.6 to 54.2, quite the surprise. I am putting that down to a gradual reopening of borders and government stimulus.   Taiwan’s Industrial Production and Retail Sales come out late today, at 1600SGT, and will likely be lost in the noise of the S&P Manufacturing and Services PMI releases from France, Germany, and the Eurozone. Both numbers should hold steady, or increase slightly from April, due to the knock-on effects of China’s covid-zero reopening. Singapore’s Core and headline Inflation for May are expected to increase slightly to 5.50% and 5.5% YoY respectively. That won’t be enough to tip the MAS’ hand for an out-of-sequence tightening announcement, especially with recession fears rising among key export markets.   Of most interest will be the monetary policy decisions out of the Philippines and Indonesia today. Both the Philippines Peso and Indonesian rupiah have been under the cosh lately. The Bangko Sentral ng Pilipinas (BSP) has already indicated a 0.25% hike, with the incoming governor stating he isn’t a fan of large hikes. Bank Indonesia (BI) is murkier. Core inflation remains comfortably within the BI’s target range, but with USD/IDR approaching 15,000.00, BI may spring a surprise on markets and hike by 0.25%. Both central banks will likely be forced to hike at each policy meeting going forward now to offset currency pressures.   European and US S&P PMIs aside, the calendar is pretty light this evening. Powell’s testimony aside, Initial Jobless Claims could be interesting if the weekly number jumps sharply higher tonight. That will reinforce recession fears although frankly, I would need to see the monthly JOLTS number plummet from 11.50 jobs to confirm that. US API Crude Inventories leapt higher to 5.60 million barrels overnight, quite a surprise. More surprising is that oil didn’t move lower because of it, having plummeted in Asia. If tonight’s official US Crude Inventory data shows a huge increase as well, instead of the forecast modest drawdown, we could see some more short-term pressure on prices, especially WTI. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Powell uses the “R-word” - MarketPulseMarketPulse

Oil prices slump in Asia Oil prices probed the topside intraday overnight but gave back those gains with Brent crude almost unchanged at USD 114.60 a barrel, and WTI edging 0.55% lower to USD 109.65 a barrel. In Asia, both contracts have slumped, with WTI notably, falling through longer-term support. Brent crude has fallen 3.40% to USD 110.75, and WTI has fallen by 3.80% to USD 105.50 a barrel. There is a distinct lack of drivers behind this move, and certainly no headlines to justify it. I surmise that President Biden’s expected announcement of a temporary suspension of Federal fuel taxes this evening has prompted the selling, and I do note the US-centric WTI contract is leading the charge lower. From here, a more likely outcome is a widening of the Brent premium over WTI. Brent is the internationally traded benchmark and in the real world, supplies remain as tight as ever. ​ Today’s falls have bought my six-month support lines back into focus. ​ WTI has fallen through its six-month support line at USD 106.30 a barrel and is attacking the 100-day moving average (DMA) at USD 105.40. A daily close below USD 105.40 would be a very bearish technical development for WTI. Brent crude’s 100-DMA is at USD 108.40 today, with the six-month support line at USD 107.30 a barrel. Failure of the latter would also be a powerful bearish technical signal, although Brent crude remains well clear of both levels. Given the weight of speculative long-positioning in WTI especially, it looks the more vulnerable to the Biden gasoline put. However, I remain of the opinion that the contortions of the futures market are not representative of the real-world situation. As such we shouldn’t get our hopes up for sub-USD 100 dollar oil just yet. Gold range continues Although gold’s interminable range-trading continued overnight, the falls of the past three sessions hint that any upward momentum for the yellow metal is doing an Elvis and is leaving the building. Gold has been grinding lower, even as US yields and the US dollar trade sideways. Overnight, gold edged 0.30% lower to USD 1833.00 an ounce, falling another 0.33% in Asia to USD 1827.00 an ounce as US dollar strength returns. A bout of US dollar strength post-Powell testimony could finally set up a meaningful test of the bottom of the recent range around USD 1800.00 an ounce. Gold has resistance at USD 1860.00 and USD 1880.00, the latter appearing an insurmountable obstacle for now. Support is at USD 1805.00 and then USD 1780.00 an ounce. Failure of the latter sets in motion a much deeper correction, potentially reaching USD 1700.00 an ounce. On the topside, I would need to see a couple of daily closes above USD 1900.00 to get excited about a reinvigorated rally. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Oil pares gains, gold range trades - MarketPulseMarketPulse

US dollar steady ahead of Powell testimony With the notable exception of the Japanese yen once again, currency markets refused to buy into the snake oil promises of the equity markets. The US dollar did push lower intraday across the board but recovered as US yields held firm. The dollar index finished almost unchanged at 104.42, edging higher to 104.60 in Asia, as equities sink. ​ The dollar index has support at 1.0350 with resistance now distant at 1.0570.   EUR/USD rose just 0.22% to 1.0535 overnight, an intraday rally fading ahead of 1.0600 once again. In Asia, risk sentiment has soured, sending the single currency 0.22% lower to 1.0510, unwinding the overnight gains. It has initial resistance at 1.0600, with challenging resistance at 1.0650. Support is at 1.0450 and 1.0400. Sterling rose just 0.25% to 1.2280 overnight, unwinding that move and falling 0.30% to 1.2240 in Asia. GBP/USD has initial resistance at 1.2360 and 1.2400, with support at 1.2200 and then 1.1950.   USD/JPY was the big mover in the DM space overnight, rocketing 1.15% higher to 136.65, a 24-year high. In Asia, it has fallen 0.35% to 136.20 after some belligerent comments about currency moves by the Bank of Japan. The Bank of Japan minutes though reveal the committee is comfortable with monetary policy settings, and although not happy with the yen vol, is not hitting the panic button at all. US yields firmed overnight, boosting USD/JPY, and although I don’t rule out some nasty downside corrections, they are likely to be short-lived in the current environment. Only a sharp, and I mean sharp, fall in US yields is likely to stop the USD/JPY rally. ​ USD/JPY has support at 135.00 and 134.50, with resistance at 136.65 and 138.00.   AUD/USD and NZD/USD booked modest gains overnight but have slumped today as risk sentiment has soured. AUD/USD has fallen 0.60% to 0.6930, and NZD/USD has slumped 0.95% to 0.6275. While supports at 0.6850 and 0.6200 hold respectively, further gains to 0.7150 and 0.6450 cannot be ruled out, but both down under dollars remain as tied to swings in investor sentiment as ever.   Asian currencies saw no sentiment-driven gains overnight, and in fact, most post small losses versus the US dollar. Another warning sign that the overnight Wall Street rally was a solitary rear-guard action. With the US dollar strengthening today, Asian currencies are in retreat. USD/KRW, USD/CNH, USD/CNY, USD/INR and USD/PHP have all gained around 0.40% this morning. A hawkish Jerome Powell this evening, with reinforcement from the other Fed speakers could prelude more Asian FX weakness, and I wouldn’t be surprised to see the Bank of Korea, Bank Indonesia and the BSP Manila all intervening tomorrow. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Currency markets continue sideway trading - MarketPulseMarketPulse

Asian equities ignore the overnight Wall Street rally Wall Street rallied broadly overnight, with the three main indexes having banner days as the call of buy-the-dip proved irresistible after a weekend in the Hamptons. The S&P 500 rallied by 2.45%, the Nasdaq leapt 2.51% higher, and the Dow Jones booked a healthy 2.19% gain. Unfortunately, US index futures in Asia are telling a story of fast-money locking in short-term overnight gains as all three head south. S&P 500 and Dow futures have sunk by 0.85%, while Nasdaq futures have fallen by 0.70%.   Rather surprisingly, Asian markets, even the Wall Street-following-slaves in Japan and Australia, have completely ignored the overnight rally, with most of Asia flat to lower. The abrupt about-turn by US futures today could be behind it when combined with a lack of conviction about the overnight rally’s staying power.   Japan’s Nikkei 225 is 0.20% lower today, while the South Korean Kospi has slumped by 2.0%, perhaps over monkeypox fears. Mainland China’s Shanghai Composite is down 0.30%, with the CSI 300 falling by 0.45%. In Hong Kong, the Hang Seng has retreated by 1.30%.   Across regional markets, Singapore has eased 0.40% lower, while Taipei has slumped by 2.0%. It is interesting that the Caligula’s of semi-conductor manufacturing, Taiwan, and South Korea, are the day’s worst performers. Perhaps it is a proxy play for a US and Europe recession? Kuala Lumpur has fallen 0.70%, Jakarta by 0.30%, Bangkok by 0.60%, and Manila by 0.40%. In Australia, the ASX 200 is 0.10% lower, with the All Ordinaries down by 0.20%.   Asia-Pacific markets, ex Taipei and Seoul, appear content to adopt a wait-and-see approach this week, letting the dust settle on the Powell testimony. That caution is likely to finally nip the European equity rally in the bud as well, which has been ignoring the natural gas crisis completely and at its peril. European equities are likely to open lower this after in line with Asia. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Asia markets drop ahead of Powell testimony - MarketPulseMarketPulse

Gone in 60 Seconds was a movie released in 2000 starring Nicholas Cage who is charged with stealing 50 high-end cars in three days. It is actually a remake of my preferred 1974 version, where the “hero” is set a much more reasonable target of stealing 48 cars in five days, but I guess that is productivity progress for you. The premise is that from start to finish, one must break into the car and be driving it off (preferably in a cloud of tyre smoke), within 60 seconds, thus avoiding the long arm of the law.   Gone in 60 seconds is what the equity market is looking like today, with the outsized overnight rally on Wall Street, disappearing in a cloud of smoke this morning, with no real reason why. Although the S&P 500, Nasdaq and Dow Jones all finished well over 3.0% higher overnight, US index futures have headed south this morning, and Asian equities completely ignored Wall Street’s overnight rally for a change.   The term “bear market rally” does come to mind, and given that currency markets didn’t move overnight, and US yields actually rose, it does seem as if Wall Street came back to work with a post-holiday glow, especially as equities globally did quite well over the US long weekend. On top of that US existing home sales continued to ease, maybe the FOMO gnomes of Wall Street felt it meant less Fed hiking? It seems that markets just can’t shake off fears of intensive central bank tightening and recession nerves.   It’s another slow day for data internationally, leaving markets to stew in their recessionary juices and react to headlines. UK Inflation is released at 1400 SGT, with the headline YoY for May expected to rise to 9.10%. A Bank of England member did come out on the hawkish side of the fence, even if it meant a recession. That will be of little solace to the pound, which held steady overnight. Britain is in the throes of a winter of discontent over the cost of living, with a huge rail strike disrupting the country this week. Anyone wondering why stagflation is fait accompli for central banks need only look at Britain. Do nothing and expect protests on the streets, tighten policy and cause a recession.   With that in mind, all eyes will be on Fed Chairman Jerome Powell tonight, who has the unenviable task of semi-annual testimony on Capitol Hill tonight (he is also speaking tomorrow). Markets will be standing by to dissect every word the poor man utters for clues on the direction of monetary policy. The FOMO gnomes of Wall Street will be desperately looking for signs he is blinking on tightening so that they can rush back into their buy-the-dip happy place.   On the side-lines, a few things are happening in Asia today. Oil has slumped by 3.50% although I cannot see any notable reason for it. Maybe some large positions are being shopped, or perhaps it is a reaction to expectations that US President Biden will announce a suspension of the Federal fuel tax tonight. That’s about 19 cents a gallon, making it drop in the ocean for gasoline prices. Maybe 3.50% of oil futures prices is equivalent to that?   In the equity space, South Korea Kospi is getting an outsized beating today. The Kospi is down just over 2.0% at the moment, rather a surprise after the successful test of a rocket to launch satellites yesterday. Perhaps markets believe it can also be loaded with high explosives and pointed north? More likely it seems, are reports of two monkeypox cases in South Korea. The pandemic has left markets frazzled about viruses. I welcome any input from readers more connected or cleverer than I (the latter being a low bar).   We should also be paying attention to Europe right now, most especially the energy space. Russian natural gas flows have slumped with each side blaming the other. Countries across Europe are activating emergency energy plans, including reactivating coal-fired power plants. Even the greens are finally admitting that a clean energy transition is incompatible with the short-term goals of a war-time economy.  If Russian gas continues to fall, we can pencil in a European recession if they hold their nerve with Vladimir. The euro is likely to make its way towards parity shortly thereafter. A recession in Europe will be another headwind for growth globally and give the ECB a few more stagflation headaches.   Following Mr Powell, we also have the Fed’s Barkin, Evans and Harker speaking this evening. Barkin was particularly hawkish on the wires overnight, which made the Wall Street rally even more surprising. We also have a 20-year bond auction and the bid-to-cover ratio will be interesting. If all four are aligned as the four riders of the monetary policy apocalypse, yesterday’s Wall Street equity rally looks more and more like gone in 60 seconds. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Gone in 60 seconds - MarketPulseMarketPulse

Oil prices start reversing the Friday slump As I outlined above, oil futures have started reversing the Friday price slump as speculative capitulation collides with the reality of tight energy markets in the real world. Brent crude held USD 112.00 overnight, finishing 0.92% higher at USD 114.05 a barrel. It has added another 0.85% to USD 115.15 a barrel in Asian trading today. WTI held USD 108.50 overnight, finishing 0.20% higher at USD 110.05 a barrel. It has jumped 1.20% higher to USD 111.50 a barrel in Asian trading.   Friday’s falls have bought my six-month support lines back into focus. On Brent crude, that is at USD 107.00 a barrel today, just below its 100-day moving average (DMA) at USD 107.95. Ahead of this, it has support at USD 112.00, with resistance at USD 116.00 a barrel. WTI’s six-month support line is at USD 106.25 a barrel, just ahead of its 100-DMA at 105.25. It has interim support at USD 108.50, and resistance at USD 112.50 a barrel.   Of the two, WTI looks the more vulnerable, having fallen further and closed closer to its multi-month support zone. If the US cuts federal fuel taxes this week, or US housing data is very soft, that could be enough to tip the scales lower. It is hard to see either contract moving lower than USD 100.00 a barrel given the state of the physical market. From a technical perspective, I would like to see one of either contract tracing out a couple of daily closes below the longer-term support lines and the 100-DMAs, before reassessing my longer-term bullish outlook.   Gold range continues It was another wax-on, wax-off day for gold overnight thanks to US markets being closed. It edged 0.11% lower to USD 1839.00 an ounce. In Asia, it has gained slightly by 0.12% to USD 1840.60 an ounce as comatose trading conditions continue.   Despite the noise of the past week, it remains anchored in the middle of its one-month range. The overnight price action shows that the inverse correlation to the US dollar is as strong as ever.   Gold has resistance at USD 1860.00 and USD 1880.00, the latter appearing an insurmountable obstacle for now. Support is at USD 1805.00 and then USD 1780.00 an ounce. Failure of the latter sets in motion a much deeper correction, while I would need to see a couple of daily closes above USD 1900.00 to get excited about the upside. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Oil moves higher, gold range-trades - MarketPulseMarketPulse

Currency markets trade sideways over the US holiday Not a lot has changed in currency markets overnight despite some decent intraday ranges. The US holiday and a slow news reel ensured that currency traders took the option of easing into the week, awaiting the US return this evening. The dollar index edged 0.16% to 104.48 overnight, easing another 0.14% to 104.34 in Asia. thanks mostly to a weak yen. The dollar index has support at 1.0350 with resistance now distant at 1.0570. EUR/USD rose just 0.17% to 1.0511 overnight, adding another 10 pips to 1.0525 in Asia. It has initial resistance at 1.0600, with challenging resistance at 1.0650. Support is at 1.0450 and 1.0400 now although I note that EUR/USD has based twice at 1.0350. That leaves the door open slightly to a corrective recovery this week. Sterling rose just 0.27% to 1.2248 overnight, edging 0.20% higher to 1.2270 in Asia. ​ GBP/USD has initial resistance at 1.2360 and 1.2400, with support at 1.2200 and then 1.1950. USD/JPY is holding steady at 135.00 today, almost unchanged for the past 24 hours. It is likely awaiting the reopening of the OTC US bond market this evening. It once again failed ahead of 135.45 overnight and the 135.45/60 region is shaping up as decent resistance now. ​ Unless US yields move higher again this week, the odds of a USD/JPY correction lower are rising. USD/JPY has support at 134.50 and then 132.20. AUD/USD and NZD/USD have booked modest gains to 0.6975 and 0.6345 over the last 24 hours, with trading volumes muted, but a tentative rise in sentiment proving supportive to both. A US holiday has dampened volumes but both Australasians have traced out bottoming patterns on the charts. As long as 0.6850 and 0.6200 hold respectively, further gains to 0.7150 and 0.6450 cannot be ruled out. Asian currencies are barely changed overnight as regional markets await the return of the US later today. Noises from officials in Seoul and Tokyo about currency speculation are probably limiting US dollar gains for now. Two notable exceptions are the Indonesian rupiah and Philippine peso, with weakened sharply by around 0.65% to USD 14,825.00 and USD 54.10 overnight. It is no coincidence that both have monetary policy meetings this week and both are reluctant rate hikers, as they prioritise the pandemic recovery. More selling pressure this week could force their hand on Thursday, but if both hold policy unchanged, could see more waves of selling into the end of the week. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. US dollar steady after US holiday - MarketPulseMarketPulse

Asian markets regain confidence US futures moved higher in Asia yesterday and continued gaining through European time as a lack of really negative headlines allowed the buy-the-dippers to dip their toes in the market. That also helped European equities sage a decent recovery as well, with markets ignoring the shock result in the French parliamentary elections. S&P, Nasdaq and Dow futures rose around 1.0% overnight, and all three have added another 0.55% this morning.   With US index futures maintaining their gains into today’s session, some confidence has returned to Asian markets, which are mostly higher today. The speculative FOMO herd has sent the Nikkei 225 1.90% higher, with South Korea’s Kospi adding 0.45%. In mainland China, both the Shanghai Composite and CSI lost ground early doors, after suspiciously artificial gains yesterday. Those losses have once again reversed, with the Shanghai Composite now 0.05% higher, and the CSI 300 edging 0.15% higher. Hong Kong’s Hang Seng has jumped by 1.30%, helped perhaps by signals from Evergrande of a timetable for debt repayments and relisting of its shares.   In other markets, Singapore has climbed by 0.75%, with Taipei jumping 1.85% higher, Kuala Lumpur and Jakarta have gained 0.45%, Bangkok 0.25%, but Manila has fallen by 0.45%. Australian markets have wasted no time in reversing yesterday’s losses, thanks to firm US futures. The ASX 200 and All Ordinaries are 1.45% higher today.   Assuming the news ticker stays quiet, and with little data out this afternoon, European markets should continue recouping some recent losses, and as long as the US housing data holds steady, I can see Wall Street maintaining its recent gains as well. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Asian equities move higher - MarketPulseMarketPulse

With the US on holiday yesterday, activity was muted overnight. Currency, precious metal, and crypto markets traded sideways, while equities used a slow news night to stage a modest recovery, led by European equities. The modest equity market recovery continues in Asia, thanks to US index futures grinding higher since the early morning opening yesterday in Asia. Energy markets have continued unwinding the Friday capitulation at a steady pace this week. Reduced Russian natural gas flows are supporting European prices, with a number of countries looking to reactivate coal-fired power plants to make up potential energy shortfalls. Chinese energy demand is hitting record highs in the north of the country thanks to a heat wave. Reuters is reporting that Iran is preparing to step up uranium enrichment, and US Treasury Secretary Yellen is circulating a plan to put a price cap on Russian oil to deprive them of revenues. Taken in totality, the physical market is as tight as ever, and thus, the speculative capitulation in futures markets probably shouldn’t be taken as a picture of the reality on the ground in the real world. Iran’s measures, if correct, likely mean we won’t be seeing a return of Iranian crude to greater world markets anytime soon either. The bottom line seems to be that until we see physical demand destruction, oil and other energy markets are as tight as ever. In Asia today, South Korean 20-day exports for June fell unexpectedly by 3.40% YoY. Most of that though will be down to the truckers’ strike this month, and a recovery should occur in July. The Bank of Korea put out a statement saying that “CPI would likely remain over 5.0% for the time being.” The BoK seems to be priming markets for a 50bps hike in July and a couple more hikes shortly thereafter. Some concern around the currency is clearly evident as they warned they would take action over “herd-like” behaviour. Translating as “if you all keep buying USD/KRW, we’ll intervene.” They won’t be the only Asian central bank with that problem this year. RBA signals another 50bps hike The Reserve Bank of Australia Minutes were released this morning. The minutes signalled potentially another 50bps hike next month followed by a series of 25bps hikes for the rest of the year. They also mentioned that the RBA had lost some credibility in how it exited its yield control policy. They shouldn’t feel too bad about this. There are plenty of other central banks with eggs on their face, and their trans-Tasman neighbours, the Reserve Bank of New Zealand, have put on a veritable Muppet Show with monetary policy and will make the RBA look good, no matter what. That is about it for data releases today in both Asia and Europe, leaving markets to continue quietly reversing Friday’s price moves until the US walks in the door, or we get a headline bomb. The Fed’s Barkin speaks this evening, but most eyes will be on US Existing Home Sales for May. There is downside risk to the 5.40 million forecasts with stresses in the US housing market evident for some time now as mortgage rates rose precipitously. I’m not sure what the reaction will be to a bad number. Theoretically, the gnomes of Wall Street will price in less Fed tightening and send US yields lower and equities higher and buy risk sentiment currencies. But I can’t see how a slowing US housing market is a positive environment for equities going forward either. I think I’ll sit this one out and watch from the sidelines. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. A quiet day in Asia - MarketPulseMarketPulse

Oil slumps on recession fears Oil prices plummeted on Friday as increasing recession fears after soft US Manufacturing and Industrial Production data saw a mess sell-off in futures markets. Brent crude fell by 5.0% to USD 113.15 a barrel, but WTI plummeted by 6.0% to USD 110.00 a barrel. In Asia, Brent has edged 0.25% lower to USD 112.85, while WTI has fallen by 0.75% to USD 109.20 a barrel. Looking at the price action, I am undecided whether Friday’s capitulation is the start of a repricing of oil lower as the world economy slows dramatically in the months ahead, or whether it was a capitulation of extended speculative long positioning in the futures markets. Chinese Customs reported record oil imports for May this morning, suggesting demand remains as strong as ever. That remains so around the world, and the squeeze on refined products like diesel and gasoline remain as tight as ever. Friday’s falls have bought my six-month support lines back into focus. On Brent crude, that is at USD 107.00 a barrel today, just below its 100-day moving average (DMA) at USD 107.95. Ahead of this, it has support at USD 112.00, with resistance at USD 114.25 and USD 116.00 a barrel. WTIs six-month support line is at USD 106.00 a barrel, just ahead of its 100-DMA at 105.00. It has interim support at USD 108.25 and resistance at USD 112.50 a barrel. Of the two, WTI looks the more vulnerable, having fallen further and closed closer to its multi-month support zone. If the US cuts federal fuel taxes, that could be enough to tip the scales lower. It is hard to see either contract moving lower than USD 100.00 a barrel given the state of the physical market. From a technical perspective though, I would ideally like to see one or both contracts tracing out a couple of daily closes below the support lines mentioned and the 100-DMAs, before reassessing my longer-term bullish outlook. Gold range continues It was another wax on, wax off day for gold on Friday as it retraced Thursday’s gains and fell by 0.88% to USD 1840.00 an ounce on US dollar strength. In Asia, it has gained slightly by 0.25% to USD 1845.00 an ounce. Despite the noise of the past week, it remains anchored in the middle of its one-month range. The overnight price action shows that the inverse correlation to the US dollar is as strong as ever. Gold has resistance at USD 1860.00 and USD 1880.00, the latter appearing an insurmountable obstacle for now. Support is at USD 1805.00 and then USD 1780.00 an ounce. Failure of the latter sets in motion a much deeper correction, while I would need to see a couple of daily closes above USD 1900.00 to get excited about the upside. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Oil slides, gold range-trades - MarketPulseMarketPulse

Dollar in choppy waters The US dollar held onto its intraday gains on Friday, as US bond inflows seemed to support it as investors preferred safety over risk into the weekend and today’s US holiday. With the weekend being relatively uneventful, the US dollar has eased in Asia, but overall continues a pattern of choppy range trading. The dollar index rose 0.82% to 104.65 on Friday, thanks mostly to a weak yen. In Asia, it has eased 0.26% to 104.38. The dollar index has support at 1.0350 with resistance now distant at 1.0570.   EUR/USD eased by 0.56% to 1.0495 on Friday in another 100-point session, climbing by 0.31% to 1.0525 in Asia as weekend hedges are taken off. Dutch natural gas futures prices remain elevated, so the single currency is not receiving much of a boost from last Friday’s oil retreat. It has initial resistance at 1.0600, with challenging resistance at 1.0650. Support is at 1.0450 and 1.0400 now although I note that EUR/USD has based twice at 1.0350. That leaves the door open slightly to a corrective recovery this week.   Sterling has another awful day as its economic picture darkens, falling by 1.10% to 1.2215 on Friday, edging 0.22% higher to 1.2240 in Asia. ​ GBP/USD has initial resistance at 1.2400 and 1.2500, with support at 1.2200 and then 1.1950.   USD/JPY powered higher on Friday as the Bank of Japan left monetary policy unchanged and continues to heavily intervene to cap ultra-low JGB yields. With Japan’s inflation only expected to hit 2.50% this Friday, I can’t really blame them, but with the US, Switzerland, the United Kingdom, et al hiking, the interest rate differential continues to power USD/JPY higher. USD/JPY leapt 2.10% higher to 135.00 on Friday, with last week’s 131.50 low a distant memory and a bargain for somebody. Having probed 135.45 today, USD/JPY has eased back to 134.85 this morning, as commodity prices fell. It is likely to be only a respite though unless US yields move sharply lower this week. USD/JPY has resistance at 135.60 with support distant at 132.20.   Swings in investor sentiment continue to generate all the two-way volatility in the Australian and New Zealand dollars. AUD/USD fell 1.60% on Friday to 0.6935 before rising to 0.6955 in Asia. NZD/USD fell 0.80% to 0.6315 on Friday before rising to 0.6330 in Asia. A US holiday is dampening volumes but both Australasians have traced out bottoming patterns on the charts. As long as 0.6850 and 0.6200 hold respectively, further gains to 0.7150 and 0.6450 cannot be ruled out.   On a 24-hour basis, Asian currencies are mostly unchanged today after the losses on Friday and were mostly unwound this morning. The main reason has been a rally by China’s CNY and CNH after the PBOC left both the 1 and 5-year LPRs unchanged. USD/CNY has fallen 0.60% to 6.6760, while USD/CNH has fallen by 0.50% to 6.6745, dragging USD/Asia lower. Although the KRW, INR, MYR, THB, and IDR look the most vulnerable and remain near last week’s lows, a US holiday today should mean range-trading continues into Wednesday. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. US dollar remains firm but choppy - MarketPulseMarketPulse

Recession fears weighing on markets Asian markets are off to a weak start as the recessionary fears sweeping the US on Friday, continue to weigh on sentiment in Asia. For once Asian markets are not moving in lockstep with the US ones, and I put that down to the distortions of options expiries on Wall Street on Friday. The S&P 500 closed up just 0.22% on Friday, but the Nasdaq leapt 1.43% higher, while the Dow Jones edged 0.16% lower after soft US Manufacturing and Industrial Production data. In Asia, US futures are rising, although with it being a US holiday today, I am not placing too much emphasis on the price action. S&P futures are 0.17% higher, Nasdaq futures are 0.50% higher, while Dow futures are unchanged.   Another outperformer is China, which is well and truly bucking the trend in Asia today. Mainland China markets have reversed sharply higher after China left its 1 and 5-year LPRs unchanged, a counterintuitive move. News that Shenzhen has apparently locked some neighbourhoods in virus curbs should also be a headwind. Nevertheless, the Shanghai Composite is now unchanged, but the CSI 300 has risen by 0.65%, with Hong Kong’s Hang Seng edging 0.15% higher. The price action looks to be “buy at worst” and “smoothing.”   Over in Japan, the Nikkei 225 has fallen by 1.0%, with South Korea’s Kospi slumping by 2.20% today. Taipei is 1.10%, with Singapore remaining unchanged. Kuala Lumpur has lost 1.25%, while Jakarta is 0.90% lower, and Bangkok and Manila have eased by 0.10%. In Australia, falling China resource prices have pushed the ASX 200 down by 0.45%, with the All Ordinaries losing 0.65%.   After such a torrid week last week, a corrective bounce by equity markets cannot be ruled out this week. However, that may have to wait for another 24 hours as US markets are closed today. With nothing on the calendar of note today, European markets may take some solace from lower energy and commodity prices, although European natural gas supplies are tighter than ever as Russian flows reduce.   For US markets, the plethora of Fed speakers this week, including a double-header from Jerome Powell, are likely to drive intraday volatility in the absence of many tier-1 data releases. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Asian equities start the week lower - MarketPulseMarketPulse

Jonny Hart speaks to APAC Senior Market Analyst Jeffrey Halley about news impacting the market and the week ahead. It’s another blockbuster episode today as we range far and wide across the global economy and financial markets. US markets are closed today but Asian equities, ex-China, are having a tough day at the office despite a steady US Close on Friday. We look at what Asian markets are doing today and discuss the divergence in price action, with industrial commodities falling heavily in China, which also left policy rates unchanged. Oil markets fell heavily on Friday. We discuss the drop and Asian price action this morning, as well as the important difference between the speculative world of the futures markets, and the everyday pain you and I are feeling as we fill up our cars. I take a look at the demand outlook and also two key support levels on the Brent crude and WTI charts. Jonny then asks whether all this talk of recessions will lead markets to expect less central bank easing. Then it’s on to cryptos! We have quite a broad chat here as I dissect the weekend price action for Bitcoin, the crypto space in general, the outlook for prices and the sector as a whole. Finally, we look at the week ahead which is light on data, but very very heavy on Fed speaks!     This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Market Insights Podcast (Episode 343) - MarketPulseMarketPulse

Recession fears are escalating The “R” word is being used more and more as recessionary winds start blowing more loudly through economic data and the price actions across the asset class spectrum. On Friday, US manufacturing and industrial production data were soft. That follows weaker US retail spending and housing market data previously. Even oil prices cracked under the weight of recession noise. A classic case perhaps, of high prices being the best cure for high prices?   US yields eased lower in response as well, but not by much. The US dollar remained firm while US equities had a mixed session. The Dow Jones edged lower while the S&P 500 edged higher, but the Nasdaq jumped by over 1.40%. One could argue that a recession in the US means less tightening, a boon for the interest-rate-sensitive Nasdaq. But as I mentioned last week, there were a galactic amount of options expiries on US equity markets on Friday, so take the price action with a grain of salt. A US holiday today will keep volumes thin.   In China today, iron ore, steel rebar and coal futures have all plummeted as local markets join the US ones in pricing in a slowdown. Chest thumping over the weekend by China around the Taiwan Strait, and legislation allowing Russian-style “special operations” won’t be giving regional Asia much comfort either.   You can choose from an extensive drop-down menu of recessionary drivers. Rising inflation and interest rates in the developed world, the Ukraine-Russia war and ensuing commodity disruption, the Covid-19 slowdown in China, and the list goes on. It is clear that sentiment is turning though and given the appalling track record of forecasting these past couple of years, the more central banks say, “soft landing,” the more nervous markets become, and rightly so.   Unfortunately, with all your monetary bullets fired and stagflation at your doorstep, as a central bank you don’t have any pleasant choices. Do nothing, and inflation continues to rise, but growth may not; expect protests on the streets. Hike rates to dampen inflation but with growth already slowing or falling, you know how the story ends. The best I see it is that the recession, when it arrives, is short and sharp and, at least in much of the developed world, it’s starting from a relatively high base.   Asset price volatility is an inevitable consequence as the street tries to price in the next direction of travel. Currency markets are saying the Fed won’t blink on rates. Bond markets are saying that too, although as US 1-years drop back below 3.0%, then perhaps they are wavering. Gold doesn’t seem to care. Oil is cracking like a refining spread, but has yet to reach my longer-term support lines, although we’re not far away. It would be ironic if falling energy prices from a recession torpedoed the funding for Vladimir Putin’s war machine.   Nowhere has been more frantic than the crypto space which endured some emotional volatility over the weekend as expected. Bitcoin fell 15-odd per cent on Saturday as support at USD 20,000.00 cracked, finishing 7.50% lower for the day at USD 18,955.00. It rallied yesterday by 8.40% to USD 20,550.00, only to fall 3.50% this morning after another Solend Labs, which allows you to lend or borrow in something called Solana, granted itself emergency powers to take over a (very) large account to manage its exposure. The more the merde hits the fan in the DeFi space, the less decentralised it seems to be becoming as reality bites. I can’t help but think of George Orwell’s Animal Farm. “All animals are created equal, but some are more equal than others.”   That said, the price action on Saturday looked very much like forced margin stop-outs triggered by the failure of the USD 20,000.00 support level. Yesterday’s price action suggests that as well. I don’t rule out a rally by cryptos this week as enough lambs appear to have been silenced for now. Equity markets in the real world may also have had the herd thinned enough temporarily.   Leaving central bank-induced speculative exuberance-based digital Ponzi schemes behind, for now, the week is somewhat thin on tier one data. China has left its One and Five-year Loan Prime Rates unchanged today and may have added fire to the local market commodity price falls. Markets appear disappointed that no stimulus crumbs were thrown to the markets, even a 5 or 10 basis point trim of the 5-year LPR. I still contend that China’s biggest short-term threat is more Covid-19 lockdowns. I’ll say it till I’m blue in the face, China is unlikely to be “one and done,” and the virus only has to get lucky once under Covid-zero.   Elsewhere in the Asia-Pacific, the Reserve Bank Of Australia Minutes will be released tomorrow, with markets picking over the carcass searching for any clues on the direction of RBA interest rate policy. How high, and for how long, will rates move higher? Friday’s Japan Inflation Rate will have more interest than any time over the last 20 years, I expect, as the Bank of Japan defied the word and maintained super-easy monetary policy last Friday.   We received a swath of PMI data from across the globe on Thursday. The US calendar sees New Home Sales tomorrow and Existing Home Sales on Friday. Both have downside risks and may add to the recessionary noise. The week’s highlight is likely to be testimony from Fed Chairman Jerome Powell on Wednesday and Thursday. But we also have a plethora of Fed speakers throughout the week as well. With a dearth of tier-1 data, Fed speakers are likely to drive intraday volatility, although it wouldn’t surprise me that after last week’s bonfire, risk assets in general consolidated higher this week. Either way, we can expect plenty of intraday noise, but ultimately directionless volatility this week in my opinion. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. The “R” word - MarketPulseMarketPulse

The Japanese yen continues to post strong swings this week and is up sharply on Friday. USD/JPY is trading at 134.67 in Europe, up 1.86% on the day. BoJ maintains yield curve control It’s been a busy week, with the markets still digesting some dramatic moves by central banks. The Fed and SNB delivered massive salvos in their fight against inflation, and the BoE continues to tighten, albeit at a more modest pace. The week wrapped up with the Bank of Japan policy decision earlier in the day. These meetings are usually on the dull side, with the central bank merely reaffirming its ultra-loose policy, with the occasional tweak. Today’s meeting was closely watched, however, as the BOJ’s yield curve stance has been under pressure and there was speculation that the BoJ might retreat and release the cap of 0.25% on 10-year JGBs. In the end, the BoJ did not blink or budge, maintaining its policy for yield curve control and QE. The BOJ reaffirmed it will continue its policy of rock-bottom rates, even though other major central banks are tightening policy, as we saw this week with the Fed, BOE and SNB. Governor Kuroda has insisted that monetary easing remain in place, given Japan’s slow recovery from the Covid-19 pandemic. With inflation barely at 2%, the central bank’s target, Kuroda can afford to continue his loose policy and tenaciously defend the BoJ’s yield curve. The BoJ didn’t adjust policy today but it was noteworthy that the policy statement added the exchange rate to its list of risks, something we haven’t seen in previous statements. The yen hit a 24-year low at 135.60 earlier this week and could fall even further. The Bank is sending a message that it is monitoring the exchange rate, but I question whether this will deter the markets from continuing to test the yen – previous jawboning from the BoJ and Ministry of Finance didn’t succeed in stemming the yen’s slide, and we could well be on our way to a 140 yen if the US/Japan rate differential continues to widen. . USD/JPY Technical USD/JPY is testing resistance at 133.14. Above, there is resistance at 1.3585 There is support at 131.72 This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Yen falls back down after BoJ balks - MarketPulseMarketPulse

Oil trades sideways Oil, once again, endured big ranges overnight, only to finish not far from where it opened. Once again, Brent crude and WTI saw some heavy selling intraday as markets tried to price in a plethora of central bank hikes and potential recessions. Unfortunately, none of that changes the fact that despite those risks, the world remains short of crude supply from OPEC+, and global refining capacity, squeezing gasoline and diesel prices higher in a stagflationary embrace. Little surprise then that physical buyers eagerly lapped up the overnight futures selling. Brent crude fell to USD 115.60 intraday, only to reverse and finish 0.20% higher at USD 119.05 a barrel. WTI plummeted to USD 112.40 intraday, only to reverse impressively to finish 1.10% higher at USD 117.05 a barrel. In Asia, Brent has eased to USD 118.90 and WTI to USD 116.65 a barrel in what looks like a nothing session today. With the battle between the physical buyers and the speculative sellers, either closing longs or turning short, set to continue, I won’t rule other another crazy intraday spike lower today in New York. but once again, I suspect it is doomed to failure. Brent crude has initial support is at USD 115.50, with resistance at USD 120.25 a barrel. WTI has support at USD 112.50, with resistance at USD 118.00 a barrel. Gold’s range continues Gold staged a decent recovery overnight as the US dollar fell and US yields retreated. Gold rose by 1.25% to USD 1857.00 an ounce, before retreating just as quickly on US dollar strength in Asia today. It has fallen 0.73% to USD 1843.50 in regional trading. The overnight recovery, and equally fast retreat in Asia, demonstrate that gold’s fate is not its own. Despite the noise of this week, it still remains anchored in the middle of its one-month range. The overnight price action shows that the inverse correlation to the US dollar is as strong as ever. Gold has resistance at USD 1860.00 and USD 1880.00, the latter appearing an insurmountable obstacle for now. Support is at USD 1805.00 and then USD 1780.00 an ounce. Failure of the latter sets in motion a much deeper correction, while I would need to see a couple of daily closes above USD 1900.00 to get excited about the upside. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Oil trading sideways, gold range-trading - MarketPulseMarketPulse

US dollar retreats as central banks hike The US dollar fell overnight as traders turned short of USD/JPY ahead of the BOJ meeting, and central banks in the UK and Switzerland hiked policy rates. A rotation from equities to bonds overnight drove down US yields, further eroding short-term support. The dollar index slumped by 1.0% to 1.0380 overnight but has recouped some of those losses in Asia, rising 0.37% to 104.18 as USD/JPY rallies on the just-released no change from the Bank of Japan. The dollar index has support at 1.0350 with resistance now distant at 1.0570.   EUR/USD rose 1.0% to 1.0550 overnight as USD/CHF weakness and lower US yields boosted the single currency. The rally looks more to do with temporary US dollar weakness and the SNB, rather than a vote of confidence in the Eurozone. It has eased 0.20% to 1.0530 in Asia, and has initial resistance at 1.0600, the overnight high, with challenging resistance at 1.0650. Support is distant below 1.0400 now although I note that EUR/USD has traced out to bottoms at 1.0350. It is a bit too soon to judge whether the current euro bearish outlook has turned though.   Sterling traded in a 300-point overnight, but a 0.25% Bank of England hike, with hints of more to come, won the day for sterling, GBP/USD closing 1.45% higher at 1.2353. Probably the main supportive factor was the BOE split decision on a 0.25% versus 0.50% rate hike, suggesting the latter is possible at later meetings with UK inflation expected to hit 11.0% this year. GBP/USD has initial resistance at 1.2400 and 1.2500, with support distant at 1.2200 and then 1.1950.   USD/JPY slumped 1.20% to 132.20 overnight as the offshore market positioned for a possible lifting of the Bank of Japan JGB target of 0.25% today. Japanese markets spoke loudest though, immediately lifting USD/JPY through 133.00 this morning. The BOJ has just announced no change to its policy setting and USD/JPY is now 1.05% higher at 133.65 today. With the BOJ unchanged, and the Federal Reserve now on an aggressive hiking path, it seems just a matter of time before the US/Japan rate differential reasserts full control of the cross. A return to 135.00+ appears to be the path of least resistance. Last night’s low of 131.50 could well be the bargain of the month for some lucky buyer.   A weaker US dollar lifted the AUD and NZD overnight. AUD/USD rose by 0.70% to 0.7050, and NZD/USD rose 1.23% to 0.6365. A stronger greenback in Asia has pushed both 0.35% lower to 0.7025 and 0.6340 today. Both Australasians have traced out bottoming patterns this week on the charts and as long as 0.6850 and 0.6200 hold respectively, further gains to 0.7150 and 0.6450 cannot be ruled out initially.   Asian currencies rallied overnight, led by the usual sentiment indicators, the KRW, THB, and CNH, with SGD, MYR, INR, and IDR having little to show for overnight US dollar weakness. USD/THB has risen by 0.70% today, unwinding most of the THB strength, while USD/CNH has gained 0.36% to 6.7100 as the USD/JPY rallies. The price action in the Asian currency space has not given too many clues this week, other than USD/Asia continues to consolidate at or near its recent highs. That suggests that they remain vulnerable to further weakness into next week, despite the US dollar retreating against the DM space overnight. ​ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Central bank tightening sends US dollar lower - MarketPulseMarketPulse

Wall Street’s post-FOMC rally ended after less than 24 hours as a plethora of central banks from around the world followed the Fed’s lead and hiked interest rates. The S&P 500 closed 3.24% lower, the Nasdaq slumped by 4.08%, and the Dow Jones fell by 2.37%. In Asia, US futures have rallied on some short covering with S&P 500 futures rising 0.60%, Nasdaq futures gaining 0.90%, and Dow futures have added 0.40%.   The rally in US futures today has taken the edge off the bearishness in Asia, most of the region is in the red. Japan’s Nikkei 225 has fallen by 2.0%, with South Korea’s Kospi down 1.25%. In Mainland China though, markets have once again mysteriously and abruptly reversed early losses, suggesting China’s “national team” is around. The Shanghai Composite is now unchanged for the day, while the CSI 300 is now 0.25% higher, and Hong Kong has risen by 0.35%.   In regional markets, Singapore is unchanged, while Taipei has lost 1.30%. Kuala Lumpur has fallen by 1.35%, with Bangkok down 0.30%, Jakarta slumping 1.70%, and Manila retreating 1.50%. Australian markets have remained laser-focused on Wall Street’s main session and are deeply in the red. The ASX 200 and All Ordinaries have slumped by 2.25%.   European markets had the SNB rate hike to contend with, as well as a weak Wall Street session, leaving them deep in the red overnight. The price action in Asia will give Europe no reason to turn bullish today, and ahead of weekend risk, are likely to start the day lower once again. In the US, a holiday Monday and huge option expiries today mean it might be best avoided altogether. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Asian equities follow Wall Street lower - MarketPulseMarketPulse

The post-FOMC rally ran in equities out of steam within 24 hours with Wall Street plummeting overnight once again. Even the most ardent FOMO gnome had a conviction crisis as a swath of central banks followed the Fed’s lead and hiked policy rates. Taiwan hiked 12.50 bps, the Bank of England hiked 25 bps and the Swiss National Bank shocked markets, hiking policy rates by 50 bps. SNB shocks with 0.50% rate hike It was probably the SNB that broke the camel’s back because if the Swiss are worried about inflation, we all should be. Stock markets went looking for ABE (anything but stocks), and it looks like a US 10-year yield approaching 3.50% yesterday was just too tempting. US bonds saw some impressive ranges and as money poured into the US curve, the 10-year fell from near 3.50% to close around 3.25%.   That set of a negative feedback loop in the US dollar which suffered heavy losses overnight. They were led by a post-SNB rally by the Swiss franc, which spilt over into euro and sterling strength as well, helped along by the BOE hike. EUR/USD rallied by 1.0% and probably would have had an even better day if EUR/CHF wasn’t getting simultaneously crushed. Falling US yields also eroded US dollar strength as did a huge rally of the Japanese yen.   With hiking policy rates this season’s new black for the world’s central banks, offshore markets moved to rapidly price in that the Bank of Japan would raise the 0.25% yield cap on 10-year JGBs at this morning’s policy meeting. USD/JPY fell by just over 1.0% overnight helped along by falling US yields as well. Japanese markets are having none of it though, with USD/JPY rising by 0.80% already today to 133.25.   One side or the other is seriously wrong. We will know which sometime after 1100 SGT today. As a hint, the longer that no noise emerges from BOJ HQ after 1100SGT, the more likely it is we are going to get a surprise, from my experience. We should get a binary outcome once again from the decision. If the BOJ makes no changes and reiterates its commitment to a super-easy policy, USD/JPY will likely be trading on a 135.00 handle by Monday. If they do raise the cap, the correction lower by USD/JPY should continue, possibly in a quite disorderly manner. And I suspect 130.00 or lower wouldn’t be out of the question. You’ve got to love Fridays.   Gold also rallied overnight, but that was because the US dollar fell, with the inverse correlation as strong as ever. The yen gains overnight boosted Asian currencies although the KRW, THB, TWD, and CNH are moving lower with the yen this morning as well. Oil held steady overnight despite probing the downside, no amount of noise elsewhere changes the fact the world doesn’t have enough of it or that refineries can’t refine enough of it. The underachiever overnight was the crypto space. Bitcoin ran into buyers again ahead of USD 20,000.00 overnight but remains uncomfortably close to the danger zone at USD 20.700.00 this morning. The weekend session promises to be emotional.   My overall take on the state of play for markets at the moment is that even the most ardent buy-the-dipper in the equity space is starting to realise inflation is a threat, with central bank banks prepared to hike the world into a slowdown and possible recession to get on top of it. A recession isn’t good news for pimped-up valuations either. The street is looking for anything but equities into the end of the week, and tasty government bond yields seem to be the preferred home.   In other data recently, US Housing Starts and Building Permits in May slumped from April. We can draw a line straight to rocketing mortgage rates on that one and the US won’t be the last to feel housing market pain. Singapore Non-Oil Exports (NODX), surprised to the upside today, rising by 12.40% YoY in May, boosted by electronics. That will be a welcome offset for slowing domestic consumption but unless China really reopens, will start to fade in the coming months.   We have the Bank of Japan meeting shortly, Eurozone Inflation this afternoon, and US Industrial Production and Manufacturing this evening. Federal Reserve Chairman Jerome Powell is also speaking at 2045 SGT. And apart from testing every resident of Shanghai for Covid-19 this weekend, China releases its 1-year and 5-year Loan Prime Rates on Monday. Cryptos may generate some headlines this weekend as well if Bitcoin breaks USD 20,000.00.   Finally, there are apparently USD 3.40 trillion of options expiries on listed US equity markets today where liquidity may be reduced ahead of a US holiday on Monday. That may distort price action on Wall Street this evening. Tonight’s session could be a good one to avoid. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Looking for ABE - MarketPulseMarketPulse

The sell-everything trade has mostly paused for breath over the last 24 hours, with US equities finding their feet overnight, Asian equities rallying today, and the US dollar giving back some of its recent gains. Bond markets remain the exception. The Bank of Japan is buying JGBs furiously to maintain the yield cap, while US bond yields continued to rise leaving the yield curve almost flat and dangerously close to inversion. Markets brace for 0.75% hike from Fed Given bond markets saw no love overnight, I am inclined to believe that clawing back losses elsewhere is merely a consolidation ahead of tonight’s FOMC policy decision. The market has priced in at almost 100% an FOMC hike of 75bps this evening. My two cents worth is that the Fed will not go 100bps, as that would further erode their credibility on the forward guidance front, which is already ragged. They may, however, decide to upgrade their forward guidance to an even more hawkish tilt. I suspect 75bps is already built into prices now, and if the guidance is more modest in scope, I am sure the buy-the-dippers will be out in force for the rest of the week. I remain concerned that the Bank of Japan policy meeting is an underrated risk point this week, perhaps even more so than the FOMC outcome itself. A 100bps hike tonight, and/or a very hawkish outlook, will lift USD/JPY once again and may force the BOJ into lifting the 10-year JGB yield cap slightly, despite their actions in the bond market this week. That could, in turn, prompt a very ugly, somewhat short-term correction lower by USD/JPY that could reach 130.00. Expect GBP/JPY, AUD/JPY, and NZD/JPY to get a pasting as well. The Bank of England rate decision tomorrow will become murkier as well if the FOMC is uber-hawkish tonight. The BOE most likely intends to hike by 0.25%, but with sterling under some serious pressure right now, its hand may be forced even though it has admitted it has only limited means to manage imported inflation from here. One positive note is that unemployment remains very low in the UK, giving the BOE a decent starting point to inflict monetary pain. We should be keeping an eye on energy prices over the next few days as well, most notably, European natural gas prices. Nord Stream 1 gas flows from Russia to Germany have been severely reduced as it undergoes summer maintenance. The culprit is a compressor turbine, sent for maintenance in Canada, which now won’t return it as Canada widens sanctions on Russia. Of course, I am sure Russia isn’t using this as an excuse to squeeze Europe, cough, cough. European and UK natural gas prices spiked yesterday, and I have said before that the moment Russia starts messing with European gas supplies, the euro is heading south. You can put the sterling in that basket as well. Looking at the data releases we have had so far today in Asia, it has been mostly positive. Australian Consumer Confidence improved slightly to -4.50% from -5.60%. Rising living costs and mortgage rates leave consumer confidence in a dire spot still. South Korean Unemployment ticked higher to 2.80% in May from 2.70% in April; however, workforce participation rose strongly, dulling the headline numbers impact. Far more importantly, the truckers’ strike has ended today, allowing goods to flow to ports and removing a potential growth roadblock. Japan’s Reuters Tankan Index for June improve to 9.0 from 5.0, as business confidence edges higher. A weaker yen is a boon for manufacturers and was likely the main reason for the jump. A similar impact can be seen in Japan’s April Machinery Orders, which outperformed, rising 10.80% MoM. We can expect a similar impact in May and June. ​ The Nikkei 225 gained no benefit, with both it and the Kospi content to track Nasdaq underperformance overnight as the world press fills its pages with tech-layoff headlines. China has left its one-year MTF rate unchanged at 2.85% but rolled over the entire CNY 200 billion of maturities. Disappointing at the periphery for those of us waiting for a more comprehensive stimulus from China. Offsetting that, were notable improvements in May Retail Sales, Industrial Production, and Fixed Asset Investment. Retail Sales fell by 6.70%, less-worse than expected. Industrial Production and FAI outperformed, rising by 0.70% and 6.20% YoY respectively. All of that can be laid at the door of the reopening of Shanghai and Beijing and the Shanghai Port. I must reiterate a word of caution on China though. Markets have leapt into thinking that it would be “one-and-done” for China with covid-zero lockdowns. Bitter experience from around the world shows that this is a naïve point of view, especially regarding omicron. I see a high possibility that China will still endure repeated omicron lockdowns this year unless it changes its covid-zero policy. Thus, China’s growth outlook remains challenging to say the least, even more so if key export markets shift to slowing growth as tighter monetary policy bites. Indonesia releases its Balance of Trade for May shortly, with the surplus expected to fall from USD 7.56 billion in April, to USD 3.83 billion in May. The palm oil export ban will have impacted the headline number, and Indonesia’s commodity exports have bolstered the trade balance this year and supported the Indonesian rupiah. I wouldn’t normally comment on this data point, but the rupiah has weakened sharply this past week. If the trade surplus is lower than expected this afternoon, the rupiah selling may gain more momentum and have a knock-on impact across neighbouring ASEAN currencies. I’m fairly sure a number of Asia’s central banks have been busy this week quietly selling US dollars, including Indonesia. That smoothing may have to accelerate, especially if the FOMC is very hawkish tonight. India’s Balance of Trade this afternoon should also make for interesting reading as its imported energy bill soars. A May deficit higher than USD 20.00 billion could increase pressure on the rupee as well, which remains near record lows. US Retail Sales will be of passing interest before the main event tonight, especially if the headline and core numbers are soft, with a market on edge about growth stalling in the US. Otherwise, I believe today will be a “hurry up and wait” messy session as the world awaits the FOMC meeting outcome. I have thrown my two cents in, and I will leave it at that, it has been analysis-paralysis’ed to death elsewhere for those who require more information overload. Today is likely to be the eye of the hurricane, so we should enjoy the temporary peace and quiet. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Noisy pre-FOMC consolidation - MarketPulseMarketPulse

The supply-side squeeze keeps oil prices elevated Oil prices remained almost unchanged overnight, with Brent crude finishing at USD 122.10, and WTI closing at USD 121.10 a barrel. The continuing squeeze on refined products globally, as well as a lack of investment to bring online more supplies from OPEC members, or other sources, means lost Russian production is nowhere near being covered by global markets. Adding to the noise is news that Libyan production has fallen from 1.1 million bpd to just 0.10 million bpd. Not a game-changer in normal times, but with the current situation, it is certainly enough to keep prices elevated. In Asia, prices have climbed once again as regional buyers get impatient waiting for a risk-aversion dip to arrive. Brent crude has climbed 0.70% to USD 123.95, with WTI adding 0.40% to USD 121.60. In the near-term, Brent crude has support at USD 119.50 and USD 118.50, with resistance at USD 123.60 and a triple top at USD 124.40 a barrel. WTI has support at USD 118.00 and USD 117.00 a barrel, with resistance at USD 122.25 and USD 123.00 a barrel. Gold slumps Gold has once again teased gold bugs, only to whip the rug from under their feet. The huge rise in both US yields and the US dollar was too much for gold to endure yesterday as it collapsed by 2.80% to USD 1819.50. The 50-dollar-an-ounce collapse hinted that once again, the fast money longs were shown the exit door. In line with price moves in other asset classes in Asia, stability in US equity futures has prompted a 0.50% gain to USD 1828.25 an ounce. The inverse correlation to the US dollar is as strong as ever it seems and the technical picture for gold has turned murky. Only a sharp US dollar correction lower is likely to alleviate selling pressure on gold. Gold has resistance at USD 1840.00 and USD 1880.00, the latter appearing an insurmountable obstacle for now. Support is at USD 1805.00 and then USD 1780.00 an ounce. Failure of the latter sets in motion a much deeper correction. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Oil steady, gold slides - MarketPulseMarketPulse

Higher yields, safety first, sends US dollar higher The dollar index soared overnight, driven by risk aversion, higher yields and ramped-up hiking expectations from the FOMC this week. The dollar index finished 0.97% higher at 105.20, easing slightly in Asia to 105.10. Asia seems content to adopt a wait-and-see attitude among the major currencies today after the ructions overnight. Having taken out resistance at 105.00, the technical picture remains constructive. The dollar index has nearby support at 105.00 and then 104.00, with nothing on the charts until the 108.00 area. EUR/USD slumped again overnight, finishing 1.05% lower to 1.0420 before edging slightly higher to 1.0420 in Asia. With the ECB only likely to hike by a total of 0.50% by September, with all bets off as far as the Fed goes, the single currency remains under serious pressure. Arguably the economic picture looks much darker for Europe than the US anyway. The fact that EUR/USD never seriously attempted to regain its multi-decade breakout around 1.0800 suggests that a medium-term high is now in place. EUR/USD’s last support ahead of parity is at 1.0350, with resistance at 1.0600. Sterling fell by 1.50% to 1.2130 overnight, continuing its grim week. US dollar strength aside, the UK published soft GDP data overnight and seems intent on provoking an economic conflict with the European Union over the Northern Island Protocol. Markets are also still expecting only a 0.25% hike from the Bank of England this week. That should all ensure the pressure stays on sterling, despite climbing 40 points to 1.2170 on short-covering in Asia. The next support is at 1.2070 and then 1.2000. USD/JPY continues to top out at 135.00, despite a massive increase in US yields over the past two sessions. Yen repatriation and perhaps some fears that the Bank of Japan is going to do “something” regarding monetary policy this Friday seem to be adding a note of caution to USD/JPY longs. USD/JPY is ranging between 134.00 and 135.00 for now with risks still skewed to the upside as the Bank of Japan aggressively intervenes on the yield curve this week. Risk aversion sentiment pummelled AUD/USD and NZD/USD overnight, both falling by over 1.50%. Some stability in US equity futures in Asia today has allowed them both to stage a modest recovery, gaining 0.45% to 0.6960 and 0.6285 respectively. The technical picture remains challenging for both, which are at the mercy of swings in sentiment by global investors. USD/Asia rose overnight, but by and large, Asian currencies are proving quite resilient to the US dollar rally. USD/MYR, USD/PHP, and USD/INR showed only modest gains, while USD/KRW rose 0.85% to 1290.00 and USD/CNH rose 0.70% to 6.7815 before giving all those gains back today, falling to 6.7410. Neutral PBOC CNY fixes are adding some stability, but I suspect there are a few regional central banks around on the topside selling US dollars. Some cracks are showing on the periphery though, USD/IDR has risen from 14,420.00 to 14,715.00 over the last couple of sessions. The technical picture suggests that further Asian currency weakness remains a case of when, and not if. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Risk aversion boosts US dollar - MarketPulseMarketPulse

Markets nerves ahead of FOMC meeting Overnight, panic around rate hike expectations by the Fed increased and US bond yields rose aggressively across the curve. Recessionary fears increased and in the self-fulfilling negative feedback loop created, US equities were once again crushed. The S&P 500 slumped by 3.87%, the Nasdaq tumbled by 4.68%, and the Dow Jones lost 2.73% as the least ugly value horse in the glue factory. In Asia, some short-covering has lifted US futures slightly higher, but the gains pale in comparison to the overnight losses. Futures on all three main indexes are around 0.35% higher today. The small gains by US futures seem to have taken the edge off the negativity in Asian markets today, although they are still in the red. One notable loser was Australia, where the ASX 200 and All Ordinaries have lost 5.0%. But for context, Australia was closed yesterday, and thus local markets were playing catch-up to the losses internationally on Friday and yesterday. Elsewhere, Japan’s Nikkei 225 has fallen by 2.0%, with South Korea’s Kospi losing 1.20%. Mainland China’s Shanghai Composite is down by 1.70%, while the CSI 300 has lost 2.0%, with Hong Kong’s Hang Seng down just 1.10%, a surprisingly robust performance. The more value-orientated regional APAC markets have also been spared the worst of the selling. Singapore is 1.0% lower, Kuala Lumpur and Jakarta have actually recorded 0.50% in what I can only assume is a resource play. Thailand is down just 0.40%, with Manila easing 0.65% lower. European markets also fell heavily yesterday, coat-tailing US markets south as Eurozone yields also squeezed higher. That should continue this afternoon, although Asia’s performance today should mean the panic of yesterday subsides. In the US, lower PPI prints this evening could give Wall Street to unwind some shorts into the FOMC decision tomorrow. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Asian equities fall once again - MarketPulseMarketPulse

Equity markets jittery, US dollar soars Things didn’t improve from Friday overnight in New York, as the market scrambled to price in a 0.75% by the FOMC, whose two-day meeting starts today. Among the biggest casualties were the bond market, where yields soared, and the 2/10-year tenor spent part of the day inverted. 20+ basis point increases across the curve were the norm. Equities had another awful session, led by the Nasdaq and S&P 500, home to some of the most pimped-up valuations from the pandemic largesse. With the risk-free 10-year yield at 3.38% now and growth forecasts sure to be reigned in as the Fed moves harder on inflation, it’s hard to see that outlook improving this week.   The crypto space has been particularly hard hit with bitcoin falling 15.50% overnight and down 5.0% to 21,370.00 this morning. Celsius suspending withdrawals yesterday gave extra downside momentum. I’ve always been confused about how the DeFi space can conjure up 17/20% returns from crypto “lending” activities. For a start, who in their right mind would pay that rate for financing? Two things have stuck with me over the decades though. Firstly, if something looks too good to be true, it always is. Secondly, each generation into the markets brings a tranche of bright young things saying, “this time it’s different.” In the end, it never is (if I ever write a book about my time, that will probably be the title). I can only assume the next big level for bitcoin psychologically will be USD 20,000. It will be interesting to see if that level, should it fail, spurs another wave of cross-margining selling.   The US dollar has soared once again overnight and the dollar index, having broken out of a 5-year triangle earlier this year at 102.30, appears to be on the march again, having corrected back just below that level in mid-May. The technical target is somewhere in the 116.00 to 117.00 area, and if the Fed is going to start hiking rates harder and for longer, it is not unreasonable to assume a prolonged period of US dollar strength lies ahead.   Although all the focus will be on the Federal Reserve this week, for Asia, perhaps the biggest risk is the usually sleepy Bank of Japan meeting on Friday. The 10-year JGB yield cap at 0.25% has been under severe pressure this week and the BOJ is tendering to buy a lot of JGBs across the curve today to maintain that cap. USD/JPY sitting at 20-year highs just under 135.00, and frankly, I’m a little suspicious that the 135.00 area has capped USD/JPY these past four sessions, as the US dollar bulldozes all before it in the currency space. I guess it could be yen repatriation by defensive Japanese investors, but I’m not completely buying it.   Anyway, with the yen on its knees, Japan’s imported energy bill looking uglier than ever, and 10-year JGBs edging through 0.25%, a 0.75% to 1.0% hike by the Fed tomorrow evening (SGT), along with a very hawkish dot plot and statement, could be enough to get Tokyo to adjust the rate cap slightly higher. Given the weight of long USD/JPY positioning out there, we could see a very violent correction lower. Definitely, something to keep an eye on this Friday.   Asia could also get some temporary solace from China, which may choose to trim the 1-year MTF rate this week. That decision was due between the 13-16th of June, so that announcement could come at any time. A perception that China is getting serious about broader stimulus could help spare Asia’s blushes temporarily. However, I remain adamant that the greater risk in the medium term remains a return to omicron lockdowns under the covid-zero policy.   Looking ahead at today’s data calendar, Japan Industrial Production is unlikely to move the needle today, with markets more focused on the JGB and stock markets. India’s WPI Inflation for May should hold steady at 15.0% YoY and won’t be enough to shake the RBIs hawkish resolve. Germany’s ZEW Survey will still remain negative for a plethora of obvious reasons, but slightly less so. German Inflation later today has upside risks after last Friday’s US number and could see European bonds sold once again today. Eurozone yields have shot up this week along with US ones, another headwind for the European economic outlook and the euro.   The US releases its PPI data this evening, with May headline PPI MoM expected to rise by 0.80%, and Core MoM by 0.60%. Herein lies an opportunity for markets to catch their breath if the PPI numbers come in below those forecasts. I don’t believe the buy-the-dippers have gone away, and softer PPI might be the chance for those 1.0% hiking expectations by the Fed we heard about so much overnight, to be pared back somewhat. It’s that sort of market and softer PPIs may bring temporary relief to equity and bond markets desperate for some good news. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. The bears come out to play - MarketPulseMarketPulse

Recession fears push oil lower Oil prices edged lower on Friday as US inflation eroded hopes of a Fed-derived soft landing. The falls were modest though, highlighting that despite economic slowdown nerves, the supply/demand situation remains as stagflationary tight as ever. Brent crude finished 0.83% lower at USD 121.85 a barrel, and WTI fell just 1.0% to USD 121.25 a barrel. In Asia, oil has fallen again, this time after mass testing in Beijing and Shanghai over the weekend raised fears that lockdowns would return, diminishing local demand. Brent crude and WTI have eased by 1.30% to USD 120.25 and USD 118.90 a barrel respectively, near Friday’s intraday lows. Unless US markets move to price in a full-blown recession, and China does actually hit the lockdown button again, it is unlikely that we see an extended sell-off in oil prices. With OPEC+ compliance approaching 200% and the continuing squeeze on refined products such as diesel around the globe, the supply/demand dynamics remain supportive of prices. In the near term, Brent crude has support at USD 119.50 and USD 118.50, with resistance at USD 122.00 and USD 124.40 a barrel. Brent crude has traced out four recent daily highs just above USD 124.00, suggesting further gains will be challenging, even if the downside is limited. WTI has support at USD 118.00 and USD 117.00 a barrel, with resistance at USD 120.25 and USD 123.00 a barrel. Gold rises on haven buying Gold had an interesting session on Friday, shrugging off higher US yields and a powerful US dollar rally to record a 1.28% gain to USD 1871.60 an ounce. Haven buying as equities and cryptos melted down lifted gold as investors parked cash in the yellow metal to hedge weekend risk. With the new week starting, there unfortunately for gold bugs, seems to be a business as usual air around gold’s price action today. Gold has fallen by 0.46% in Asia to USD 1863.10 an ounce, as the US dollar rally continues. Unfortunately, gold does have a habit of teasing gold investors, only to dash hopes with whipsaw corrections lower. I would really like to see another session or two of gold defying a stronger US dollar before erring to the bullish side after a month of range trading. With that in mind, I do not discount a continued correction lower and in the bigger picture, gold remains stuck in a USD 1830.00 to USD 1880.00 range with its 100-day moving average just above USD 1890.00 an ounce. Realistically, the technical picture requires a close or two above USD 1900.00 an ounce to suggest that gold is on the move once again. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Oil dips after US inflation, gold rises - MarketPulseMarketPulse

Inflation boosts US dollar  The US inflation data spurred a sharp rise in US yields across the curve, a selloff by equities, and in turn, a haven-derived rush into US dollar. The dollar index tore through resistance at 104.00 on its way to a 0.85% gain to 104.18 on Friday, rising another 0.26% to 104.46 in Asia. The index looks to have formed a medium-term low now as the reality of monetary policy divergence permeates the financial world. The dollar index will now have 105.00 in its sights with support at 104.00 and 103.00.   EUR/USD slumped on Friday, carving through support at 1.0600, almost reaching my 1.0500 targets for this week. It finished 0.93% lower at 1.0520 and has fallen another 0.30% to 1.0490 in Asia. With the ECB only likely to hike a total of 0.50% by September, with the Fed likely to have booked 1.50% of hikes by then, it is no surprise that the single currency has resumed its selloff. The fact that EUR/USD never seriously attempted to regain its multi-decade breakout around 1.0800 suggests that a medium-term high is now in place. Weekend developments in Ukraine were not good news either, and that is likely to further sap sentiment. EUR/USD has resistance at 1.0610 initially, with support at 1.0460.   Sterling fell by 1.43% to 1.2320 on Friday on widening yield expectations from the BOE and the Fed. In Asia, GBP/USD has fallen another 0.23% to 1.2290. Resistance is distant at 1.2425, while a retest of the May lows around 1.2150 has become a distinct possibility.   Quite surprisingly, given the move in US yields on Friday, USD/JPY was almost unchanged at 134.40, before rising 50 points to 134.90 in Asia today. I suspect the broad selloff across asset markets on Friday provoked quite a lot of haven-derived yen repatriation by Japanese investors, capping USD/JPY’s gains. That has ebbed today, allowing the USD/JPY rally to resume. A daily close above 135.00 suggests more gains to 138.00 in the week ahead, while only a fall below 133.00 changes the bullish picture. Some nerves around Friday’s BOJ policy meeting may also be tempering USD/JPY gains.   The Australian and New Zealand dollars held up relatively well on Friday, falling 0.74% to 0.7040, and 0.45% to 0.6355 respectively. An Australian holiday and severe weather in New Zealand are probably muting volumes in both today, sparing further blushes, but I do not rule out a catchup selloff in London this afternoon. AUD/USD has fallen 0.25% to 0.7025 today, with support at 0.7000 and 0.6950, with resistance at 0.7050. NZD/USD has fallen by 0.20% to 0.6340, with support/resistance at 0.6300 and 0.6450.   USD/Asia has risen sharply today after a mixed performance by Asian currencies on Friday night. USD/CNH rose 0.50% on Friday to 6.7350, climbing 0.30% to 7.6550 today, with onshore USD/CNY has risen by 0.30% today to 7.7370. USD/KRW rallied sharply by 1.23% to 1279.30 on Friday, gaining another 0.60% to 1286.70 this morning. The rest of USD/Asia is higher by between 0.15% to 0.30% this morning and it seems probable that regional central banks are doing a bit of smoothing today. Lower oil prices are modestly supportive, as was a neutral USD/CNY fixing today. However, USD/KRW looks on track to retest 1292.00 and USD/MYR, which gained no benefit from a weaker US dollar last week, could potentially reach 4.4500 this week. Higher Fed-rate-hike expectations will keep the pressure on Asian currencies this week and renewed lockdowns in China will make the situation darker still. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Asia equities slide on higher US inflation On Friday, the higher-than-expected US inflation data dissolved hopes of a less aggressive FOMC, prompting a mass sell-off of equity markets in the US and Europe. The S&P 500 slumped by 2.91%, the Nasdaq tumbled by 3.52%, and the Dow Jones fell by 2.73%. Things aren’t looking any better with US futures in Asia today, as the selling continues, perhaps with one eye on the weekend crypto meltdown. S&P 500 futures are 1.40% lower, Nasdaq futures have fallen by 1.80%, and Dow futures are 1.0% lower. Obviously, the slump by Wall Street has provoked a negative reaction in Asian markets today, and mass testing in China over the weekend has lockdown nerves elevated once again. Japan’s Nikkei 225 has tumbled by 2.70%, with South Korea’s Kospi doing slightly worse, retreating by 2.75%, while Taiwan is down by 2.25%. In mainland China, the Shanghai Composite is 0.85% lower, with the CSI 300 down by 0.95%. There is no solace for Hong Kong, the Hang Seng has slumped by 2.90% today. In regional markets, Singapore is 0.65% lower, Kuala Lumpur is down by 1.50%, and Jakarta has retreated by 1.95%. Bangkok has lost 1.25%, and Manila is 0.55% lower. Australian markets are closed, but New Zealand has slumped by 2.30%. Given the price action seen today in Asia, especially the continuing selloff of US index futures, it is unlikely that European markets will look to buy the dip. More likely is that they will continue to jail without passing go. Even the perpetually bullish FOMO gnomes of Wall Street may struggle to find a reason to buy the dip this afternoon, especially if the US yield curve continues to flatten. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Equity sell-off continues in Asia - MarketPulseMarketPulse

A market perpetually looking for reasons to temper Federal Reserve hiking expectations (so they can buy equities), had those quashed on Friday. US headline inflation accelerated to 8.60% YoY from 8.30% previously, with core inflation holding at 6.0%, slightly lower than April’s 6.2%. That sparked a scramble to reassess Fed hiking expectations, with some calling for a 0.75% hike at this week’s FOMC meeting. Equities were sold heavily while the US yield curve saw short-dated yields shoot higher while the 10-year to 30-year was also sold. That has left the 2/10-year tenor at just 10 basis points and 2/30-year at just 16 basis points. That is uncomfortably close to flat and with the R-word now on everyone’s lips, we can’t rule out the possibility of an inversion, which markets use as a signal for a recession. The 5/10-year already is. With higher yields and markets running for cover, the US dollar soared, with the euro getting pummelled along with fellow sentiment indicators, the Australian dollar, New Zealand dollar and the Korean won. Oil has also retreated again today as a US recession is complicated by mass Covid-19 testing over the weekend in Beijing and Shanghai. I’ll say it again, under Covid-zero policies, the virus only has to get lucky once and anyone trying to pick the bottom in China’s growth and equity markets on the basis that China was “one and done” on lockdowns is naïve. It is turning into a Black Monday in Asia as well after US and European equity markets were pummelled on Friday, as China risks also rise again. US equity index futures have continued their selloff this morning, oil continues to fall, the US dollar has risen as Asian currencies play catchup to Friday’s greenback rally, and Asian equity markets are taking some serious selling pressure. It is a measure of how quickly sentiment has turned that gold managed to disengage itself from its inverse correlation on Friday, finishing the day higher at USD 1871.50 an ounce. That indicates just how nervous investors out there are now, although I would like to see another positive close in the face of US dollar strength and higher US yields before calling a medium-term low. Given that gold has fallen in Asia, I am not so sure that this isn’t another false dawn for gold bugs. Perhaps the biggest carnage has been in the crypto space which is on the verge of a reckoning now that the gloves are off around global inflation and the realities of a new world where fixed interest actually pays a yield – albeit one still deeply negative in real terms. Bitcoin fell by around 10% over the weekend, while ethereum was cremated, falling by around 20%. That sell-off also continues this morning and I am wondering if some cross-margining stop losses are going to start washing through real asset classes. Things may get uglier if the pegs on (un)stable coins like tether start becoming untethered. Today’s data calendar is non-existent, which means markets will be allowed to continue stewing in sentiment and risk aversion. Australian markets are closed today, but looking at the price action around Asia, they may be glad they are. This week’s centrepiece is undoubtedly the FOMC policy meeting this Wednesday (NYT). I am not sure if Friday’s inflation reading is enough to provoke a 0.75% rate hike, although that won’t stop people from forecasting it. A 0.50% hike is done and dusted, and the crucial point will be what the Fed’s outlook is from here and whether they remain confident about a soft landing. The post-meeting press conference will surely be one of the most exciting of the year. Elsewhere, China will release its latest Medium Lending Facility rate sometime between today and Thursday. Cutting it from 2.85% would be a surprise (not a huge surprise), as the government remains intent on targeted stimulus and bank lending has already soared after the government ordered the banks to lend more. The Federal Reserve is not the only central bank with a policy decision this week. The Swiss National bank on Thursday would love to raise rates from -0.75% I am sure, but with risk aversion lifting the Swiss franc and the euro falling once again, it is boxed in. The Bank of England also meets on Thursday and markets are pricing in a 0.25% hike to 1.25%. Talk of 0.50% will come to naught as the BOE has raised the white flag on inflation already. Perhaps the most interesting one, which is usually the most boring, is the Bank of Japan on Friday. A continuation of the quantitative easing forever and the 0.25% cap on 10-year JGB yields is expected. However, USD/JPY has hit 135.00 this morning and if it reaches for 138.00 this week, the temptation/need to tinker with the JGB yield corridor may become irresistible. Despite all the rhetoric to the opposite recently, I don’t fully discount the mother of all spoofs occurring on Friday. Given the amount of long USD/JPY positioning out there, a slight hike in the JGB yield cap could see an ugly washout, maybe even back to the 130.00 region or lower. Wouldn’t that be something? This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Jonny Hart speaks to APAC Senior Market Analyst Jeffrey Halley about news impacting the market and the week ahead. It has been a Bonfire of Vanities in Asia today as equities tumble and the crypto meltdown continues. We start the podcast off with a recap of Friday’s torrid session post the US inflation data. We look at equities and cryptos as well as what has happened over the weekend and today in that space. Then it’s over to an old bugbear of mine, asset price inflation. With central banks in tightening mode, the playbook of the last 20 years just doesn’t cut it this time. Then it’s into the week ahead and we start with the Bank of Japan on Friday post-FOMC. We chat about the outlook for USD/JPY and “what if” the BOJ tinkers with policy this Friday. Then it’s over to the FOMC mid-week, surely the highlight for this week. A 50bps point hike, but what about those inflation numbers? Surely one of the most closely watched meetings in recent memory. As if that wasn’t enough, the Bank of England and Swiss National Bank also have policy decisions on Thursday. We discuss that and UK inflation. Finally, it’s time to circle back to the crypto space, is its time of reckoning upon us?     This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Market Insights Podcast (Episode 340) - MarketPulseMarketPulse

Oil eases in Asia on China fears Oil prices consolidated their recent gains overnight, with Brent crude edging 0.70% lower to USD 122.85, and WTI easing by 0.80% to USD 121.45 a barrel. Oil has continued retreating in Asia, driven by China slowdown fears after widened Covid mass testing was announced for Shanghai this weekend. Brent crude is 0.53% lower at USD 122.20, and WTI is 0.60% lower at USD 120.70 a barrel.   Oil markets probably have more downside risk in the short-term, with another wave of China slowdown fears capping the upside. Somewhat counterintuitively, higher than forecast US inflation tonight may also spur more selling as markets price in a higher recession likelihood. Any losses are going to be limited though, as the physical tightness of both crude and refined products globally remain powerful supportive factors. Weekend event risk should also limit pullbacks.   Brent crude has traced out a series of highs at USD 124.25 marking initial resistance. After that, the road opens to USD125.00 and USD 128.00 a barrel, bringing the Ukraine invasion highs back into sight. Support is at USD 120.50 and USD 118.50 a barrel. WTI has resistance at USD 123.15, the overnight high, and then USD 125.00 and USD 127.00 a barrel. Support is at USD 119.35 and USD 117.50 a barrel.   Gold remains in a coma Gold remains confined to a narrow USD 1840.00 to USD 1860.00 an ounce range, comfortably continuing to move in an inverted manner to US dollar moves. Gold’s main hope for a directional breakout rests with US Inflation data moving the US dollar materially one way or the other. In the meantime, bring a good book.   Gold has resistance at USD 1870.00, followed by the 100-DMA at USD 1890.00, and then USD 1900.00, where I expect there to be options-related sellers in the first instance. Support is at USD 1837, USD 1830.00, and then USD 1780.00 an ounce. I do not discount a disorderly retreat if the latter fails. The wider USD 1830.00 to USD 1870.00 range seems set to continue until the US data. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Oil dips on China concerns, gold range-bound - MarketPulseMarketPulse

Inflation jitters boost US dollar Pre-US inflation nerves triggered a wave of risk aversion in equity markets overnight, which translated into haven inflows to the US dollar, which booked gains in the DM and EM space. The dollar index leapt 0.74% higher to 1.0330 overnight, although the rally’s scope was flattered by the euro sell-off, the index’s largest component. How the euro performs today will dictate whether we have seen a low put in place or not. Higher US inflation tonight should lift the US dollar, with a lower print seeing renewed selling as Fed hiking expectations are pared. The index is almost unchanged in Asia, and has resistance at 104.00, with support at 1.0285.   EUR/USD slumped by 0.91% to 1.0620 post-ECB, adding a modest 0.13% to 1.0630 in Asia. EUR/USD may come under further pressure today if Eurozone sovereign spreads widen or if US inflation prints above forecast. Support at 1.0650 overnight becomes nearby resistance, while the 1.0770 and 1.0830 zone remains as formidable as ever. Support is between 1.0610 and 1.0600, and failures signal a retest of 1.0500 early next week. ​   Sterling fell 0.32% to 1.2500 overnight, where it remains in Asia. Economic worries, leadership concerns, and the Northern Ireland protocol continue weighing on the sterling. Resistance is at 1.2600 and 1.2670. Support is still at 1.2460 and 1.2400.   USD/JPY endured a torrid session overnight, selling off from 134.10 to near 133.20 at one stage, likely on EUR/Yen selling. Firm US bond yields saw it recover all those losses to finish almost unchanged at 134.35. Some long-covering today has seen it ease back to 134.15 in Asia. The Bank of Japan is unlikely to change policy next Friday post-FOMC, which will have hiked another 0.50%. The US/Japan rate differential should ensure that USD/JPY does not fall much further than 133.00 today, with its next target being 135.00. Soft US inflation though, could spur a US bond rally and see an abrupt fall by USD/JPY.   The price action on the Australian and New Zealand dollars was ugly overnight. AUD/USD fell 1.30% to 0.7100, where it remains in Asia. NZD/USD fell by 1.0% to 0.6385, before edging up to 0.6400 in Asia. A combination of US inflation concerns and renewed mass testing in Shanghai seem to have created a toxic risk sentiment cocktail for the Australasians. Both remain acutely vulnerable to negative developments on both fronts. AUD/USD support resistance is at 0.7050 and 0.7200. NZD/USD support/resistance is at 0.6300 and 0.6450.   USD/Asia strengthened overnight with the KRW the worst performer, losing over 0.55% to 1263.80. Asian currencies are steady in Asia after the PBOC set a neutral USD/CNY fix at 6.6994, but several currencies are near their recent lows versus the US dollar. USD/MYR is near 4.4000, USD/PHP is just below 53.00, USD/THB is 0.20% higher today at 34.640, and USD/INR is once again testing resistance at the 77.80 region. A high US inflation number today likely spurs another wave of Asian FX weakness to round out the week. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. US dollar strengthens overnight - MarketPulseMarketPulse

Asia markets follow Wall Street lower US markets couldn’t shake off the inflation/recession hoodoo last night after European markets endured a torrid session as the ECB swung to a hawkish stance. The S&P 500 slumped by 2.38%, the Nasdaq tumbled by 2.75%, and the Dow Jones lost 1.95%. In Asia, US futures have seen some modest short covering, lifting the S&P and Dow futures 0.20% higher, with Nasdaq futures gaining 0.35%.   In Asia, the overnight Wall Street performance was never going to give local markets a good start. But with US data and weekend risk ahead, as well as lockdown nerves around widening mass testing in Shanghai this weekend, regional markets are almost all in the red today. Japan’s Nikkei 225 has fallen by 1.35% today, with South Korea’s Kospi falling by 1.15%.   In Mainland China, equity markets have reversed earlier losses and are in modest positive territory. The Shanghai Composite is now 0.22% higher, while the CSI 300 is flat. I suspect that the authorities’ “national team” might be “smoothing” today. Hong Kong is performing better than expected, perhaps lifted by Ant Financial IPO hopes. Nevertheless, it remains 0.55% lower.   In regional markets, Singapore has fallen by 0.65%, with Taipei losing 0.85%. Kuala Lumpur has dropped by 1.0%, with Jakarta just 0.15% lower. Bangkok is 0.45% lower as it removes its last Covid restrictions on inbound travellers, but Manila has slumped by 1.90%. Australian markets are tracking Wall Street and China nerves, the All Ordinaries falling 1.0%, with the ASX 200 losing 0.85%.   The tone in Asia, ahead of crucial US inflation data, means that European equities are poised to open lower once again this afternoon. If Bund/BTP spreads widen once again today, nerves will be further frayed. Only a lower US inflation number this evening is likely to bring any solace to European markets. US markets are a 100% binary outcome of the US inflation data. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Shanghai nerves weigh on Asian equities - MarketPulseMarketPulse

The roller coaster activity on US stock markets continued overnight, with Wall Street deciding that inflation and recessions were an issue for two days in a row. A tiny rise in US Initial Jobless Claims probably tilted Wall Street over the edge, following the European Central Bank’s tilt to a hawkish bias at their policy meeting earlier in the day. Markets eye US inflation Thankfully, Friday is here on a number of levels, but most especially because we will see the release of US Inflation and Core Inflation data. Markets have been tying themselves up in knots over this all week, thanks to a thin data calendar. Like last Friday’s Non-Farm Payrolls, I am expecting a very binary outcome this evening with median forecasts for the headline at 8.30%, and core inflation at 5.90% YoY. A number at 8.40% or higher probably sparks a risk aversion sell-off across asset markets with the US dollar winning. Conversely, a print at 8.20% or lower probably sees a buy everything, sell US dollars rally, as Fed hiking expectations are pared ahead of next week’s FOMC.   China inflation this morning has passed without incident this morning. Inflation YoY for May was just under expectations at 2.10%. Inflation MoM fell to -0.20%, slightly higher than forecasts of -0.30%. The Covid-led consumer and industrial-led slowdown continues acting as a brake on inflation. Markets in China today have their eyes focused elsewhere. President Xi Jinping sent out mixed messages overnight, exhorting officials to maintain covid-zero, while also supporting economic growth. Good luck with that.   A potential on again, off again Ant Financial IPO is also doing the rounds. Bloomberg ran a story yesterday saying Chinese officials had indicated a willingness for it to go ahead. Alibaba ADRs rallied 7.0% in New York before reversing all those gains after Chinese officialdom denied the report. Today, Reuters is also running an exclusive the IPO had received a tentative blessing from officialdom as well. Hong Kong equity markets though are showing no signs of taking the bait this time. Where there’s smoke there’s fire I suppose, but with a valuation of around half of what it was around the abortive 2020 date, you’d probably ask why Alibaba and Ant would bother right now. Perhaps the main message would be that China was moving past “peak crackdown” as the economy slows.   Far more front and centre for mainland China markets, and Asian ones and sentiment, in general, are developments from Shanghai. One district was locked down yesterday and today it was announced that mass testing would take place in seven of its 16 districts, so basically half the city. Markets have naively assumed that China was “one and done” with Beijing and Shanghai, ignoring the experience of Covid-zero nations elsewhere. That reality might finally be permeating the most ardent dip-buyers now, and the prospect of a wave of renewed Covid lockdowns in Shanghai would have subdued Asian sentiment today, even without the bonfire on Wall Street last night.   The overnight ECB policy meeting outcome has already been analysis paralysised to death already. What stands out to me is the price action of EUR/USD, which after the hawkish pivot overnight, still closed 100 points lower at 1.0620. The devil is in the detail I suppose. ECB projections on growth and inflation suggest two years of stagflation ahead. A hike of 0.25% next month and one in September (they left the door open to a larger one), isn’t earth-shattering. It is telling that despite a pedestrian hiking schedule to errrr 0.0%, the Bund/BTP spread still blew out.   But I think the kicker is that the ECB will keep rolling over maturing bond purchases even if they stop adding more from July 1st. So effectively, their answer to stagflation is raising interest rates to 0.0%, while at the same time continuing quantitative easing under the surface. In their defence, the war in Ukraine has thrown a stagflation spanner in the works, but they would have arrived at this point to some degree anyway. Given the ECB’s response, I’d sell euro and European equities as well. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. US inflation Friday at last - MarketPulseMarketPulse

UAE Oil Minister lifts oil prices Oil prices shot higher overnight with the UAE oil minister warning that China’s reopening and the inability of OPEC+ members to pump at production targets posed more upside risks to oil prices. Tensions around Iran’s nuclear programme also diminished hopes of more Iranian crude on international markets. Finally, although US crude inventories rose by 2 million barrels, gasoline production was flat, keeping up the squeeze on refined products in the US.   That saw Brent crude ratchet higher by 2.40% to USD 123.75 a barrel, while WTI rallied by 2.25% to USD 122.45 a barrel. In Asia, oil prices have remained flat, with the lockdown of the Minhang district in Shanghai spurring China covid-zero part two fears, crimping demand in Asia today. That said, it is indicative of how tight supplies are that oil has not retreated on that news today. That leaves the chart picture looking positive with the respective RSIs still not yet in overbought territory. Brent crude has traced out a series of highs at USD 124.25 marking initial resistance. After that, the road opens to USD 125.00 and USD 128.00 a barrel, bringing the Ukraine invasion highs back into sight. WTI has resistance at USD 123.15, the overnight high, and then USD 125.00 and USD 127.00 a barrel. Support is at USD 119.35 and USD 117.50 a barrel.   Gold remains in a coma With little movement in the US dollar overnight, gold remained sedated as well, closing almost unchanged at USD 1853.35 an ounce. In Asia, a slightly lower US dollar has seen gold crawl modestly higher to USD 1855.00 an ounce. It seems that like currency markets, we are going to have to wait for tomorrow’s US Inflation data to create a directional move one way or the other. In the meantime, bring a good book.   Gold has resistance at USD 1870.00, followed by the 100-DMA at USD 1890.00, and then USD 1900.00, where I expect there to be options-related sellers in the first instance. Support is at USD 1837, USD 1830.00, and then USD 1780.00 an ounce. I do not discount a disorderly retreat if the latter fails. The wider USD 1830.00 to USD 1870.00 range seems set to continue until Friday. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Oil rises on UAE warning, gold stuck - MarketPulseMarketPulse

US dollar remains choppy US yields climbed higher overnight which was enough to lift the dollar index to a 0.20% gain to 102.55. It has given most of that back in Asia, falling to 102.40 thanks to a modest yen rally. Another inconclusive session leaves support/resistance at 101.30 and 102.70.   EUR/USD edged higher to 1.0715 overnight, adding another 0.15% to 1.0730 in Asia as JPY strength has spread, once again, to the broader FX market in Asia today. Resistance is between 1.0770 and 1.0830 remains a formidable barrier, while support remains at 1.0650. The outcome of today’s ECB meeting will set the tone for the single currency for the rest of the session.   Sterling fell 0.45% to 1.2535 overnight as economic worries, leadership concerns, and the Northern Island protocol weighed on the sterling. Like the other majors, it remains in a choppy range-trading scenario overall. Resistance remains at 1.2670, 1.2800, and 1.3000. Support is still at 1.2460 and 1.2400.   It was another feeding frenzy by USD/JPY overnight, by far the highlight in an otherwise dull night for currency markets. The disparity between US and Japan monetary policies was once again brought to the fore. USD/JPY leapt by 1.22% to 134.25 overnight. In Asia, nerves around invention have spurred some long-covering, pushing it slightly lower to 133.95. The Relative Strength Index (RSI) is overbought, but not grossly so, so I do not foresee an aggressive move lower just yet, that may have to wait for 135.00 to trade.   Although I can see an increase in rhetoric about the currency from Tokyo increasing, I do not believe we are close to intervention by the authorities at all. A far more likely occurrence would be some sort of tinkering with the BOJ’s yield curve control policy. Given the vehemence around no change from the BOJ and MOF, that would be a huge surprise as well (“Huge surprise” used for the 3rd time, danger Will Robinson!) A move by the BOJ in this regard would provoke an ugly washout of USD/JPY long positioning, potentially targeting 125.00. In the meantime, it is business as usual. Support is at 132.65 with the next upside target being 135.00.   Both AUD/USD and NZD/USD fell once again overnight, and I will admit to some confusion over the recent price action. AUD/USD fell 0.55% to 0.7190, easing to 0.7180 in Asia. NZD/USD fell 0.65% to 0.6445 where it remains in Asia. Although the reason behind the negativity eludes me, the technical picture is becoming more soggy than a wet piece of paper. Both currencies have broken below ascending one-month trendlines. Failure of 0.7150 and 0.6425 respectively, suggests another material move lower is occurring.   USD/Asia continues to range trade, with regional currencies almost unchanged today after a directionless New York session. Ominously, the Indian rupee shrugged off a 0.50% rate hike by the RBI yesterday and the USD/INR is trading at 77.678, near its highs for the year. Similarly, USD/MYR, USD/THB and USD/PHP are all closing in on their year’s highs again. The rally in oil prices could also cause USD/KRW to play catchup and appears to be weighing on all four. A higher than expected US CPI number tomorrow could complicate that picture further, lifting Fed hiking expectations. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Currency markets continue to range trade - MarketPulseMarketPulse

Shanghai restrictions weigh on Asian equities The moody range-trading that has typified US equity markets in June continued overnight as Wall Street decided that inflation was a concern, after all, sending equity markets lower. The S&P 500 fell by 1.08%, the Nasdaq finished 0.73% lower, while the Dow Jones lost 0.82%. Futures on all three remain negative today, easing by around 0.15%.   Asian markets were never likely to have a good start after a weaker New York session, but the lockdown of the Minhang district of Shanghai has delivered a much-needed wake-up call around the reality of China’s covid-zero policy to regional markets. Asia has started today in the red on renewed China slowdown fears, ignoring mighty Chinese trade numbers. The only exceptions are Japan, where a plummeting yen has lifted the Nikkei 225 0.30% higher, and Jakarta, where the palm oil export scheme has lifted the JCI 0.50% higher.   Elsewhere, it is a sea of red today. South Korea’s Kospi has fallen by 0.60%, Mainland China’s Shanghai Composite eased by 0.45%, with the CSI 300 losing 0.55%. Hong Kong’s Hang Seng has also fallen by 0.50%, with the positive sentiment of the overnight China tech ADR rally evaporating in a sea of mass testing stations.   Regionally, Singapore has fallen by 0.50%, with Taipei losing 0.45%, and Kuala Lumpur falling by 0.70% as the government faces ever-higher fuel subsidy bills with oil’s rally. An ironic outcome for an oil-producing nation. Bangkok has managed a 0.20% gain today, with Manila tumbling by 0.90%. Australian markets aren’t liking the Shanghai news either, the All Ordinaries have lost 0.95%, while the ASX 200 has fallen by 0.90%.   With the ECB meeting today, and nerves around China’s covid-zero policy and its impact on growth, along with a surge in oil prices overnight, Europe is unlikely to have any reason to click the buy button this afternoon. That may all change post the ECB is the central bank is more dovish than expected. Conversely, if the ECB delivers a hawkish surprise, European equities are likely to remain pressured. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. China lockdowns send Asia lower - MarketPulseMarketPulse

Inflation jitters send US yields, dollar higher Inflation. The chop-fest range trading beguiling currency, bond, and equities markets in the US this month continued overnight. Overnight, New York decided that it was in fact worried about inflation, having dismissed it the day before. Tomorrow, perhaps, they won’t be once again. That saw equities retreat, US yields firm, with US 10-years back above 3.0% once again, while the US dollar also booked some modest gains. Ignoring the noise elsewhere, oil continued its march higher, Brent crude jumping 2.40% to 123.95 a barrel overnight. An unexpected rise by official US Crude Inventories of 2.0 million barrels, and distillates by 2.5 million barrels provided no solace to oil markets, as gasoline stocks remained flat. Most of the price rise can probably be attributed to fighting talk by the UAE Oil Minister at a conference yesterday. According to Reuters, Minister Suhail al-Mazrouei said the OPEC+ shortfall to target was 2.6 million barrels, with OPEC+ compliance at 200%. He also warned that a reopening of China would place further stress on supplies. He also said that we were nowhere near peak oil prices. Gulp. In other news, difficulties monitoring Iran’s nuclear compliance puts a new nuclear deal, and more Iranian crude on international markets, as far away as ever. That leads nicely into China, where markets were awaiting this morning’s May Balance of Trade release. The trade balance has exploded higher to USD 78.76 billion, led by exports increasing by 16.90%, while imports climbed by 4.10%. I suspect port reopenings have flattered the data. However, from my point of view, the trade data is irrelevant to a much more important development that has occurred today. This morning, Shanghai residents awoke to the news that the Shanghai district of Minhang, home to two million people, has been placed under strict lockdown with mass testing scheduled for Saturday. Markets have been naively pricing in that the easing of restrictions in Beijing and Shanghai was the final victory over omicron, and thus, peak covid-zero. As I have said repeatedly with regards to covid-zero country’s experiences, the country has to get lucky 100% of the time, the virus has to only get lucky once. China is no different from anywhere else in this respect and buying the dip for a China bounce is a perilous activity. Covid-zero is going nowhere in China, and nor is the virus. Thus, the chances of extended restrictions returning, with the ensuing drop in China’s economic activity, remain as high as ever. They could repeat over and over again. About the only good news from this development is that it might take the edge off the oil rally. Still, the news isn’t all bad on the inflation front. The US Treasury Secretary indicated overnight that the US was looking to “reconfigure” tariffs on Chinese imports. Translation: we’ll drop a lot of them to try and slow inflation down ahead of November’s mid-term elections. Indonesia today, has also announced an export acceleration scheme to ship at least one million tonnes of palm oil and derivatives to international markets according to Channel News Asia. And yesterday from Reuters, India indicated it would soon allow 1.2 million tonnes of wheat exports after banning exports previously. Neither development will materially move the dial on food inflation thanks to the Russia/Ukraine conflict, but it does show both an understanding and willingness by exporting countries, of the downstream impacts globally and the need to assist in mollifying them. Like China’s covid-zero policy though, nobody should be naïve enough to expect them not to return and bite the global economy again. Food nationalism will continue to be a real issue throughout 2022 and into 2023. China’s trade date was the only tier-1 Asia data release today. Philippine’s trade balance held steady at USD-4.8 billion for April, barely changing from March. Imports rose 22.80% YoY, likely reflecting skyrocketing food and energy prices. Indonesia’s May Consumer Confidence leapt higher to 128.90, and the rising cost of living or not, it’s hard to see any recessionary signs here in Jakarta. Pak President’s removal of the mask mandate seems to have magically restored activity of pre-pandemic levels, and the traffic is well and truly back to normal here. So much so, that Jakarta’s local government has expanded the odd/even car restrictions to a larger part of the Big Durian. This afternoon’s undoubted highlight will be the European Central Bank policy meeting, perhaps the most anticipated one of the year. Given her recent guidance, ECB President Lagarde has primed markets for an ending to their quantitative easing but don’t call it quantitative easing programme, this month or next, as well as two 0.25% rate hikes in July and September. The rates curve has fully priced this in, with 130bps of hikes expected by year-end. I think that’s punchy myself, given that Europe is moving into a war economy, with a lot of inflation imported and beyond its control thanks to the conflict in the East. By default, one would expect that much of the euro’s recent recovery is down to those rate hiking expectations as well. So, this afternoon will be all about the press conference as it would be a huge surprise if they hiked by 0.25% today as well (note: I have already used huge surprise and central bank this week and I was wrong). A rate hike today could shake EUR/USD out of its 1.0700/1.0800 malaise and open gains to 1.1000. On the other hand, If Ms Lagarde has blinked and become dovish again, the adjustment lower by the ECB rates curve and EUR/USD could get quite emotional. The US calendar is dead ahead of tomorrow’s Inflation main event. US Jobless Claims may see traders grasping at straws on a slow news day. Otherwise, I suspect we will see another mood-swing session from the FOMO gnomes of Wall Street, with any excuse to buy, the genetically pre-programmed default option. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. And today’s theme is…. - MarketPulseMarketPulse

Oil is steady in Asia Oil prices rose slightly overnight as tight refined supplies persist in the US, and industrial action in Norway and a shutting down of a Libyan oil field continued supporting prices at recent highs. Brent crude finished 0.75% higher at USD 120.75 a barrel, and WTI rose 0.30% to USD 119.75 a barrel. Asia is once again adopting a wait-and-see position, with Brent and WTI unchanged in regional trading. Oil prices remain at post-Ukraine invasion highs if you strip out the days when tanks rolled across the borders. Returning Venezuelan and Libyan production to Europe and North America, should it occur, will not be material enough in the shorter term to force prices lower. Refining margins globally suggest that demand for petrol and diesel remain in heavy demand, with the refining logjam in refined products backstopping crude prices. A reopening China is also supportive of oil prices. Brent crude has resistance at USD 122.00, and USD 124.00, with support at USD 116.00 and USD 112.50 a barrel. WTI has resistance at USD 121.00, with current support at USD 115.00 and USD 111.25 a barrel. Gold’s flip-flop ranging continues A weaker US dollar into the end of the New York session saw yet another mechanical response by gold, which rose 0.56% to USD 1852.50 an ounce in another snooze-fest session. In Asia, some US Dollar strength had sent it 0.25% lower to USD 1848.00 an ounce in an automatic response. Until we get a material move one way or the other by the greenback, gold’s range trading looks set to persist. Gold has resistance at USD 1870.00, followed by the 100-DMA at USD 1889.00, and then USD 1900.00. Support is at USD 1837, USD 1830.00, and then USD 1780.00 an ounce. I do not discount a disorderly retreat if the latter fails. The wider USD 1830.00 to USD 1870.00 range seems set to continue until Friday. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Oil edges higher, gold directionless - MarketPulseMarketPulse

US dollar in choppy waters US yields eased overnight, pushing the US dollar lower as the choppy range trading in currency markets continues this week. The dollar index finished just 0.08% lower at 102.33, although the yen weakness probably flattered the final result. US dollar strength has returned in Asia, lifting the dollar index by 0.23% to 102.56 as the Japanese yen selloff spills into other currency pairs. Support/resistance remains at 101.30 and 102.70.   EUR/USD probed 1.0650 overnight, before rallying to close 0.10% higher at 1.0705. The USD/JPY strength has spread to the broader FX market in Asia today and sees EUR/USD falling by 0.20% to 1.0683. Resistance between 1.0770 and 1.0830 remains a formidable barrier, while support remains at 1.0650. With the ECB expected to swing to a tightening bias this week, losses should be limited unless US yields continue to march higher from here.   Sterling got a BoJo glow overnight, finishing 0.50% higher at 1.2590 overnight, before easing 0.1% to 1.2565 in Asia. Resistance remains at 1.2670, allowing a potentially larger rally to 1.2800 and 1.3000. Support is at 1.2460 and 1.2400.   USD/JPY has been the big mover over the last 24 hours, rising 0.55% to 132.65 overnight, before adding another 0.36% to 133.05 this morning. There has been little noise from Japanese officials today, emboldening the fast-money momentum traders into adding to long positions. Notably, US yields fell overnight, but USD/JPY still rallied. That could be an ominous development for Tokyo, and I would expect to see more “watching closely” noise in the days ahead. USD/JPY has immediate support at 132.00, with 135.00 its next upside target.   AUD/USD finished 0.50% higher at 0.7230 overnight, holding onto most of its post-RBA gains. Ostensibly a bullish technical development, that picture has quickly muddied with both AUD/USD and NZD/USD sharply falling by 0.45% to 0.7200 and 0.6460 today. There seems no obvious reason other than the US dollar strength seen elsewhere and the negative comments on trade by the China Vice Commerce Minister. AUD/USD has support at 0.7150, with resistance between its 100 and 200-day moving averages (DMAs) at 0.7230 and 0.7255.   USD/Asia continues to range trade, with some US dollar strength lifting USD/Asia slightly higher today. The INR and MYR continue to be the worst performers in the region, Japanese yen aside. Today’s RBI meeting could strengthen the INR if a 0.70% rate hike is enacted, otherwise, with 0.40% priced in, INR weakness will persist. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. US dollar eases with lower US yields - MarketPulseMarketPulse

Target outlook boosts equities US markets seized on Target’s softened outlook to price in peak US inflation on a slow news day overnight, sending Wall Street sharply higher. The S&P 500 rose by 0.95%, the Nasdaq rallied by 0.94%, and the Dow Jones gained 0.80%. In Asia, US futures have dropped sharply. Nasdaq and S&P 500 futures have fallen by 0.45%, with Dow futures easing by 0.30%. The price action reinforces the theory that it is tail-chasing fast-money dominating moves on Wall Street this week. Asia is ignoring the US futures’ moves today, as they often do, choosing to follow the overnight US main boards rally instead after a few very mixed sessions. The Nikkei 225 has risen by 0.85%, helped along by a weaker yen this morning. South Korea’s Kospi has added just 0.20%, perhaps held back by the downward Q1 GDP revision this morning. In mainland China, markets appear to be suffering a bout of profit-taking after a strong performance this week. China’s Vice Commerce Minister said today that foreign trade faced huge pressures and uncertainty, which certainly won’t have helped sentiment. The Shanghai Composite is 0.70% lower, while the CSI 300 has lost 0.40%. Hong Kong is ignoring the mainland noise, however, remaining laser-focused on the overnight Wall Street gains as the Hang Seng rallies 1.65% higher today. In regional markets, Taipei has rallied by 0.90%, with Singapore remaining a laggard, easing by 0.20%. Kuala Lumpur has added 0.20%, Jakarta has risen by 0.45%, Bangkok by 0.10%, and Manila by 0.30%. Australian markets have also posted modest gains after yesterday’s post-RBA selloff. The All Ordinaries has risen by 0.30%, with the ASX 200 edging 0.15% higher. European markets gave back some of Monday’s gain overnight but will probably use the price action from late in New York and Asia today as an excuse to open slightly higher this afternoon. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Asian equities follow Wall Street higher - MarketPulseMarketPulse

Target’s soft outlook boosts equity markets I warned yesterday that with a dearth of heavyweight data this week until Friday’s US CPI, we were likely to experience choppy trading, driven by swings in sentiment and headlines hitting the news ticker. Sure enough, that is what occurred overnight after US retailer, Target, gave a soft outlook and announced it had too much inventory and would cut prices to shift it.   If that headline had come out on another day or week, it may well have been subsumed in the day. But, with little else to go on, and a genetic predisposition to pick the low in the equity markets, investors in New York immediately interpreted that as the high in US inflation was nigh. US yields duly fell, US 10-years moving back below 3.0%. That saw some US dollar weakness, gold rally a little and of course, lower inflation means buying equities, which is what happened. To be fair, consumer discretionary got a pasting, but other sectors such as big-tech roared higher.   Tonight, it may well be another headline that the FOMO gnomes of Wall Street don’t like, and markets could well unwind all the overnight moves, or not. Roll on Friday.   In Asia today, we have had a few data releases already ahead of today’s main event, the Reserve Bank of India’s policy decision. Circling back to yesterday briefly, the Reserve Bank of Australia surprised both markets, and the author, by announcing a 0.50% rate hike. Local equities got clubbed, and the Australian dollar traded in a near 100-point range and managed to hold onto most of them as the RBA becomes the latest central bank to climb off the fence on inflation. Interestingly, the incoming Philippines Central Bank Governor also signalled rate hikes ahead, and after a slow start, Asia-Pacific central banks are playing catchup to the Federal Reserve. That should partially insulate Asian currencies from further weakness for now.   This morning, Japan’s final Q1 GDP Growth received a tiny upward revision to -0.10% as reopening saw strength in the consumer segment, if -0.10% could be called strength. The data is now historical and has been ignored by markets which remained laser-focused on the rapid ascent of USD/JPY, hitting 133.00 today, as the US Fed continues to signal more tightening, while the Bank of Japan signals it has no intention of adjusting its ultra-easy monetary policy. There has been an increase in verbal intervention from Tokyo officialdom, but not massively. I do not believe we are anywhere close to intervention in the Japanese yen by the Ministry of Finance yet. Japanese equities are enjoying a weakening yen though.   South Korean Q1 GDP got a slight downward revision from 0.70% to 0.60%. Again, in the context of recent events, the data is old news now and will be mostly ignored by markets. Cost of living and potentially softening consumer and export demand are far more pertinent and will probably keep the pressure up on the won, even though the Bank of Korea has itself started raising interest rates.   Today’s main event is the Reserve Bank of India interest rate decision due shortly. Markets have priced in a 0.40% hike after the unscheduled rate hike previously and a sharp swing in hawkish rhetoric by the RBI. With possum-in-the-headlight uber-doves, the RBA, hiking 0.50% yesterday, I’m not ruling out more aggressive action by the RBI today either, with inflation far above 6.0%, the top of their inflation band. Notably, the Indian rupee continues to weaken, despite recent US dollar weakness lifting other currencies across the world. USD/INR is trading at 77.6450 today, not far from recent highs around 77.80. That may factor into the RBI’s equations. A 0.75% hike would probably see the Sensex take a hit, but provide much-needed support for the currency, although India’s imported energy bill and wheat export bans will continue to erode the current account.   The data releases across Europe and the US today are strictly second-tier. Probably the most interesting will be the US official crude inventory data after last week’s surprise 5 million-barrel drop. With Brent crude and WTI both around USD 120.00 a barrel, sharp falls in headline crude inventories or refined products could spur another rally in oil prices. Otherwise, it is as I said earlier, markets swinging on sentiment shifts and headline risks. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. A target on your back - MarketPulseMarketPulse

Oil is steady in Asia Oil’s intraday gains overnight were pared back in New York as US yields and the US dollar climbed, leaving both Brent crude and WTI slightly lower for the session. Brent crude finished 1.05% lower at USD 119.95 a barrel, and WTI finished 1.10% lower at USD 119.00 a barrel. Asian markets are very much in wait-and-see mode, with Brent crude slightly higher at USD 120.15 a barrel and WTI edging higher to USD 119.25 a barrel. Whichever way you look at it though, both Brent and WTI prices are nearing post-Ukraine highs, stripping at the days of the initial hostilities themselves. Returning Venezuelan and Libyan production to Europe and North America, should it occur, will not be material enough in the shorter term to force prices lower. Refining margins globally suggest that demand for petrol and diesel remain in heavy demand, with the refining logjam in refined products backstopping crude prices. Additionally, the damp squib OPEC+ meeting outcome, with some production bones thrown to some angry dogs, and a potential recovery in demand from mainland China has got on top of omicron, provides yet more reasons to believe that physical demand will keep prices elevated. Brent crude has resistance at USD 122.00, and USD 124.00, with support distant at USD 116.00 and USD 112.50 a barrel. WTI has resistance at USD 121.00, with distant support at USD 115.00 and USD 111.25 a barrel. Gold’s flip-flop ranging continues Gold continues to bore traders to death as range trading and reversals by a thousand cuts continue. Overnight, a stronger US dollar and firmer US yields pushed gold 0.50% lower to USD 1842.00 an ounce, where it remains in yet another moribund Asian session. The chart picture shows gold is now eroding resistance at USD 1870.00, touching USD 1874.00 an ounce on Friday. But overall, resistance at USD 1870.00 remains intact, followed by the 100-DMA at USD 1889.00, and then USD 1900.00. Support at USD 1844.00 has given way, opening further falls to USD 1830.00  and then USD 1780.00 an ounce. I do not discount a disorderly retreat if the latter fails. Gold remains at the mercy of intraday directional moves by the US dollar and US yields. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

The spike in US yields across the curve overnight unwound early US dollar selling, sending the dollar index to a modest 0.24% gain for the day, closing at 102.41. US dollar strength continues in Asia, perhaps helped by BOJ comments that now is not the time to consider an easy monetary policy exit. ​ The dollar index has risen by 0.20% to 102.60 today, climbing back above the pivot point at 102.35. Support/resistance lies at 101.30 and 102.70 and remains in a wide and noisy range. US dollar rises in Asia - MarketPulseMarketPulse EUR/USD finished slightly lower at 1.0695 overnight, as US yields capped an attempted rally through 1.0750. It has edged lower to 1.0685 in Asia. ​ Resistance between 1.0770 and 1.0830 remains a formidable barrier, with support at 1.0650. With the ECB expected to swing to a tightening bias this week, losses should be limited unless US yields continue to march higher from here. Sterling finished 0.30% higher at 1.2530 overnight as PM Johnson survived a leadership vote. It has fallen to 1.2505 in Asia though as US dollar strength continues. ​ A rise through resistance at 1.2670 opens a potentially larger rally to 1.2800 and 1.3000, while the failure of support at 1.2460 could see sterling retest 1.2400. A widening US/Japan rate differential overnight saw USD/JPY soar higher and has had the Bank of Japan making plenty of comments on the wires today. The BOJ’s comments that they will not change monetary policy are cancelling out any impact of “rapid yen fall undesirable” comments. USD/JPY rallied by 0.82% to 131.90 overnight, and it has gained another 0.55% to 132.60 this morning. USD/JPY should theoretically be on the way to 135.00 now, but it remains entirely at the mercy of the direction of US yields. If US yields retreat this week, USD/JPY could easily find itself back below 130.00. AUD/USD has fallen through trendline support at 0.7195 this morning to 0.7175. Although AUD/USD has lost 0.50% over the last 24 hours, the move lower appears like markets trimming long positions ahead of the RBA, rather than a turn in sentiment. AUD/USD has support at 0.7150, with resistance between its 50/100/200-day moving averages (DMAs) between 0.7225 and 0.7255. It could trade both sides of that range post-RBA. A hawkish statement could see AUD/USD closer to 0.7300 by the end of the Asian day. USD/Asia moved higher on Monday as US yields rose, but overall, there is no sign of panic, merely a technical move in response. That could all change by Friday if US yields are still above 3.0% and US inflation rises above 8.50%, but for now, US dollar strength is mostly playing out versus the Japanese yen. USD/Asia is slightly higher this morning, rising by around 0.20%. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

China reopening boosts Chinese equities Higher US bond yields took the edge of Wall Street overnight, which was happy to tail chase the China reopening trade higher, especially as US-listed China equities performed very well. That left Wall Street closing modestly higher. The S&P 500 rose by 0.31%, the Nasdaq gained 0.40%, and the Dow Jones added just 0.07%. In Asia, US futures have continued falling, and all three major indexes are down 0.40% this morning, although that is not translating into universal negativity in Asian markets. Asian markets are mixed once again, with the growth-centric North Asia heavyweights doing well, for the most part, while the more value-orientated ASEAN markets are once again struggling, perhaps unnerved by USD 120.00 oil. The slumping yen has seen Japan’s Nikkei 225 rise by 0.60% today, though South Korea’s Kospi has fallen by 1.35% as it plays catchup to Friday after being on holiday yesterday. Taipei is also struggling, edging 0.40% lower. In mainland China, the reopening trade remains at full strength, with US-listed Chinese equities pricing in the worst is over overnight as well. That has been helped along by the belief that China has reached “peak-crackdown” on its tech giants. We shall see. The Shanghai Composite has risen by 0.50% today, with the CSI 300 climbing by 0.65%. Rather surprisingly, Hong Kong’s Hang Seng is almost unchanged, edging 0.10% lower. In regional markets, the rise of both oil and US yields appears to be weighing on sentiment. Singapore is 0.20% lower, while Kuala Lumpur has fallen by 0.50%. Jakarta has unwound some of yesterday’s losses, climbing by 0.50%, with Bangkok dropping by 0.80%, with Manila adding 0.15%. Australian markets are retreating ahead of the RBA policy decision in what appears to be a defensive move against a hawkish surprise. The ASX 200 and All Ordinaries have fallen by 0.90%. European markets jumped on the China reopening trade overnight, along with the possibility that Russia might “allow” Ukrainian wheat exports. Germany and France’s leaders should probably ask the Ukrainians first though. That rally is unlikely to be repeated today with higher US yields spurring an equity retreat in the US overnight, and US futures mired in the red this morning in Asia. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

US Treasury yields push above 3% US yields were on the move last night, with the curve from the 5-year to 30-year tenor now all above three per cent. That was enough to crimp the perpetual FOMO bulls of the stock market, with Wall Street finishing just above flat, while the US dollar also booked some gains. Gold fell slightly while oil also gave back early gains, Brent crude finishing almost flat, just shy of USD 120.00 a barrel. One notable loser was the Japanese yen, with USD/JPY climbing to two-decade highs around 131.90 overnight, before adding another 0.50% to 132.60 today. With the US/Japan rate differential hollowing out the cross, Japanese authorities resorted to verbal intervention this morning, BOJ officials saying a rapid yen weakening was undesirable. The US yield curve is starting to look pretty flat now between the 5-year and 30-year tenors, which is making me a little nervous. An 8.50%+ US inflation print could see it start to price in a recession and head to inversion in parts, as the data reinforce Fed tightening. In a stagflationary environment, central banks don’t have a good choice, just least bad ones. That said I don’t think the US is at stagflation yet, but if oil stays above USD 120.00 a barrel, it might soon be. Looking at the price action overnight, I am not entirely convinced that the US bond move was driven by inflation and Fed tightening fears. Yes, the US dollar rallied, but stripping out the yen, it wasn’t a currency bonfire. US equities still finished modestly higher, and gold’s retreat was limited, it is still boring everyone to death with range trading. The move higher in US yields could well be in anticipation of the USD 96 billion of US government bond sales hitting markets this week in the 3, 10 and 30-year tenors. Time will tell although if most of the US curve is still above 3.0% come Friday, the post-US inflation price action could be frisky indeed. Turning to the Asia-Pacific, all eyes are on the Reserve Bank of Australia policy decision at 1230 SGT today. The market is heavily weighted to a 0.25% rate hike to 0.60%, as am I. It would be a huge surprise if the RBA did a reverse Prince, didn’t let the doves cry, and hiked by 0.40%. That would see AUD/USD a lot higher and the battlers on the stock market having a bad day, as well as sending a message that the RBA had entered panic mode. A 0.25% hike is priced in and should have minimal impact on the Australian dollar which remains at the mercy of US-derived sentiment flows, like its flightless bird cousin across the Tasman. A change in tone to a more hawkish post-rate-decision statement could see some AUD strength though. Japanese Household Spending also disappointed this morning, improving slightly from March, but falling by 1.70%, it was well below forecasts. That would have been another reason to buy USD/JPY today, with the rhetoric emanating from the Bank of Japan this morning sounding a bit more nervous than previously. The rest of the Asian calendar is dead today, although we did get UK BRC Retail Sales YOY for May this morning, Retail Sales improved ever so slightly, but are still solidly negative at -1.50%. The UK has a post-Jubilee railway strike yesterday, and Boris Johnson survived a no-confidence vote. In BoJo’s case, TINA came to his rescue, there is no alternative. The railway strike is what I believe will be a summer/autumn/winter of discontent for the UK as the cost of living soars and the Bank of England waves the white flag. War in Eastern Europe and a UK government still seemingly intent on invalidating the Brexit agreement over Northern Island all add up to me struggling to find a reason for GBP/USD to ever see a 1.3000 handle in 2022. The data calendar across Europe is similarly second-tier with a few construction PMIs, and the US releases its April Balance of Trade. That is expected to improve to a mere deficit of USD 89.5 billion; however, this data is not usually market-impacting. It looks like we have 24 hours ahead of markets being driven by headlines and sentiment swings once again. Roll on Friday. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

The Japanese yen has started the week quietly. In the European session, USD/JPY is trading at 130.63, up 0.15% on the day. It was a week to forget for the yen, as USD/JPY surged 2.91%, the biggest weekly gain this year. The driver of the yen’s downswing was primarily the rise in US bond yields, which have started the week with gains and are closing in on the 3% level. US yields climbed on Friday after the May nonfarm payrolls were stronger than expected. The economy added 390 thousand jobs, above the forecast of 325 thousand and indicating that the labour market remains robust. The report has solidified expectations that the Fed will deliver 50-bps hikes at the June and July meetings. Ahead of the NFP release, Fed members were sending out hawkish messages to the markets. On Thursday, Fed Vice Chair Brainard said the Fed should not take a break from rate hikes in September, and that the Fed might continue with 50-bps hikes if inflation doesn’t peak. What makes Brainard’s comments noteworthy is that she is considered a leading dove on the Fed, which is indicative of the hawkish pivot the Fed has taken as inflation continues to accelerate. Echoing Brainard, Fed member Mester said that the Fed had to act aggressively to contain inflation and that could mean an increase in September.   BoJ’s Kuroda dismisses tightening With the Japanese yen declining in health and trading above 130 to the dollar, there has been talk that the BoJ might intervene in order to prop up the currency. BoJ Governor Kuroda poured cold water on any such expectations on Monday, stating that monetary tightening was not “suitable”. Kuroda said that the economy was still recovering from Covid and high commodity prices were adding pressure on the economy. He added that the BoJ would adhere to its ultra-loose policy until the Bank achieved its inflation target of 2%. With Kuroda doubling down on the Bank’s accommodative policy, the risk for the yen is clearly tilted to the downside, barring a decline in US Treasury yields. USD/JPY Technical USD/JPY faces resistance at 1.3124 and 1.3226 There is support at 129.56 and 128.14 This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Oil is steady in Asia as Saudi Arabia hikes prices Oil prices ignored Fed tightening nerves after the US data, rallying strongly with the relaxing of China Covid curbs, with its ensuing return of oil demand, the story driving oil markets. Brent crude rose 2.70% to USD 121.25 a barrel, with WTI rising 2.35% to USD 120.35 a barrel. There seems to be some confusion with pricing feeds on oil futures today, possibly as platforms shift their front-month futures from June to September. Brent crude has eased slightly in Asia to USD 120.45 a barrel, while WTI has eased to USD 119.65 a barrel. While China relaxing Covid curbs and Saudi Arabia hiking selling prices to Asia and Europe are supporting prices, potential Venezuelan shipments to Europe are providing temporary resistance.    Oil edges lower, gold steady - MarketPulseMarketPulse Whichever way you look at it though, both Brent and WTI prices are nearing post-Ukraine highs, stripping at the days of the initial hostilities themselves. Returning Venezuelan and Libyan production to Europe and North America, should it occur, will not be material enough in the shorter term to force prices lower. Refining margins globally suggest that demand for petrol and diesel remains in heavy demand, with the refining logjam in refined products backstopping crude prices.     Additionally, the damp squib OPEC+ meeting outcome, with some production bones thrown to some angry dogs, and a potential recovery in demand from mainland China which has got on top of omicron, provides yet more reasons to believe that physical demand will keep prices elevated.     Brent crude has resistance at USD 122.00, and USD 124.00, with support distant at USD 116.00 and USD 112.50 a barrel. WTI has resistance at USD 121.00, with now distant support at USD 115.00 and USD 111.25 a barrel.   Gold’s flip-flop ranging continues Strong US data saw the fast-money longs in gold take fright and head to the exit door on Friday. That pushed gold sharply lower by 0.95% to USD 1851.00 an ounce as the US dollar rallied. In Asia, a moribund session has seen gold add 0.25% to USD 1855.70 an ounce.     The chart picture shows gold is now eroding resistance at USD 1870.00, touching USD 1874.00 an ounce on Friday. Overall, though, resistance at USD 1870.00 remains intact, followed by the 100-DMA at USD 1889.00, and then USD 1900.00. So, gold has plenty of wood to chop on the upside. Support is at USD 1844.00, USD 1830.00, and then USD 1780.00 an ounce. I do not discount a disorderly retreat if the latter fails.   Gold remains at the mercy of intraday direction moves by the US dollar it seems. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

US dollar pares gains from NFP report Friday’s higher Non-Farm Payroll data saw the US dollar reverse much of its losses from Thursday, characterising a very choppy back-and-forth week last week. The dollar index rose by 0.40% to 1.0217, leaving the index slightly higher for the week. Notably, the rally was not enough to lift the index above its 102.35 pivot point, suggesting that the downside remains the path of least resistance still. Support/resistance lies at 101.30 and 102.70. In Asia, the China reopening trade has pushed the index slightly lower to 102.11.  US dollar eases lower in Asia - MarketPulseMarketPulse EUR/USD fell only slightly by 0.27% to 1.0720 on Friday post-data, where it remains in Asia. ​ Resistance between 1.0770 and 1.0830 remains a formidable barrier, with support at 1.0650. However, the single currency continues to show resilience at these levels, and resistance could be seriously tested if China’s reopening trade continues to support risk sentiment. Volumes will be impacted by European holidays today.   Sterling tumbled by 0.70% to 1.2490 on Friday in yet another whipsaw session. It remains there in Asia today. It has support/resistance at 1.2460 and 1.2670. A UK leadership challenge this week may serve to limit gains but a clean break of 1.2670 opens a potentially larger rally to 1.2800 and 1.3000, while the failure of 1.2460 could see sterling fall to 1.2400.   USD/JPY rose 0.73% to 130.85 on Friday, accounting for most of the dollar index gains post US data as US bond yields firmed slightly. USD/JPY has edged 0.15% lower to 130.65 today despite dovish BOJ comments, but the US/Japan rate differential should continue to support the downside unless US yields suddenly fall sharply. It has support at 129.00 and resistance at 131.00, a double top, and 131.30.   AUD/USD fell post US data as risk sentiment turned south. It finished 0.80% lower at 0.7205, easing another 0.20% to 0.7195 in Asia. AUD/USD has nearby support at 0.7180, an ascending one-month trendline, with resistance between its 50/100/200-day moving averages (DMAs) between 0.7225 and 0.7255. RBA hiking concerns ahead of tomorrow’s RBA meeting look set to limit gains in the short term.   USD/Asia moved higher on Friday on firm US data, with the Korean won, New Taiwan dollar, Singapore dollar, and India rupee the main losers, being favourites by fast-money to express risk sentiment of late. Yuan trading was impacted by a China holiday. Markets are quiet in Asia today, with Asian currencies booking only small gains versus the greenback. The sharp rise in oil prices on Friday, which continues in Asian trading today, is likely limiting Asia FX gains. The double-edged sword of China’s reopening is that oil prices are likely to remain firm as well as demand returns. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Asian markets rise as China eases restrictions Friday’s higher than expected US Non-Farm Payrolls saw Wall Street make an abrupt retreat as easier Fed hiking hopes on a slowing economy were dashed, although I’d argue a slowing US economy wouldn’t be good for equities either. The S&P 500 finished 1.63% lower, the Nasdaq tumbled by 2.47%, and the Dow Jones fell by 1.06%.  Asian equities rise on Beijing reopening - MarketPulseMarketPulse In Asia, an easing of restrictions in Beijing, along with reiterations of easy monetary policy in Japan has shielded Asia from New York’s back-and-forth volatility, lifting sentiment in US futures and North Asian markets. US futures have rebounded with Nasdaq futures rising 0.70%, S&P 500 futures are 0.50% higher, and Dow futures have added 0.40%.   Japan’s Nikkei 225 has risen by 0.60%, unwinding a rocky start. South Korea is closed today, but mainland China’s Shanghai Composite has jumped by 1.05%, with the CSI 300 leaping 1.50% higher. Hong Kong’s Hang Seng has rallied by 1.10% and it appears that reopening news and its positive outlook forward is outweighing any backwards-looking Chinese data like the PMIs for now.   The picture is more mixed in the rest of Asia, possibly thanks to higher oil prices and a soggy New York close. Singapore is 0.15% lower, having unwound most of its earlier losses. Taipei is 0.55% higher, while Jakarta has fallen by 1.50%, led by resources after the government announced it was investigating potential palm oil distribution cartels. Malaysia closed today, while Bangkok is just 0.25% lower, and Manila is down by 0.55%. Australian markets have also been unable to shake off Friday’s weak Wall Street close, ahead of an expected rate hike by the RBA tomorrow. The All Ordinaries are down by 0.25%, with the ASX 200 falling by 0.55%.   With most of Europe closed today, most eyes will be on UK markets, which reopen after a four-day break. The rise in oil prices over the past two days is likely to make cost-of-living concerns front-and-centre again, potentially weighing on sentiment. A potential change of leadership in the UK, regardless of your political views, will be another source of uncertainty. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

US nonfarm payrolls beats expectations Wall Street had another schizophrenic day on Friday as May US Non-Farm Payrolls outperformed, rising by 390,000 jobs, slightly less than April’s number, but well above market forecasts of 325,000. That sparked yet another tail-chasing reversal across asset classes as US markets continue to desperately search for “peak-hiking” from the Fed and return to their buy-everything happy space, an illness caused by endless rounds of quantitative easing and ultra-low rates by the world’s central banks over the past 15 years, as they themselves, tried to rewrite the laws of nature.   Equities markets tumbled, the US dollar rallied, bond yields edged higher, and precious metals fell on Friday. Meanwhile, energy markets continued reacting to a disappointing OPEC+ meeting on the production front, Brent crude and WTI both closing just above USD 120.00 a barrel. We can expect more of the same behaviour from US markets this week, tiring and asinine as it may be. US markets will have a second bite of the cherry this Friday when Inflation and Core Inflation for May are released. YoY Inflation is currently expected to be unchanged at 8.30%, with Core Inflation expected to ease slightly to 5.90%. As per Friday’s note, we can once again expect a binary outcome as we head into next week’s FOMC policy decision. ​ An “on forecast” to lower number equals buys everything, sell US dollars, higher equals sell everything buy US dollars. It’s pretty hard to guess what the FOMO gnomes of Wall Street will do until Friday, but I’m pretty sure volatility will, once again, be the winner.   Asia is having an altogether more orderly start to the week thankfully. China has announced a further easing of curbs in Beijing over the weekend, which is seeing some Asian equity markets, and US futures, trading in positive territory. Other glimmers of relief are that officials in Washington D.C. are considering a selective removal of tariffs on Chinese imports to aid the inflation fight. In the energy space, Reuters is reporting that Washington DC is allowing Spain’s Repsol, and Italy’s ENI, to resume debt-for-oil shipments with Venezuela. Libya announced its largest oil field had finally restarted operations. Oil has shrugged those headlines off in Asia, holding steady on weekend news that Saudi Arabia had hiked oil export prices to Asia and Europe, and with China reopening hopes suggesting higher oil demand.   Asia’s data calendar is quiet today. Australian ANZ Job Advertisements for May rebounded to a 0.40% gain MoM, after dropping 2.0% in April. More importantly, China’s Caixin Services PMI for May rose to 41.4 from April’s shocking 37.2 print. 41.4 is nothing to write home about either, but investors will take heart that some sort of rebound has taken place even as restrictions remained in place in Shanghai and Beijing, and that as they ease in both cities, the rebound will accelerate. That seems to be another tailwind for China equities today.   Holidays will impact markets today with South Korea, New Zealand, and Malaysia away today. Much of Europe is also closed including Germany, France, the Netherlands, and the Nordic region. UK markets return from a four-day break, with the UK media reporting that Prime Minister Boris Johnson could face a vote of no confidence and a leadership challenge this week. I’m not sure if BoJo’s demise would be bullish or bearish for the sterling or UK equities, I guess it depends on your point of view.   The data calendar is also very quiet in America this afternoon with the most heavyweight data releases back-ended later in the week including US CPI and the Bank of Canada policy decision. Tomorrow, we have a Reserve Bank of Australia policy decision, with the Reserve Bank of India on Wednesday. With all three, a rate hike is a certainty, the main question being by how much and whether slowdown fears cause them to blink on aggressiveness.   The next 24 hours in global markets, therefore, are likely to be driven by headlines and intraday swings in sentiment. A case in point being the Bank of Japan’s Kuroda reiterating today that there would be no tightening of monetary policy, which has lifted Japanese equities at the periphery while maintaining upward pressure on USD/JPY. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Jonny Hart speaks to APAC Senior Market Analyst Jeffrey Halley about news impacting the market and the week ahead.  Market Insights Podcast (Episode 337) - MarketPulseMarketPulse With Jonny returning from a four day holiday to celebrate Her Majesty’s platinum anniversary, it’s time to look at the week ahead for financial markets. First of all, though, we glance back to the market reaction to last Friday’s US Non-Farm Payrolls. Markets are reacting very mechanically at the moment which has been great for intraday volatility, but not so good for thematic investing or trading. Having set the scene for the week ahead we discuss the Asian market’s reaction to Friday’s equity sell-off, with Beijing’s loosening of covid restrictions today taking the edge of that, and in some cases, sharply reversing it. Central banks and oil prices dominate the start of the week aside from Beijing. Oil prices have climbed back above $120.00 a barrel, Jeff ponders that implication. Then it’s onto central bank rate decisions from Australia, India, and the European Central Bank this week. We break down each. Finally, in this blockbuster episode, we take a look at the week’s data high, US Inflation on Friday, and its possible market reactions.       This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Oil stages spectacular reversal higher A disappointing outcome from the OPEC+ meeting (for consumer nations), saw oil’s selloff in Asia yesterday completely reversed plus interest. Markets were disappointed when OPEC+ only agreed to hike production to 650,000 bpd for the next two months, instead of more structural increases from OPEC to cover the Russian shortfall. Things got worse for oil bears later in the season when the US Crude Inventory data posted a surprise 5.0 million barrel drawdown. Brent crude fell as low as USD 112.50 a barrel intraday, before staging a spectacular reversal higher which saw it close 1.93% higher at USD 118.05 a barrel. WTI fell to near USD 111.00 a barrel intraday, before it reversed sharply higher, finishing 2.40% higher at USD 117.55 a barrel. The US Crude Inventory number impacts WTI more and causing the Brent premium over WTI to narrow sharply. In Asia, the swathe of holidays has torpedoed volumes and liquidity. Brent crude and WTI have seen some short-term long-covering, pushing them slightly lower to USD 117.45 and USD 116.60 a barrel respectively. Markets have passed judgment on the OPEC+ moves unequivocally and clearly believe they will have no meaningful impact on the global supply/demand imbalance. The ferocity of the rally overnight leaves little doubt that the upside is the path of least resistance. Brent crude has resistance at USD 118.40, USD 120.00, and USD 124.00, with support distance at USD 112.50 a barrel. WTI has resistance at USD 117.70 and then USD 120.00, with now distant support at USD 111.25 a barrel. Gold rises sharply on falling US dollar It is a measure of how powerful the risk-on rally was overnight, and how desperate markets are to price in less Fed tightening, that gold leapt 1.20% higher to USD 1868.50 an ounce as the US dollar was crushed. Having probed USD 1874.00 in early Asian trading, it has retreated back to its starting point at USD 1868.50 as the morning progressed, volumes impacted by holidays in Greater China. The chart picture shows gold is now eroding resistance at USD 1870.00, with the 100-DMA at USD 1886.00 as its next target, followed by USD 1900.00. There, I suspect, it will encounter heavy option-related selling initially. Support is at USD 1844.00, USD 1830.00, and then USD 1780.00 an ounce. I do not discount a disorderly retreat if the latter fails. A weaker than expected US Non-Farm Payrolls number tonight should keep the less-Fed-tightening, risk-seeking party going. In that case, a test of USD 1900.00 is out of the question, followed by a gap higher if it breaks. However, gold bugs will know how quickly joy can turn to disappointment with gold, and a firm data print could well see the overnight gains unwound with interest. Be careful out there. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. https://www.marketpulse.com/20220603/799781/

US dollar eyes nonfarm payrolls There was a wax on, wax off feel to currency markets overnight. Soft ADP Employment data spurring a risk-on rally across asset classes as the Fed hiking outlook was tempered. The US dollar staged a broad retreat, unwinding all its gains from the day before in the major space except for USD/JPY. Asian market volatility is being dampened by holidays across the region today, including mainland China and Hong Kong, and the UK later today.  US dollar loses all of its previous gains - MarketPulseMarketPulse The dollar index tumbled by 0.78% to 101.75 overnight, an exact reversal of the rally from the day before. It is unmoved in Asia and support/resistance lies at 101.40 and 102.70. Its fate will be decided by this evening’s US Non-Farm Payrolls.   EUR/USD reversed all its previous day’s losses, rising 0.91% to 1.0750 where it remains in Asia. Resistance between 1.0770 and 1.0830 remains a formidable barrier, with support at 1.0650. Sterling reversed all its previous day’s losses, rising 0.75% to 1.2575 where it remains in Asia. It has support/resistance at 1.2460 and 1.2670. USD/JPY was almost unchanged at 129.85 as US bond yields barely moved. It remains unchanged in Asia. It has support/resistance at 129.00 and 131.30. Their fate will be decided by this evening’s US Non-Farm Payrolls.   AUD/USD staged a bullish outside reversal day overnight, making a new low before closing higher than the high of the day before, thanks to the broad-based risk-on rally after the US data. It leapt 1.27% higher to 0.7260 overnight where it remains today. AUD/USD has support at 0.7150, and the overnight rally took it above its 50/100/200-day moving averages (DMAs) between 0.7230 and 0.7255 as well. A soft Non-Farm print tonight could see AUD/USD rise to test 0.7350, with a weekly close at these levels being a bullish signal technically. Its fate will be decided by this evening’s US Non-Farm Payrolls.   Asian FX currencies booked modest gains overnight, with the rise in oil prices tempering the fast money inflows. Both the Malaysian ringgit and Philippine peso actually fell overnight, a result I suspect, of rising subsidy bills as oil prices climb higher. The Indonesian rupiah has rallied 0.70% to 14,420.00 today, while the KRW and MYR have risen by 0.10%. With a swathe of holidays across the region today, and no PBOC USD/CNY fixing, Asian markets look content to watch from the sidelines as we head into US data this evening and the weekend. Their fate will be decided by this evening’s US Non-Farm Payrolls. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. https://www.marketpulse.com/20220603/us-dollar-loses-all-of-its-previous-gains/

Soft US job data send equities higher Overnight, soft US ADP Employment data saw Wall Street rapidly price in less Fed tightening, spurring an impressive rally on Wall Street. With Wall Street clutching at any straw for an excuse to buy, the S&P 500 jumped 1.84% higher, the Nasdaq leapt to a 2.69% gain, and the Dow Jones rallied by 1.29%. US futures have paused for breath in Asia, all three indexes are unchanged.   Asian volatility appears to be suffering a holiday impact, rising more cautiously thanks to holidays in mainland China, Hong Kong, Taiwan, and Thailand. Japan’s Nikkei 225 has risen by 1.15%, with South Korea’s Kospi adding just 0.42%. Singapore is just 0.10% higher, with Kuala Lumpur easing by 0.25%, Jakarta gaining 0.90%, and Manila unchanged. Higher oil prices overnight may also be tempering gains in Asia.   In Australia, markets are slavishly following the US lead. The ASX 200 is 0.65% higher, while the All Ordinaries has risen by 0.80%, with New Zealand edging 0.30% higher.   European markets rallied overnight, likely on hopes that OPEC+ would ramp up oil production and with Wall Street’s climb. Oil prices closed around 2.0% higher in New York, with the OPEC+ announcement mere window dressing. That is likely to limit gains in Europe initially, especially with the UK away, weekend event risk, and much of Europe on holiday on Monday. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. https://www.marketpulse.com/20220603/asian-equities-edge-higher-6/

Oil sinks in Asia on FT/OPEC+ story Oil prices have fallen in Asia today after the Financial Times ran a story that Saudi Arabia has indicated to western allies that it could raise oil production if Russian output fell substantially. Overnight, oil gave back all its gains after a WSJ story released yesterday morning suggested that OPEC+ might exempt Russia from its production quotas. Taken in totality, today’s OPEC+ meeting is assuming far greater importance for global markets than the US Non-Farm payrolls tomorrow. We can expect a very binary outcome from today’s meeting. If OPEC+ does nothing but raise production by the 433,000 bpd already planned, oil prices are likely to rally sharply, with knock-on impacts in Asia and Europe equity markets. If Russia is exempted and Saudi Arabia and the UAE (the only two real swing producers), signal they will step up production, we can expect oil prices to fall sharply. Oil slides on OPEC+ report, gold steady - MarketPulseMarketPulse Overnight, Brent crude finished just 0.33% lower at USD 115.85, having tested USD 118.50 a barrel intraday. In Asia, it has gapped lower, falling by 1.50% to USD 114.15 a barrel. The overnight close at USD 115.85 is immediate resistance, with support at USD 112.00. There is a very well-defined rising 6-month support line on Brent crude at USD 104.50, with the 100-DMA also nearby. A daily close below this point should allow Brent crude to retest USD 100.00 a barrel. WTI also tested higher overnight, rising to USD 117.85 a barrel, before giving back all its gains to close 0.40% lower at USD 114.80 a barrel. In Asia, WTI has also fallen by 1.50% to USD 113.00 a barrel. Immediate resistance is the overnight close at USD 114.80, with support at USD 111.60 and then USD 108.00 a barrel. WTI’s 6-month support line lies at USD 102.50, followed by the 100-DMA at 101.00. Failure of these levels signals a move back to the mid-90s in the first instance. Gold defies a stronger US dollar Gold defied expectations overnight, shrugging off slightly firmer US yields and a higher US dollar to record a 0.50% gain to USD 1846.65 an ounce. The price action has left me scratching my head a bit, and I can only assume some risk aversion flows lifted gold as the hot money retreated from other asset classes. In the context of gold’s overall performance, I would need to see quite a few more days like this before changing my bearish outlook, with the gains overnight, insignificant in scope. In Asia, gold has eased infinitesimally to USD 1845.00 an ounce. Overall, gold remains confined to a USD 1830.00 to USD 1870.00 range, and one could argue a USD 1840.00 to USD 1860.00 an ounce range. Gold’s inability to rally on recent US dollar weakness remains a primary concern. Gold has resistance at USD 1870.00 and then USD 1900.00, where I suspect there will be plenty of options-related selling. Support is at USD 1830.00 and then USD 1780.00 an ounce, and I do not discount a disorderly retreat if the latter fails.   This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

US dollar rises on strong data, Fed expectations The dollar index leapt higher overnight, thanks in part to the heavy weighting of the euro and yen in it, which slumped against the greenback. Robust US data and an ensuing extinguishing of hopes that the Fed would need to ease hiking expectations were behind the US dollar rally. The soggy data from Europe and the UK this week, in contrast to US releases, reinforcing greenback strength.   The dollar index soared 0.75% to 102.54, rising above the long-term triangle line once again, today at 102.35. In Asia prices have remained steady, the index edging up to 102.57. The 100-point move higher has left support distant at 101.75, while the close above 102.50 suggests the index could retest 103.00, especially if US yields rise again today, putting more downward pressure on the yen, which also has a large index weighting.   EUR/USD fell by 0.75% overnight, with US data leaving Fed hiking expectations on track, while soft GDP data from the Eurozone this week continues to darken its outlook. EUR/USD fell 70 pips to 1.0652, where it remains in Asia. The 1.0800 to 1.0830 region ahead of the multi-decade breakout line looks like an insurmountable barrier for now. Risks are now skewed towards a retest of 1.0600, although if OPEC opens the pumps, the single currency could receive a boost.   GBP/USD is in the same boat as the euro and fell by 0.93% to 1.2485 overnight, closing below support at 1.2500 which become immediate resistance. The series of daily highs just below 1.2670 has become a formidable barrier now, particularly with the challenging economic environment in the UK staying the BOE’s rate-hike hand. Risks have shifted towards a test of 1.2400. Liquidity will be severely reduced today and tomorrow with UK holidays, meaning sterling volatility could track higher.   USD/JPY rallied 1.13% higher to 130.13 after US data put the Fed hiking path back on track and US bond yields firmed. With the Bank of Japan and government officials still vehemently sticking to a no rate hike outlook, the US/Japan rate differential and outlook spurred a powerful rally by USD/JPY. The USD/JPY correction looks over for now unless US yields suddenly move lower. Resistance at 130.00 broke overnight and becomes nearby support, followed by 129.00. Resistance lies just above 131.00.   AUD/USD failed ahead of the 0.7250 zone overnight, which contains its 50, 100 and 200-day moving averages (DMA). As US data hit the wires, AUD/USD retreated to finish almost unchanged at 0.7175. A souring of sentiment could see AUD/USD testing support at 0.7150, opening a potentially deeper correction. ​ Having traced out a series of tops at 0.6560, NZD/USD continued to underperform overnight as sharp economic slowdown fears increase. NZD/USD fell 0.50% to 0.6480 where it remains this morning. Failure of 0.6400 signals an outright reversal and a return to the low 0.6200s.   While currency markets in the DM space remain barely changed in Asia, traders are content to wait and see, there is pronounced weakness in the Asia FX space today. Asian currencies retreated overnight as the Fed’s hike path was confirmed by US data releases, and that has continued in Asia. USD/KRW has risen 0.45%, USD/TWD is up 0.80%, while USD/CNY, USD/SGD, USD/THB, and USD/SGD are all around 0.20% higher.   I believe most of the sharp reversals seen overnight and today are due to the amount of risk-seeking hot money that has piled into EM recently, running for the door. The fall of the euro, AUD and NZD also suggests the same. As such, I do not believe we are at the start of another major move lower by Asia FX yet. That likely requires US 10-year yields to creep above 3.0% again, although gains will be limited as well. Asian FX should also get an OPEC+ boost today if the grouping side-lines Russia and opens the taps. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Asian equity markets dip Asian equity markets are lower today as a thin data calendar and slow news ticker leave them content to produce another follow-the-leader session, coat-tailing the direction of overnight US markets. Robust US data overnight reinforced Fed hiking expectations which saw US equities fall once again. Although I note, that the recent rallies have been much larger in percentage terms than the falls have been, suggesting that bottom-fishing momentum is building as slowdown outlooks increase.  Asia markets follows the leader - MarketPulseMarketPulse Overnight, the S&P 500 fell by 0.75%, the Nasdaq fell by 0.72%, and the Dow Jones eased by 0.54%. In Asia, US futures remain unchanged today, with the usual counter-trend move to the overnight session almost absent. The fall in oil prices in Asia today has limited the fallout in Asian markets though, with Japan’s Nikkei 225 recouping early losses to be down just 0.05%, although the Kospi has fallen by 0.95%.   Mainland China markets have also pared losses, the Shanghai Composite is down just 0.05%, while the CSI 300 is down just 0.15%. Local markets may also be finding support from the news that the central government has ordered state-owned banking heavyweights to set up a CNY 800 bio ($120 bio) line of credit for infrastructure projects according to Bloomberg. Hong Kong’s Hang Seng is down by 1.20% though, perhaps reacting negatively to a tightening of Covid-19 policies once again.   Across regional markets, Singapore has eased by 0.35%, with Taipei losing 0.50%, Kuala Lumpur falling 0.30%, and Jakarta remaining unchanged. Bangkok has lost 0.45%, with Manila retreating by 0.75%. Australian markets are in full retreat, the All Ordinaries and ASX 200 tumbling by 1.10%, with local markets continuing to mirror Wall Street’s price action.   European equity markets should open slightly lower this afternoon by today could be a big day for Eurozone markets, although activity will be diminished with UK markets closed today and tomorrow, and everybody stuck at an airport trying to go on holiday. Everything rests on the OPEC+ meeting today. If Russia is side-lined, I mean exempted from its production quotas, with other members stepping up, European markets could find themselves with a decent tailwind today. A business as usual outcome is likely to see a disappointing reaction. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Oil slides on OPEC+ report Oil markets are on the move this morning, with oil prices dipping by 2.0% in early trading after the Financial Times reported that Saudi Arabia has indicated to western allies it could raise production to cover any substantial fall in Russian production. That follows on from my comments yesterday that this week’s OPEC+ meeting later today could be a pivotal one if Russia is given an exemption from its production quotas, which would allow the two main swing producers, Saudi Arabia, and the UAE, to ramp up exports to fill the gap.   None of that will alleviate the refining bottleneck/crunch that is causing petrol and diesel prices to soar globally, but it would be a rare piece of good news for the global economy and the inflation fight. It certainly isn’t in OPEC’s interests to send the world into a recession, and probably the only loser would be Russia which is making more money today than pre-Ukraine invasion thanks to soaring oil prices. The cynic in me wonders if some back-room horse-trading has gone on between the West and Saudi Arabia/UAE to get to this point. It’s amazing how US gasoline prices and mid-term elections focus the mind. That aside, today’s OPEC+ meeting may even overshadow the US Non-Farm Payrolls release this week, and if it results in sharply lower oil prices, look for a potential rally in equity and bond markets globally as hiking outlooks are pared.   Overnight, exactly the opposite occurred, after mostly robust US data had markets rolling back their over-optimistic expectations that the Federal Reserve wouldn’t have to hike as much as indicated. US JOLTS Job Openings in April eased slightly to 11.4 million, just above expectations and two job openings for every unemployed American. JOLTS Job Quits remained steady at just above 4.4 million. Following on from firm Retail Sales recently, ISM Manufacturing shrugged off the gloom in Asia and Europe by unexpectedly rising to 56.1 versus an expected drop to 54.5. ISM Manufacturing Orders also rose to 55.1, although ISM Manufacturing Prices slipped to 82.2. ​ ISM Employment fell to 49.6 but the JOLTS data suggests that is because of a lack of workers, not easing labour market requirements.   So, despite concerns around the housing market, and rightly so, the US economy continues to fire on all cylinders. Nothing in that data will give the Fed any concerns about the trajectory of rate hikes, so 0.50% hikes until September it is, and quantitative tightening proceeds. The biggest beneficiary was the US dollar, which soared against the sterling and euro overnight, given their soft data this week. That was helped along by US yields along the curve firming modestly. Wall Street equity markets retraced, but I believe the only modest reaction by the bond market, limited the damage. Probably the most head-scratching move was by gold, which rose slightly despite a higher US dollar. That said, I remain concerned about the recent underwhelming price action by gold.   In Asia today, the calendar is fairly thin with the Manufacturing PMIs now out of the way. Australia’s April Balance of Trade outperformed, rising to AUD 10.495 billion. Retail Sales fell slightly as expected but printed right on forecasts at 0.90%. At midday (SGT), Indonesian Inflation for May is released and is expected to rise slightly YoY to 3.60%. That probably won’t be enough to force Bank Indonesia’s hand and hike rates at the June meeting, and nor has a slightly wobbly rupiah detracted them from supporting Indonesia’s post-pandemic recovery. A print above 4.0% may change that stance though.   Eurozone PPI will be a non-event after the PMI and GDP prints earlier in the week signalled already, that stagflation is alive and well in the war-time economy of Europe. US Factory Orders will grab some attention, especially if the figure is weaker, and market pundits will try and extrapolate tomorrow’s US Non-Farm release from today’s ADP Employment, usually a fool’s errand. But none of this really matters, because as I have said early, today will all be about the outcome of today’s OPEC+ meeting. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

OPEC+ rumours sink crude prices The announcement of the partial EU ban on Russian crude imports was a mild tailwind yesterday, but by and large, looked to have been already priced into markets. What did surprise markets was a Wall Street Journal article suggesting that OPEC might exempt Russia from the production quota agreement at tomorrow’s OPEC+ meeting. Although its impact on WTI was minimal in context, Brent crude, the internationally traded benchmark, plummeted by 4.50% to close at USD 116.10 a barrel, while WTI only finished 2.0% lower at USD 115.25.   The internal politics of OPEC+ makes the Game of Thrones look like a teddy bears picnic, and there are a couple of ways one could interpret the WSJ story. Firstly, it is an eminently sensible move by OPEC given that a sanctioned Russia has no hope of meeting its production commitments anyway, better to let the rest of the group make up the deficit and earn brownie points with the rest of the world. Or, OPEC has become upset with Russia for selling crude oil at massive discounts to India, China and others, undermining OPEC members’ market share. The other variable, if the story is correct, is did Russia agree to it, or was it imposed by OPEC on the plus in OPEC+?   All will be revealed tomorrow at OPEC+’s meeting I suppose. Realistically, only Saudi Arabia, the UAE, and perhaps Iraq, can rapidly increase production, as the rest of the group can’t meet their present quotas, let alone larger redistributed ones. If Russia has agreed to this course of action, it would weigh on oil prices, rebalancing supply, and demand but not enough to send Brent crude back through USD 100.00 a barrel. If this outcome was imposed on Russia, which disagreed with it, that implies a major fracture in OPEC+ unity. That would be a much more bearish development for oil prices. My belief is that Russia has agreed to this course, or the story is incorrect. Any other outcome appears to mean OPEC shoots itself in the foot.   Either way Brent crude is now eight dollars lower than yesterday’s USD 124.00 a barrel high, having slipped by 0.30% in Asia through support at USD 116.00 to USD 115.90. Failure of USD 115.00 could see a capitulation to USD 112.00. ​ WTI tested USD 120.00 a barrel overnight, before falling five dollars to USD 115.25. The USD 120.00 region is a clear resistance level now and failure of USD 113.00 could see WTI tumble towards USD 108.00 a barrel.   The next 36 hours in oil markets are looking rather tasty from a volatility point of view, despite already seeing huge overnight session ranges. The OPEC+ meeting, based on the WSJ article, has now transformed from the monthly business-as-usual event to a potential structural turning point for oil markets.   Gold is in trouble As I warned yesterday, the real test of gold’s resilience would be if it held firm in the face of US dollar strength and rising US yields again. On both counts, it failed overnight, as just that situation sent gold 1.0% lower to USD 1837.50 an ounce. In Asia, gold has eased again as the US dollar moves higher, falling 0.22% to USD 1833.50 an ounce. Gold’s inability to weather the most modest US dollar strength bodes ill and reinforces my fear that its recovery from USD 1780.00 has been built on sandy foundations.   Gold now has resistance at USD 1840.00, previous support and the 200-day moving average (DMA). That is followed by USD 1860.00 and USD 1870.00 an ounce. If US dollar strength persists, and US yields continue rising, gold is increasingly at risk of a retest of USD 1800.00 and then USD 1780.00 an ounce. Failure of USD 1780.00 signals a deeper, and possibly disorderly fall to USD 1700.00 an ounce. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Dollar gains ground against majors Currency markets continued to trade in a choppy, but ultimately consolidative range overnight and this morning. Higher US yields overnight allowed the US dollar to be ascendant, the dollar index rising 0.48% to 101.78, having probed above 102.00 intraday. The dollar index has added 0.14% to 101.93 this morning. It remains in a broad range between support/resistance at 101.00 and 102.50.   EUR/USD fell on a stronger US dollar and weak data overnight, finishing 0.44% lower at 1.0730. It has eased another 0.13% to 1.0718 in Asia, having dipped below 1.0700 intraday overnight. EUR/USD is struggling to find the momentum to challenge resistance at 1.0800 and 1.0830. The job will become harder if US yields continue climbing, although lower oil prices would be supportive. Support is at 1.0680 and 1.0640.   GBP/USD eased by 0.42% to 1.2605 overnight, taking out support at 1.2600 intraday. It has fallen to 1.2595 this morning and has traced out a decent top at 1.2670 for now. The fragile economic situation in the UK likely means we have seen the best of the sterling rally for now, especially if the US dollar has bottomed. ​ Support is now at 1.2540 followed by 1.2500.   The overnight price action on USD/JPY highlighted unequivocally that the US/Japan rate differential is the primary driver of USD/JPY price action. Rising US yields overnight provoked an immediate response in USD/JPY, which rallied sharply by 0.85% to 128.70, rising another 0.40% to 129.20 in today’s session. USD/JPY is now well clear of its previous descending trendline resistance at 127.30, and if US yields rise in New York later today, it may well test 130.00.   AUD/USD and NZD/USD both eased slightly overnight, with NZD/USD disproportionately impacted as economic slowdown fears ratchet higher. NZD/USD has lost around 1.0% in the last 24 hours to 0.6490 today. Having traced out a series of tops at 0.6560, support lies at 0.6450. AUD/USD is only modestly lower today, implying a fair amount of AUD/NZD buying is going through the market. It continues to consolidate in a 0.7150 to 0.7200 range.   Nothing much is happening in the USD/Asia space today. Firmer US yields, and thus, a firmer US dollar, saw Asia currencies reverse most of the previous day’s gains, with the Malaysian ringgit, once again, a notable underperformer, as was the Thai bhat yesterday after weak data. With the PBOC setting neutral USD/CNY fixes over the last few sessions, the consolidation of USD/Asia looks set to continue. Weak PMI figures from across the region have seen further weakness today, but it will be the direction of the US bond market that will ultimately dictate whether the Asian currency sell-off is set to resume, or not. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Soft PMIs sends Asian equities lower Weakening Manufacturing PMI data from across the Asia-Pacific, combined with a low close on Wall Street, sees most of Asia trading in the red today, ignoring the bounce in US index futures this morning. Overnight, a rise in US yields saw the S&P 500 finish 0.63% lower, the Nasdaq lost 0.41%, with the Dow Jones easing by 0.57%. In Asia, US futures have rebounded on thin volumes, S&P 500 and Nasdaq futures rising by 0.30%, while Dow Jones futures have unwound overnight losses, rising 0.60% and suggesting month-end flows played their part in the overnight retracement.   With most of Asia in the red, one exception is Japan where the Nikkei 225 has risen by 0.65% today. The rise in US yields overnight inspired a bout of yen weakness, which notionally, will improve exporter performance. In a similar vein, the Kospi is also 0.60% higher, although the Shanghai reopening may be playing a greater part in that rally.   In China, the contractionary Caixin Manufacturing PMI has drowned out any Shanghai reopening peace dividend, the Shanghai Composite and CSI 300 are both down 0.10%, while Hong Kong is 0.20% lower. Regional markets are also lower, although Singapore has managed to rise by 0.50% today. Elsewhere, Taipei is down by 0.55%, Kuala Lumpur is down 0.80%, Bangkok is 0.20% lower, and Manila has fallen by 0.60%. Jakarta is closed for a holiday. In Australia, the All Ordinaries has eased 0.10%, while the ASX 200 has risen by 0.10%.   A nondescript Asian session will not provide much lead for European markets, which headed lower overnight on stagflationary data and as Russia cut off natural gas supplies to Denmark, the Netherlands, and a small importer in Germany over rouble payments. Today, however, Europe should get a boost from the OPEC Russia production quota exemption story.   US markets, as ever, remain a turkey shoot. Today they might be nervous about US inflation and Fed tightening, or they may not. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Shanghai ends virus restrictions Asian markets are trading with a negative tone today, with the ending of virus restrictions in Shanghai today having little to no positive impact. Mostly that is due to the flip-flop of the day in US markets, which reopened overnight. New York decided overnight to be nervous about Fed tightening once again, having dismissed it last week. Tomorrow, they may decide it’s not a problem once again, who knows. Either way, the Fed’s Waller’s hawkish remarks on Monday and the start of quantitative tightening this week by the Fed prompted Wall Street to close slightly lower after US yields rose, after a few sessions of sideways trading. That also saw some modest US dollar strength while gold moved lower in another session of unconvincing price action. With Wall Street setting a negative tone for Asia, Manufacturing PMIs from across the region did nothing to lift the tone. China’s Caixin Manufacturing PMI rose slightly from April, the May number climbing to 48.1. Partial reopenings in China have seen the official and Caixin PMIs rebound slightly this week, but not enough to push them into expansionary territory once again. Notably, May Manufacturing PMIs from Australia, Malaysia, Taiwan, Thailand, and the Philippines all fell from April. Although mostly expansionary, one cannot but conclude that China’s slowdown is finally permeating regional economies. The only exception was Vietnam, long a China alternative. Manufacturing PMI rose to 54.7 from 51.9 previously. So a combination of soft PMIs and a negative Wall Street session are dampening Asian sentiment today. Much has been made of the ending of Shanghai virus restrictions today, with many seeming to think it offers an instant panacea to an Asian slowdown. Unfortunately, I must add a word of caution here. China’s covid zero strategy has not suddenly gone away, the opposite in fact. And as other countries with covid zero strategies have found out, the country needs to get lucky 100% of the time, the virus only needs to get lucky only once. Any returning outbreaks in Beijing or Shanghai or Shenzhen etc, will put China back to square one. One potential piece of good news for markets comes from OPEC+, who never cease to amaze me with their ability to surprise us sometimes. Late in New York, a story started circulating that OPEC might exempt Russia from the production quota agreement at the OPEC+ meeting tomorrow. That slack being taken up by other producers, although realistically, that means Saudi Arabia and the UAE. The potential for higher output making up for lost Russian oil saw crude prices fall by 5.0% overnight. All eyes will be on the OPEC+ meeting tomorrow for confirmation. Looking ahead, Asia’s data calendar is now dead with German Unemployment and UK Nationwide House Prices holding the most interest for markets this afternoon. Overnight, French GDP contracted QoQ for Q1, with inflation rising. Italian GDP narrowly avoided a Q1 contraction, but inflation also rose. It highlights the difficult position the ECB finds itself in as stagflation, exacerbated by the Ukraine conflict, makes its presence felt in Europe. There are no good choices for a central bank in this situation, and although the ECB will probably ramp rates up to errrr… zero per cent, the increasingly dark economic picture is likely to limit EUR/USD gains. One piece of good news though would be if the OPEC Russia exemption story is correct. Tonight, the US releases May ISM Manufacturing PMI and the JOLTs Job Openings for April. Manufacturing PMI should retreat slightly from April’s 55.4 but remains expansionary. And unless the JOLTs data tumbles massively and prints under 11.0 million jobs (11.4 exp), neither number is likely to move markets. The move higher by US yields, should it continue this evening, is going to have far more impact. Otherwise, US markets, and by default, global markets, will still indulge in schizophrenic swings in market sentiment as the FOMO dip-buyers become increasingly frantic in their attempts to pick a cyclical low in equity markets. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Europe’s ban on Russian oil sends black gold higher The announcement that a partial EU ban on Russian oil imports has made it over the finish line sent oil prices higher overnight. Recovering PMI data from China today, and by default recovering energy consumption, has seen the rally continue in Asia. The price action by oil this past week has been ominous, suggesting that supplies of refined products is getting worse, and not better. The EU oil ban on Russia further complicates that picture and I am wondering how long markets can continue bottom-fishing elsewhere while ignoring oil’s price rise. Overnight, Brent crude rose by 2.05% to USD 121.65 a barrel, and today, it has rallied another 1.20% to USD 123.10. WTI rallied by 2.20% to USD 177.65 overnight, gaining another 0.80% to USD 118.55 in Asia today. Brent crude is now a hair’s breadth away from resistance at USD 123.80, after which there is no resistance on the charts until USD 131.60 a barrel. Support lies at USD 116.00 a barrel. WTI has taken out resistance at USD 116.70 a barrel, which now becomes support, followed by USD 116.00. The USD 120.00 region will provide some psychological, and possibly option-related resistance, but there is now nothing on the charts until USD 126.80 barrel. Markets will find no solace from this week’s OPEC+ production meeting, as outlined in yesterday’s note. If China is reopening, and Europe is limiting Russian oil, there is only one obvious direction from here, for too long, ignored by markets. Only a surprise Iran deal, unlikely as they are seizing tankers at the moment, or a capitulation to Venezuela’s autocratic government, could change the supply/demand dynamic. Neither would alleviate the squeeze in refined products underpinning the rally. Gold trades sideways Gold seems determined to bore traders to death after another inconclusive overnight range-trading session. It probed resistance around USD 1860.00 an ounce overnight but retreated to finish just 0.14% higher at USD 1855.80 an ounce, marking another inconclusive session. Ominously, gold has fallen in Asia at the first sign of US Dollar strength, Gold has eased by 0.13% to USD 1853.50 an ounce. ​ Gold’s price action continues to suggest caution, with the US dollar sell-off not translating to any meaningful gold strength. If global risk sentiment turns lower, gold could quickly follow. Gold has nearby support at USD 1840.00, followed by USD 1836.00 an ounce. Failure sees the possibility of a mini-capitulation by longs that could reach as far as USD 1780.00 an ounce. Gold has resistance here at USD 1862.00, then USD 1870.00, followed by USD 1886.00 an ounce, its 100-day moving average. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Dollar stages corrective recovery on a quiet day Currency markets are quiet post the US holiday overnight, and that has allowed a modest short-covering US dollar rally to develop after US yields ticked higher in Asia. The dollar index has added 0.26% to 101.63 this morning, mid-range between support/resistance at 101.00 and 102.50. EUR/USD has given back most of its overnight gains, easing 0.28 to 1.0750 today. The overnight rise in oil prices, the EU Russian oil ban, and the tick higher in US yields are likely the cause of the retreat. EUR/USD is struggling to find the momentum to challenge resistance at 1.0800 and 1.0830, with support remaining at 1.0700. GBP/USD also faded ahead of resistance at 1.2700, falling 0.36% to 1.2610 this morning. That has brought support at 1.2600 back into play, with failure potentially extending losses to 1.2500. USD/JPY has seen an immediate reaction to firming bond yields overnight and this morning internationally. USD/JPY rose through resistance at 127.50 overnight, gaining 0.405 to 127.62. Today it has booked another 0.28% gain to 128.00. If nothing else, it highlights that the overriding driver of USD/JPY direction remains the US and to a lesser extent, European/Japan rate differentials. AUD/USD and NZD/USD posted modest gains overnight but have given all of those back as long-covering set in today and risk sentiment dipped. AUD/USD has faded ahead of 0.7200 resistance, falling 0.22% to 0.7180 today, with interim support at 0.7150. NZD/USD has fared worse, falling 0.37% to 0.6535, with resistance at 0.6570 holding overnight. Both currencies remain at the mercy of global swings in risk sentiment. USD/Asia is also rising today as the EU Russian oil ban and the rise in US yields have flowed through into US dollar strength. That said, the losses today have only partially retraced the recent gains by CNY, CNH, KRW, NTD and MYR, and as such I am not reading too much into the price action given it is a quiet day. At this stage, it looks corrective, and we will have to wait until the US session for more direction. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Asian markets mixed after the US holiday US markets were closed overnight, but European markets enjoyed a positive overnight session, grasping the baton from Asia. Equity markets have had some of the gloss removed thanks to hawkish ECB comments and higher than expected German inflation. Today in Asia, US futures are all over the place, raising a red flag on holiday-market liquidity and bored dentists in Minnesota trading from their studies to get away from the kids. S&P 500 futures are 0.15% higher, with Nasdaq futures falling by 0.60%, and Dow futures easing 0.20% lower. In Asia, the picture is equally mixed after this morning’s data releases showed signs of an incipient recovery in China but presented a very mixed picture elsewhere. Oil’s rally continues in Asia after the announcement of the partial EU oil ban on Russian oil. A headwind for energy-hungry Asia. Japan’s Nikkei 225 is unchanged with the retail army lost with the Nasdaq to coattail. The Kospi is just 0.10% higher. Mainland China markets are rallying after less-worse PMIs and an easing of Shanghai restrictions. The Shanghai Composite has gained 0.70%, with the CSI 300 rallying by 1.05%. Hong Kong, meanwhile, absent US markets for direction, has added just 0.35%. Regionally, Singapore is 0.40% higher, with Taipei down 0.05%, and Kuala Lumpur easing by 0.10%. Jakarta is 0.25% higher post-GOTO’s first public quarterly result, while Bangkok is down 0.20%, and Manila has lost 0.45%. Australian markets are retracing some of yesterday’s gains, the ASX 200 falling 0.65%, while the All Ordinaries have lost 0.50%. The partial EU oil ban on Russian imports, and a mixed picture in Asia is likely to see European markets open slightly lower this afternoon. The turkey shoot known as the US open remains just that, it really depends on what mood they come back from holiday in, although the rise in US yields in Asia may give the bulls some pause for thought, as will hawkish comments from the Fed’s Waller overnight. The meeting between President Biden, Treasury Secretary Yellen, and Fed Chairman Jerome Powell should be a non-event. President Biden will moan about his prospects in November’s mid-terms, Mr Powell will say that’s not his job, even if he hasn’t done that job very well up until now. The end. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Brent crude rises above USD 120.00 The disconnect between energy prices and optimism in equity markets continues today in Asia. On Friday, oil prices surged once again, driven by an unrelenting squeeze on refined products, notably diesel and gasoline, globally, with the US driving season about to begin in earnest. Brent crude rose by 1.63% to USD 119.20 a barrel on Friday, rallying another 0.70% to USD 120.05 this morning. WTI rose by 0.85% to USD 115.10 a barrel on Friday, rallying another 0.83% higher to USD 116.05 in Asia today. Markets pricing in peak virus in Beijing and Shanghai are behind the rally in oil prices today, with a China reopening likely leading to increased oil consumption. Unlike recent times, markets seem unconcerned about oil moving back to March highs, emphasising how much pent-up risk-sentiment demand there appears to be out there. We can expect no solace from OPEC+ on production increases on Thursday. The grouping cannot pump to meet its present quotas as it is, and a 430,000 bpd increase is all we can expect. Additionally, the EU Russian oil import ban is still a work in progress and if it gets over the line this week, expect supplies to tighten again. As such, the risks are now increasing of a move towards the post-Ukraine highs we saw in February. Both Brent crude and WTI are at the top of my expected medium-term ranges at USD 120.00 and USD 115.00 respectively. A weekly close above these levels would be a major signal indicating more gains ahead. Brent crude’s next technical resistance is at USD 124.00 a barrel, and then USD 132.00, with support at USD 116.00. WTI has resistance nearby at USD 116.70 a barrel, with nothing afterwards until USD 127.00 a barrel. Support is at USD 115.00 and USD 113.00 a barrel. Gold trades sideways Gold seems determined to bore traders to death after another inconclusive overnight range-trading session. It finished Friday 0.13% lower at USD 1853.00 an ounce, before gaining 0.44% to USD 186.75 an ounce in Asia today. Gold’s price action continues to suggest caution, with the US dollar sell-off not translating to any meaningful gold strength. If global risk sentiment turns lower, gold could quickly follow. Gold has nearby support at USD 1840.00, followed by USD 1836.00 an ounce. Failure sees the possibility of a mini-capitulation by longs that could reach as far as USD 1780.00 an ounce. Gold has resistance here at USD 1862.00, ​ then USD 1870.00, followed by USD 1886.00 an ounce, its 100-day moving average. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Still improving risk sentiment sends US dollar lower The US dollar declined once again on Friday as improving risk sentiment continues to unwind the 2022 US dollar rally. That has spilt over into Asian markets today, with regional currencies booking some decent gains versus the greenback this morning. On Friday, the dollar index edged 0.12% lower to 101.64, losing another 0.13% to 101.50 in Asia. Support remains at 101.00, with resistance at 102.50. EUR/USD EUR/USD held steady on Friday, closing almost unchanged at 1.0735, with US dollar weakness being reflected in EMFX and the commonwealth currencies. It has gained 0.20% to 1.0755 in Asia, but overall, seems locked in a 1.0700 to 1.0800 range. Oil’s rally may temper single currency gains, with the multi-decade breakout line, today at 1.0830, still a formidable barrier. Read next: Altcoins: What Is Monero? Explaining XMR. Untraceable Cryptocurrency!? | FXMAG.COM GBP/USD GBP/USD closed 0.20% higher at 1.2630 on Friday, adding another 0.14% to 1.2640 in Asia. GBP/USD looks set to trade in a noisy 1.2600 to 1.2700 range as the week gets underway. The government’s cost of living package may prompt faster BOE tightening, supporting the downside, while the economic slowdown continues to slow upside progress. USD/JPY USD/JPY is trading sideways, ranging each side of 127.00 as US yields trade in narrow ranges. That is likely to continue with US bond markets closed today. The chart suggests USD/JPY has further downside potential that could target 125.00. Only a move through trendline resistance at 127.80 changes the picture. AUD/USD & NZD/USD AUD/USD and NZD/USD continue to be driven entirely by swings in global risk sentiment. Another strong performance by Wall Street on Friday maintained that upward momentum and both AUD and NZD were prime beneficiaries. AUD/USD rallied by 0.85% to 0.7160, adding another 0.20% to 0.7175 today. It has resistance at 0.7260, and support at 0.7100. NZD/USD rose by 0.86% to 0.6536 on Friday, rising another 0.17% to 0.6547 today. Resistance nearby at 0.6570 opens a larger rally to 0.6650, with support at 0.6475. Read next: Altcoins: Cardano (ADA) What Is It? - A Deeper Look Into Cardano (ADA) | FXMAG.COM Asian FX rode improving investor risk sentiment higher on Friday, moves reflected throughout the EM space. Gains were led by the Chinese yuan, Korean won, and New Taiwan dollar, all gaining around 0.70%, while even the beleaguered Malaysian ringgit out in a good show, USD/MYR falling to 4.3770. Both the Indonesian rupiah and the Malaysian ringgit should find further strength on higher oil prices, even though it increases their domestic subsidy bills. Oil’s strength is likely the reason the Indian rupee has remained unchanged from Friday through today. CNY, KRW and NTD are rallying strongly today, likely boosted by China’s reopening hopes. USD/CNY, USD/KRW, and USD/NTD have fallen by around 0.80% today. However, if oil prices continue to rise this week, the rally in energy-importing Asian currencies may run out of steam. Follow FXMAG.COM on Google News This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Asian markets rally on positive Wall Street and China hopes S&P 500, Nasdaq And Dow Jones US markets closed out the week on another positive note after US data alleviated inflation fears and thus, future Fed tightening, and showed strength among US consumers still. Realistically, after such a positive week, it would have taken a lot to knock the FOMO gnomes of Wall Street off their path of bottom-picking nirvana. The S&P 500 rallied by 2.48%, while the Nasdaq leapt by an impressive 3.33%, with the Dow Jones climbed by 1.76%. The rally has continued in Asia, with Nasdaq futures 0.90% higher, with S&P 500 futures up 0.40%, and Dow futures edging 0.10% higher. US OTC markets are closed for Memorial Day. End Of COVID Restrictions? Asia is also turning in a positive performance, following the impressive New York close, and boosted by hopes that China’s Beijing and Shanghai hubs are reopening from virus restrictions and a package of stimulus measures released by the Shanghai local government. Nikkei 225 And CSI 300 Japan’s Nikkei 225 has coat-tailed the Nasdaq 2.10% higher today, with South Korea’s Kospi gaining 1.25%, and Taipei rallying by 1.60%. In mainland China, the Shanghai Composite is a more cautious 0.30% higher, with the CSI 300 rising by just 0.40%. The ever-optimistic Hong Kong, however, had leapt 2.50% higher, boosted by hopes of an Evergrande bond deal. Follow FXMAG.COM on Google News Metals In regional markets, Singapore is up just 0.20%, while Kuala Lumpur has fallen 0.25%, and Jakarta is 0.60% lower. A Goldman Sachs report suggesting metals prices have peaked is likely weighing on all three markets, as risk sentiment swings back to more growth-stock orientated markets. Bangkok has gained 0.65%, while Manila has rallied by 1.25%. Australian markets have also liked what they have seen with Wall Street and China, the ASX 200 and All Ordinaries climbing by 1.25% today. Read next: Altcoins: Tether (USDT), What Is It? - A Deeper Look Into The Tether Blockchain| FXMAG.COM Russian Oil Friday’s New York close and Asia’s rally today should be enough to lift European equity markets this afternoon, although the still simmering EU import ban on Russian oil and Brent crude above USD 120.00 a barrel will temper bullish animal spirits. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Asian markets are mostly positive this morning as Shanghai announced a raft of stimulus measures and both Shanghai and Beijing eased Covid-19 restrictions. The devil is in the detail of course, and corkers in both cities still face challenges either going to work, or even being allowed to leave the house. Nor has the reality that the virus only has to get lucky once, prompting the reimposition of tightened covid-zero restrictions, in the minds of investors. Such minutiae are usually ignored by markets when it doesn’t suit the preferred narrative, and so it is today. Asia is pricing in peak virus in China and a recovery in growth. Wall Street Another tailwind was the strong performance by Wall Street on Friday, which closed out a banner week prompting the usual “maybe this is the bottom” response from the financial press and FOMO investors. That was assisted by US data on Friday. Personal Income and Expenditure for April were still robust, but eased from March’s numbers, and Michigan Consumer Sentiment retreated from 65.2 in April to a still-healthy 58.4 for May. Lower data equalling reduced need for Fed tightening equals buy everything. Simple really. Although I must say, I’m struggling to see how a slowing US economy is good for equities, I don’t want to spoil the party though. Crude Oil - EU Banning Russian Crude Another negative headwind being completely ignored by markets is oil prices. Brent crude has edged above USD 120.00 a barrel this morning as the European Union continues its efforts to get Hungary on board for a proposed EU ban on Russian crude imports. The underlying driver though is the massive squeeze on refined products we are seeing around the world, which is lifting the base ingredient for all that diesel and petrol that has got very expensive. The world would have been flapping and wringing its hands about the end of days if we had said Brent crude was above USD 120.00 a barrel a month or two or three or four ago; now it is being ignored. By the way, if China recovers, oil prices will as well; just saying. Read next: Altcoins: Cardano (ADA) What Is It? - A Deeper Look Into Cardano (ADA) | FXMAG.COM Non-farm Payrolls - Fed's Sell-off Also being ignored by markets completely in Non-Farm Payroll week is that the Federal Reserve also starts quantitative tightening this week. The Fed will start to sell USD 47.50 billion of bonds and MBS’ per month, scaling up to USD 95 billion per month by September. Meanwhile, the ECB is still quantitatively easing while talking about hiking rates to errrr, zero per cent. And there is a war in Eastern Europe. Long EUR/USD above 1.0800 anybody? Despite being less than impressed with either the Fed’s guidance or overall performance over the past year or so, at least they’re not the Reserve Bank of New Zealand. I find it highly unlikely they will abruptly swing to less a hawkish stance between now and September, meaning three more 0.50% hikes into September and fewer jokes being made about their credibility. Additionally, the USD 8.5 trillion balance sheet needs to reduce is carb and saturated fat intake, so quantitative tightening it is. From my position as a pilot fish cleaning the teeth of the capital markets sharp on the periphery, none of this is being priced in, although I acknowledge that markets can remain irrational, longer than you can stay solvent. Read next: Altcoins: Tezos (XTZ) What Is It? - A Deeper Look Into The Tezos Platform | FXMAG.COM Chinese PMI Now that I have fulfilled my role as the voice of reason on a Monday, it is time to have a look at what the week ahead brings. Asia’s calendar is dead today with the week’s highlights being China’s Official and Caixin PMIs coming out tomorrow and Wednesday. Wednesday and Thursday also see a swath of manufacturing and services PMIs from the rest of Asia, while Australia releases its April Trade Balance on Thursday. China’s data will have a very binary impact this week if peak-covid is here. Soft data will likely ramp up fears of a slowdown, with a decent showing likely to see hot money flowing in looking for the bottom. Soft data from the rest of Asia will raise fears of spreading China contagion. Watch also for Indonesian Inflation on Wednesday. A high print will increase the pressure on Bank Indonesia to finally hike this month. Holidays Holidays will play their part this week. US markets are closed for Memorial Day today, although electronic trading is open in Asia. Indonesia is closed Wednesday while mainland China and Hong Kong and Taiwan are closed on Friday for the International Dragon Boat Festival. Thursday and Friday see United Kingdom markets closed for a bank holiday and Her Majesty’s Platinum Jubilee. Activity in Asia will likely be muted from Thursday. Follow FXMAG.COM on Google News Eurozone Inflation Today features German May Inflation with Eurozone, French and Italian Inflation tomorrow. High prints will likely increase the hiking noise around the ECB and could extend the euro’s recent gains. The ECB should probably stop quantitatively easing first though. Eurozone and US Manufacturing PMIs are released on Wednesday, along with US ADPO Employment that forecasters will pointlessly use to extrapolate Friday’s data. We also have a Bank of Canada policy decision which should feature a 0.50% hike. Falling NFP? Finally, on Friday, we will see May’s US Non-Farm Payrolls data. Market expectations are a moving target this week, but as of today, markets are expecting a fall from 428,000 in April to a still robust 320,000 for May. Trading the data in the hour after its release has always been a sure-fire way to lose money. But if pushed, I would say a lower number will have the market pricing in less Fed tightening, while a higher number might dish out a cold dose of reality to the bottom-fishers in equity, bond, and currency markets ahead of the mid-month FOMC meeting. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Jonny Hart speaks to APAC Senior Market Analyst Jeffrey Halley about news impacting the market and the week ahead. It’s June already and a blockbuster week for data releases around the world. First of all, we take a look back at last Friday’s impressive US equity close. Jeff discusses its drivers, its threats, and potentially, its longevity. Then it’s over to Asian equity markets today which are also enjoying a banner day. US Stocks And China   The US Friday session and also covid-zero developments in China over the weekend are driving “most” stock markets higher. Potential banana skin is looming though, with Brent crude rising above $120.00 a barrel in Asia today. Jeff looks at the oil market, what’s driving the price increase, and its potential impact on market sentiment this week. Read next: Altcoins: What Is Monero? Explaining XMR. Untraceable Cryptocurrency!? | FXMAG.COM Holidays And US Non-farm Payrolls There are a number of holidays this week, starting with US markets today, then Greater China is dragon boating on Friday, and the UK has two days off at the end of the week. Happy Jubilee Your Majesty. We discuss how holidays can impact markets. Finally, it’s a wrap of the heavy-duty data calendar across Asia and the US this week, culminating in the US Non-Farm Payrolls. Jeff highlights also, something that markets have been ignoring up until now, the start this week, of Federal Reserve Quantitative tightening. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Follow FXMAG.COM on Google News

US dollar stuck in choppy waters The choppy range trading of the past few session continued overnight as the US dollar swung on day-to-day moves in risk sentiment. A powerful session by Wall Street, along with almost unchanged closes in US bond markets saw improved risk sentiment send the greenback lower overnight. The dollar index fell 0.31% to 101.76 overnight. Strangely for Asia of late, the directional move has continued today, pushing the index down 0.24% to test support at 101.50. Failure of 101.50 opens a potential test of major support at 101.00. Resistance is distant at 102.50. Not unexpectedly, EUR/USD was a major beneficiary as risk sentiment swung higher. The single currency rose 0.47% to 1.0730 and this morning has pushed through resistance at 1.0750, rising 0.25% to 1.0755. That brings the multi-decade trendline resistance, today at 1.0830, back into view. I would require a weekly close above 1.0830 to waver in my negative outlook and I remain convinced we are just one negative Russia energy headline away from the whole rally evaporating. Support remains at 1.0650. GBP/USD GBP/USD added just 0.20% to 1.2610 overnight, gains tempered by the government’s energy company windfall tax and energy subsidy announcements. Today, sterling has outperformed, rising 0.35% to 1.2655, taking out resistance at 1.2640. It has resistance at 1.2700 now, with support at 1.2600 and 1.2470. Read next: Altcoins: What Is Polkadot (DOT)? Cross-Chain Transfers Of Any Type Of Asset Or Data. A Deeper Look Into Polkadot Protocol | FXMAG.COM USD/JPY eased slightly overnight, losing another 0.20% to 126.85 on US dollar weakness this morning. The cross remains at the mercy of move in US bond yields, and with those being benign this week, USD/JPY has continued to grind out long positioning. The chart suggests USD/JPY has further downside potential that could target 125.00. Only a move through trendline resistance at 127.80 changes the picture. AUD/USD AUD/USD and NZD/USD moved sideways overnight but have posted decent gains in Asia as risk sentiment finishes Asia’s week on a high note. AUD/USD has 0.62% to 0.7140 and is eyeing resistance at 0.7150. It could potentially extend gains above 0.7200, while support is at 0.7050. NZD/USD had risen by 0.65% to 0.6520 today, taking out 0.6500 and leaving its next target as 0.6570. Support is at 0.6450. Read next: Altcoins: Tether (USDT), What Is It? - A Deeper Look Into The Tether Blockchain| FXMAG.COM Asian FX is moving higher today but is not reflecting the US dollar weakness seen versus the G-10. USD/CNY, USD/CNH, USD/SGD, USD/INR, and USD/THB have fallen around 0.15% today, with the region’s ugly ducklings of late, KRW, IDR and MYR all rising by around 0.40%. That suggests that the positioning we are seeing today is being driven by fast-money flows. Unfortunately, fast-money leaves as fast as it arrives and thus, I am taking today’s gains with a grain of salt. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.  

Oil rallies sharply Oil prices rallied sharply overnight as markets continued to fret over tight US galena and diesel supplies ahead of the summer driving season. News that President Biden is investigating restarting mothballed US refineries had zero impact on markets. That is not surprising as refineries, like aircraft parked in the desert, don’t have a simple on/off switch. News is also emerging that suggests OPEC+ will only raise production next week by the previously agreed 432,000 bpd, providing another supportive factor in a tight market. The street may also be pricing in peak virus in China with Shanghai’s port back to 95% of normal operations. Gold trades sideways Gold seems determined to bore traders to death after another inconclusive overnight range-trading session. It finished 0.13% lower at USD 1851.00 an ounce. In Asia, some pre-weekend risk hedging has lifted it slightly higher to USD 1854.00 an ounce. Most concerning about the overnight price action by gold, was that despite a broadly weaker US dollar seen elsewhere, and the rally in risk asset positioning overnight, gold actually finished the session lower. Its inability to rally on US dollar weakness is an ominous sign and risks are increasing for a serious downside washout of long positions. Gold has nearby support at USD 1840.00, followed by USD 1836.00 an ounce. Failure sees the possibility of a mini-capitulation by longs that could reach as far as USD 1780.00 an ounce. Gold has resistance at USD 1860.00, USD 1870.00, and USD 1886.00 an ounce, its 100-day moving average. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Asian equities move higher Asian markets have begun the day in an altogether positive mode after Wall Street outperformed overnight. Driving the equity rally were good results from department store retailers, notably high-end ones. The only blotch was Gap, which fell down a Gap with its stock price punished accordingly. That allowed the perpetually circling and no desperate buy-the-dip mafia to load up on risk positioning again with the US dollar also falling. It also allowed markets to ignore a downward revision of US Q1 GDP QoQ to -1.50%, Kansas Fed Manufacturing Index for May falling to 19, and Pending New Home Sales for April slumping deeper into negative territory at -9.1%. The latter is particularly ironic as recent soft housing data had been responsible for some previously ugly sessions on Wall Street recently. Still, why let the facts get in the way of the desperation to buy the dip. US 10-Year Yields Notable once again, is that US 10-year yields are once again retesting the four-decade downtrend line, which by my estimates comes in around 2.75%. Fears of gasoline and diesel shortages during the US driving season also pushed oil prices over 3.0% higher overnight. Some unofficial gossip ahead of next week’s monthly OPEC+ JTC meeting suggests that the grouping will stick to its scheduled 432,000 bpd incremental increase. Brent crude could test the top of my USD 120.00 a barrel medium-term range next week. I can’t see US yields and oil moving higher being constructive for equities next week. COVID In data out of Asia today, Tokyo’s Core CPI in May remained at 1.90%, although with the Bank of Japan saying inflation is driven by external factors, and not the Japanese consumer, we shouldn’t expect any change in their ultra-low forever stance. Australian Preliminary Retail Sales eased, as expected, to 0.90% with no serious cost-of-living cracks appearing as yet in the Lucky Country. ​ China’s Industrial Profits (YTD) YoY for April fell to 3.50% from 8.50% in March. The Shanghai shutdowns and covid-zero policies account for the slowdown, but market impact was minimal as the number was right on market expectations. China will have bigger fish to fry going forward as it tries to keep growth and the property market on track, while enacting sweeping lockdowns across parts of the country thanks to its covid-zero policy. The rest of Asia’s calendar is light with Singapore PPI likely to be ignored after yesterday’s firmer Industrial Production data eased slowdown fears. Europe’s calendar is similarly second-tier. US Personal Income and Personal Spending for April, along with the PCE Price Index and Michigan Consumer Sentiment round out the week. Personal Income and Expenditure and the PCE Index could settle nerves on inflation and Fed tightening if they print on the low side, ditto for Michigan Consumer Sentiment. That would set Wall Street up for another positive season to round out the week and weigh on the US dollar. Read next: Stablecoins In Times Of Crypto Crash. What is Terra (UST)? A Deep Look Into Terra Altcoin. Terra - Leading Decentralised And Open-Source Public Blockchain Protocol | FXMAG.COM Apart from oil, most of this week has been one of frantic range trading, as the herd runs this way and that on swings in risk sentiment. Lots of noise, little substance, although reading the financial press swinging from doom to bloom day-to-day has been mentally tiring. Next week sees the arrival of June and its “business time.” Asia sees the release of China and India PMIs and Australian GDP and Trade Balances. Europe has German, French and Eurozone Inflation, as well as the ongoing saga of an EU oil ban on Russia. Russia has kindly offered to allow exports of wheat from Ukraine and Russia, in return for sanctions relief. I believe June will be a watershed month for Europe, the UK, and America as to the depth of their commitment to a war economy and Russia. Perversely, if they blink for short-term national gains, it would be quite a tailwind for global equities and bonds. The financial markets are a harsh mistress. Bank Of Canada June also brings us a bevy of US data and a Bank of Canada policy decision next week. US data releases include the house price index, JOLTS Job Openings and ADP Employment, and ISM Manufacturing before the one ring to rule them all, Friday’s Non-Farm Payrolls. Oddly enough, the most important event of them all is being largely ignored by markets to their peril. Read next: Altcoins: Tether (USDT), What Is It? - A Deeper Look Into The Tether Blockchain| FXMAG.COM In the Dark Tower of the Fed, they have USD 8.5 trillion of debt instruments they need to get rid of. Quantitative tightening starts next week, scaling up to USD 95 bio a month by September. I’d hate to see the mark-to-market P&L on that position, but I guess when you can print money, it doesn’t matter. It may well matter to markets though with the Fed also set to tighten by 0.50% per month over the coming months (including June). I am yet to be convinced that the Fed can pull this off without causing another taper tantrum or sending the US 10-years well north of 3.0%, or both. They, like everyone else, will be hoping inflation indicators flatten in the months ahead, to keep the bids out there in the bond market. All I’ll say is don’t mistake short-term noise in the equity market as a structural turn in direction higher. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Follow FXMAG.COM on Google News

Asian equities shrug off weaker China Industrial Profits Wall Street staged a powerful rally overnight thanks to mostly impressive results from US retailers. The S&P 500 rallied by 1.99%, the Nasdaq leapt 2.68%, and the Dow Jones climbed by 1.62%. Although the rallies were impressive, the price action was very much in line with the schizophrenic behaviour of Wall Street these past few weeks, and I have no doubt that one piece of bad news will send the FOMO gnomes scurrying for the exit. In Asia, US futures have eased by around 0.15% as profit-taking from the overnight session makes its way through the market. The impressive overnight rally has allowed Asian markets to ignore weakening China Industrial Profits this morning, and with a slow news day this far, Asia looks set to end the week on a positive note. Japan’s Nikkei 225 is 0.50% higher, with South Korea’s Kospi rallying by 0.90%. Taipei, meanwhile, has jumped by 1.65%, coat-tailing the Nasdaq. Read next: Altcoins: Tether (USDT), What Is It? - A Deeper Look Into The Tether Blockchain| FXMAG.COM Mainland China equities are also higher, the Shanghai Composite rising by 0.50%, with the CSI 300 gaining 0.62%. Meanwhile, the market always looking for a reason to buy, Hong Kong, has leapt 2.93% higher. Singapore has risen by 0.45% today, with Kuala Lumpur underperforming, losing 0.10%. Jakarta has posted a 1.50% gain, Bangkok is up by 0.80%, and Manila is 0.70% higher. Australian markets are also enjoying a friendly Friday, the ASX 200 and All Ordinaries climbing by 1.0%. Read next: Stablecoins In Times Of Crypto Crash. What is Terra (UST)? A Deep Look Into Terra Altcoin. Terra - Leading Decentralised And Open-Source Public Blockchain Protocol | FXMAG.COM Except for UK markets, which posted only modest gains after the energy company windfall tax announcements, Europe performed well yesterday. Asia’s strong session should give Europe another positive start today, although, weekend risk will likely cap any rallies. US markets are a coin-toss these days and if PCE data is on the high side tonight, so will Fed tightening sentiment be. That could easily reverse yesterday’s outperformance. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Follow FXMAG.COM on Google News

US dollar edges higher after FOMC minutes The US dollar staged a modest relief rally overnight after the FOMC Minutes came out. Nevertheless, some decent ranges were seen across the majors. The bounce looks more technical in nature after nearly two weeks of losses. The dollar index rose 0.30% to 102.07, notably fading ahead of the multi-year breakout line at 102.35, which forms initial resistance today. ​ Support remains at 101.50 and 101.00. EUR/USD EUR/USD gave back some of its recent gains overnight, failing ahead of resistance at 1.0750. EUR/USD fell by 0.52% to 1.0680, creeping slightly higher to 1.0790 in Asia. ​ Momentum already appears to be waning for EUR/USD, but I do not rule out at least another test of 1.0750 and 1.0825, the multi-decade breakout line. A weekly close above the latter is needed to suggest a medium-term low is in place. GBP/USD bucked the trend overnight, rising 0.40% to 1.2580, where it remains in Asia. Some of the EUR/GBP buying from the day before appears to have reversed. Sterling faces political risks today as the UK unveils its windfall tax on energy companies. It has support at 1.2470, with resistance at 1.2600 and 1.2640. Read next: Altcoins: Ripple Crypto - What Is Ripple (XRP)? Price Of XRP | FXMAG.COM USD/JPY USD/JPY crept higher to 127.35 overnight as the US dollar strengthened. In sedate trading today, it has edged higher to 127.45. Support remains at 127.00, followed by 126.35, with resistance at 128.00. That range may be the story for the rest of the week for USD/JPY. AUD/USD - Australian Dollar To US Dollar AUD/USD and NZD/USD traded in choppy 100-point ranges overnight, driven by volatility post the RBNZ rate hike. AUD/USD finished just 0.30% lower at 0.7085, easing to 0.7070 today. It ran out of steam ahead of 0.7150 with support now at 0.7025. In a similar vein, NZD/USD gained 0.30% to 0.6490 overnight, running out of momentum above 0.6500. It has faded by 0.30% to 0.6460 today, despite hawkish comments from the RBNZ Governor. The fading momentum suggests the kiwi is now facing rising recession fears. A sharp move lower in global sentiment will impact the NZD more heavily than the AUD. Read next: Altcoins: Tether (USDT), What Is It? - A Deeper Look Into The Tether Blockchain| FXMAG.COM Asian FX had a quiet overnight session, regional currencies were content to range trade as the US dollar booked gains versus the DM space. The trend has continued in Asia with most Asian currencies unchanged versus the greenback today and awaiting new external drivers with the PBOC setting another neutral USD/CNY fixing today. The Korean won hardly reacted to the BOK policy hike today, suggesting it was already well priced in. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Follow FXMAG.COM on Google News

Oil markets slumber Oil prices had another comatose session by their standards, barely rising from the day before. Nevertheless, both Brent crude and WTI have held on to all their recent gains, suggesting the weaker side is the upside in prices for now. While China slowdown fears are receding in the minds of traders, for now, fears persist around the increasing tightness of the US diesel market, and I suspect not ruling out export controls has unnerved international markets, and rightly so. I expect prices to remain firm for the rest of the week, with the global data calendar fairly light. Brent crude rose 0.60% to USD 114.35 overnight, where it remains in an equally quiet Asian session. WTI rose 0.40% to USD 110.70, adding just 20 cents to USD 110.90 a barrel in Asia. Brent crude has resistance at USD 115.00 and USD 116.00 today, with support at USD 112.00. A rally through USD 116.00 could set up a retest test of my medium-term resistance at USD 120.00. ​ WTI is taking comfort from the White House stance and is sitting in a USD 108.00 to USD 112.00 a barrel range. Nevertheless, a topside breakout by Brent crude will drag WTI higher as well, allowing a test of the USD 115.00 to USD 116.00 resistance zone. Gold weakens on US dollar strength Gold fell by 0.70% to USD 1853.25 an ounce overnight, retreating another 0.45% to USD 1845.00 an ounce in Asia. As I have touched on before, the true test of gold’s underlying strength will be maintaining gains in the face of a US dollar rally. The fall by gold over the last 24 hours in the face of modest US dollar strength does not fill me with confidence. Further US dollar strength could see gold face one of its ugly downside shakeouts. Read next: Altcoins: Tether (USDT), What Is It? - A Deeper Look Into The Tether Blockchain| FXMAG.COM Gold has nearby support at USD 1842.00, followed by USD 1836.00 an ounce. Failure sees the possibility of a mini-capitulation by longs that could reach as far as USD 1780.00 an ounce. On the topside, gold has resistance at USD 1870.00, followed by USD 1886.00 an ounce, its 100-day moving average. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Follow FXMAG.COM on Google News

Asia mixed after FOMC Minutes Wall Street bounced overnight as the FOMC Minutes were less hawkish than feared. The relief rally saw the S&P 500 rise by 0.95%, the Nasdaq jump 1.51% higher, while the Dow Jones added 0.60%. In Asia, we are seeing the usual trend move from the main session with US futures easing slightly. S&P futures are 0.15% lower, Nasdaq futures have fallen by 0.40%, and Dow futures are unchanged. Once again, moves in the US overnight have led to an uneven response by Asian stock markets. Chinese Premier Li’s comments about the domestic economy spooked Asian markets, with mainland stocks dropping initially. News that the Port of Shanghai is back to 95% operability seems to have lifted spirits in China, or maybe it is the “national team” buying, with various exhortations to banks to lend to small businesses also lifting sentiment. The Shanghai Composite and CSI 300 are 0.65%, but Hong Kong has fallen by 1.60%, making it a very mainland-centric rally.   The mixed picture continues elsewhere, with Japan’s Nikkei 225 edging 0.25% lower, while South Korea’s Kospi has edged 0.20% higher. Taipei is down 0.30%, but Singapore has gained 0.90% today as local investors piled into banking and property heavyweights. Kuala Lumpur is just 0.15% higher, with Bangkok climbing 0.55% and Manila adding 0.25%. Australian markets are mixed. The All Ordinaries has fallen by 0.30%, while the ASX 200 is unchanged.   European markets face a muted opening this afternoon with quite a few holidays around and not much happening in the Asian session. UK markets will be waiting for the details to be released around the government’s windfall tax on energy companies. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

FOMC to stick to 50bps moves The FOMC Minutes, released overnight, settled a few nerves temporarily, signalling another couple of 50bps rate hikes in June and July before a pause in September. The dreaded 75bps hike threat was off the agenda and with some slowdowns in recent US data, notably in the housing market, it was enough to spur a relief rally of sorts in US equities and the US dollar. Once again, that is translating to an uneven response by Asian markets thanks to China nerves. Although Shanghai seems to be emerging from its covid zero restrictions at a faster pace, Chinese Premier Li warned of economic headwinds and that the economy, in some respects, is faring worse than in 2020. Bank Of Korea - Monetary Policy This morning, the Bank of Korea hiked policy rates by 0.25% as expected. There has been zero impact on either the Kospi or the Korean won, suggesting the move was well priced in already by markets. The Reserve Bank of New Zealand’s Governor Orr was also on the wires today testifying before a parliamentary committee. Governor Orr was very hawkish and suggested that policy rates would need to remain elevated for an extended time to tame inflation. It’s a pity he didn’t think the same thing 9 months ago when he had rates at zero and was quantitatively easing into a clearly overheating economy. Once again, the New Zealand dollar has barely reacted and has come off its highs since yesterday’s 0.50% rate hike. That implies that it is a US dollar story and not a New Zealand dollar story. Either that or markets are concerned New Zealand is heading for a recession. Australia And RBA, Will Australian Dollar (AUD) Exchange Rate Change? Australian data this morning was mixed. Building Capital Expenditure for Q1 QoQ fell by 1.70%, while Plant Machinery Expenditure rose by 1.20% for the same period. To a certain extent, it is old news with markets more focused on the RBA policy trajectory, the new government’s fiscal policy, and whether the employment of housing markets start to show cracks. Singapore releases Industrial Production for April this afternoon with the YOY number for April expected to slow to 3.40%. A softer number will increase slowdown fears in the city-state and weigh on local equities. Thailand’s Balance of Trade should continue to show a post-covid rebound as its borders reopen for tourism. Read next: Altcoins: Tether (USDT), What Is It? - A Deeper Look Into The Tether Blockchain| FXMAG.COM There are a number of holidays in Europe today for Ascension Day. Heavyweights Germany and France are closed, as is all of Scandinavia. Indonesia is closed today as well. That is likely to mute activity in Europe this afternoon with the data calendar understandably, strictly second-tier. In the US, Pending Home Sales will be closely watched given the weakness of recent existing and new home sales. That will overshadow second estimate of Q1 GDP and initial jobless claims. Another ugly number will put the recession word back on Wall Street’s lips and we could see another rush for the exit. Soft results from Gap and Dollar Tree could reinforce that sentiment. Overall, though, it looks as if today will be a day of consolidation for financial markets as they await fresh inputs, and ahead of personal income and expenditure data out of the US tomorrow evening. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Follow FXMAG.COM on Google News

White House unnerves oil markets Oil prices continued to range trade overnight, finishing almost unchanged in New York. Asia, though, has seen both Brent crude and WTI rise. A couple of items seem to be behind the move. A sharp 4.20 million drop in gasoline inventories late in New York from the API Inventory data is likely supportive, with gasoline prices becoming a major issue in the US. Following on from that, White House officials explicitly refusing to say possible crude export restrictions were off the table appears to have spooked Asian suppliers. The last thing the world needs right now is US crude oil export restrictions with global supplies already tight. That saw both Brent crude and WTI spike 1.0% higher in early Asian trade, although those gains have eased as the session has gone on. Brent crude is 0.90% higher at USD 114.70 a barrel, and WTI is 0.65% higher at USD 110.90 a barrel. The White House likely needs to “clarify” its stance, least it creates unintended consequences by pushing crude prices higher. Brent crude, notably, is testing multi-week resistance today. Brent crude is testing resistance at USD 114.70 today, which is followed by USD 116.00, with support at USD 112.00. Failure of USD 116.00 could set up a retest test of my medium-term resistance at 120.00. ​ WTI is taking comfort from the White House stance and is sitting in a USD 108.00 to USD 112.00 a barrel range. Nevertheless, a topside breakout by Brent crude will almost certainly drag WTI higher as well, precisely what President Biden doesn’t want. Gold rises once again Gold had another decent overnight session, buoyed by lower US yields and a still-weakening US Dollar. Gold finished 0.69% higher at USD 1866.50 an ounce. In Asia, some US dollar strength has seen it weaken slightly by 0.40% to USD 1859.00 an ounce. Overall, although I acknowledge gold’s upward momentum, I remain sceptical of its longevity until it manages to hold on to material gains in the face of US dollar strength. Read next: (TRX) TRON USD Decentralised Blockchain Platform That Focuses On Entertainment And Content Sharing. Altcoins: A Deep Look Into The TRON Network | FXMAG.COM The technical picture continues to remain supportive, and it seems only a marked US dollar recovery will cap gold’s rally. Gold took out resistance at the double top at USD 1865.00 an ounce which becomes intraday support, followed by USD 1845.00 and USD 1840.00 an ounce. It should now target USD 1886.00, its 100-day moving average. That would open up a test of USD 1900.00, although I suspect there will be plenty of option-related selling ahead of that level. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Follow FXMAG.COM on Google News

Recession jitters send US dollar lower The US dollar eased once again overnight, as US recession fears continue to lead to a repricing lower of Fed tightening expectations. With quantitative tightening starting next week and no signs of inflation falling, that may be more hope than reality. Nevertheless, one must respect the momentum in the short term, and the US dollar bull market correction still looks to have legs in it. ​ The dollar index fell by 0.32% to 101.77 overnight, but Asia is doing its usual countertrend moves today, pushing the dollar index back up to 101.95. The multi-year breakout line is at 102.40 today, forming initial resistance, while 101.50 and 101.00 loom as immediate supports. EUR/USD continued edging higher overnight, rising 0.42% to 1.0735 before falling by 0.28% to 1.0705 in Asia. Momentum already appears to be waning for EUR/USD, but I do not rule out at least a test of 1.0750 and 1.0825, the multi-decade breakout line. A weekly close above the latter is needed to suggest a medium-term low is in place. GBP/USD fell overnight, crushed by EUR/GBP buying, poor data and tax and political risk. It finished 0.42% lower at 1.2535 where it remains in Asia today. Sterling faces political risks, outlined above, today, and these will limit gains. It now has support at 1.2470, with a double top now at 1.2600. Even if the US dollar sell-off continues, sterling will remain euro’s poor cousin. AUD/USD remains steady at 0.7100 today, having probed the downside overnight Lower US yields saw USD/JPY fall 0.85% to 126.85 overnight where it remains in Asia, just below support, now resistance, at 127.00. A deeper selloff, potentially targeting the 125.00 support area, remains entirely possible given the market is still clearly very long USD/JPY. Once again, at those levels though, given the trajectory of US and Japan interest rates, being short becomes a dangerous game. AUD/USD remains steady at 0.7100 today, having probed the downside overnight. AUD/NZD buying is capping gains for now. A hawkish RBNZ today has sent the Kiwi dollar flying, NZD/USD jumping 0.65% to 0.6500. The rally is already showing signs of fatigue and a weekly close above 0.6550 is required to signal a potential medium-term low. Support is distant at 0.6420. Asian FX continued gaining against the US dollar overnight, but a stronger greenback in Asian time has erased those gains. A neutral USD/CNY fixing by the PBOC has given Asian markets little to go on today, with USD/CNY, USD/CNH and USD/THB rising by around 0.30%, while USD/KRW has risen by 0.10%. An impending Bank of Korea hike on Friday should limit the won’s weakness. The Malaysian ringgit looks like the most vulnerable regional currency right now, USD/MYR trading near 4.4000 today. With policy tightening gaining momentum among other Asian central banks, today’s benign inflation data reinforced that outlook. USD/MYR could potentially test 4.4500 by early next week. Read next: Altcoins: What Is Polkadot (DOT)? Cross-Chain Transfers Of Any Type Of Asset Or Data. A Deeper Look Into Polkadot Protocol | FXMAG.COM This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Follow FXMAG.COM on Google News

RBNZ hikes by 50-bps The Reserve Bank of New Zealand has raised policy rates by 0.50% to 2.0% this morning, with Governor Orr setting a hawkish tone in the press conference afterwards. In the statement itself, the RBNZ’s “least worst choices” policy seemed to imply that although external risks remained, the domestic economy was strong and could tolerate tighter monetary conditions. Mr Orr seemed to be saying much the same, suggesting that terminal rates could go above 3.0% and would get there sooner, rather than later. We’ll see just how strong the New Zealand economy is in due course, but a hawkish RBNZ has seen the New Zealand dollar rally by 0.70% to 0.6505 today, making it the biggest currency gainer in Asia today. Elsewhere, Singapore’s GDP growth came in tight on expectations, rising by 3.70% YoY for Q1. With inflation data yesterday also less worse than expected, expectations for another unscheduled tightening by the Monetary Authority of Singapore have receded for now. That may bring some relief to the Malaysian ringgit, which has fallen to 3.20 against the Singapore dollar. Snap Has Fallen In Malaysia itself, Inflation data for April continues to remain benign as domestic demand stays subdued. Inflation YoY rose by just 2.30% and will leave Bank Negara, like Bank Indonesia yesterday, in no hurry to tighten monetary policy. Ominously though, the Malaysian ringgit has shown no strength versus the US dollar. USD/MYR remains at recent highs at 4.4000 even as the greenback is experiencing an extended bull market correction versus the G-10 and EMFX elsewhere. If the US dollar turns higher once again, and the MYR resumes its sell-off, Bank Negara’s hand might be forced. Overnight, the recession word weighed on stock markets once again. European PMI data was a mixed bag. Manufacturing PMIs held steady, while Services PMIs fell as consumer demand takes a hit from the rise in the cost of living. That wasn’t enough to stop the euro rally, powered by suddenly hawkish ECB heavyweights. Bank of England, has already signalled a white flag on bringing down inflation The picture was rather grimmer in the United Kingdom where the most honest central bank in the world, the Bank of England, has already signalled a white flag on bringing down inflation and pencilled in a recession next year. UK Manufacturing PMI held steady at 54.6, but Services PMIs plummeted to 51.8. The UK is facing a winter of discontent as the cost of living soars, with the railways RMT union voting to strike over pay negotiations. Expect more of this going forward. Additionally, the Chancellor is apparently preparing to widen the scope of the windfall tax on energy companies, probably to help pay for his cost of living mini-budget. UK stock markets didn’t like that. Finally, the “party gate” report on those lockdown wine frenzies in the No 10 garden is due for release today, potentially putting more pressure on PM Johnson’s leadership. ​ Little surprise that the sterling slumped versus the euro and the US dollar overnight. In the United States, the recession world hit particularly hard after the Snap Inc. induced meltdown by Nasdaq stocks overnight. US New Home Sales plummeted to 591,000 in April, while Richmond Fed Manufacturing slumped to -9 in May. The S&P Global Services Flash PMI for May fell to 53.5, with Flash Manufacturing easing to 57.5. It was the new home sales that really frightened the street, though, as house building, and its ancillary services and suppliers are a good chunk of US domestic GDP. Soaring mortgage interest rates and petrol prices appear to be doing a lot of the Fed’s work for it before it even gets started. Read next: (TRX) TRON USD Decentralised Blockchain Platform That Focuses On Entertainment And Content Sharing. Altcoins: A Deep Look Into The TRON Network | FXMAG.COM If there is one takeout from all of this for me, it is that rising inflation and borrowing rates are already crimping the demand side of the equation. Unfortunately, we are seeing very little sign of price pressures reducing due to a combination of factors, all of which have been thrashed to death here and in research everywhere. The uncomfortable reality is that central banks are going to be forced to continue the tightening path, even as growth slows around the world, because inflation has proven sticky and not transitory. That is the least worst choice central banks need to make in a stagflationary environment. I am asked every day if we have seen the low in the equity market sell-off. Hopefully, I have answered the question. US President Joe Biden’s trip around Asia continues Finally, US President Joe Biden’s trip around Asia continues. Unfortunately, with its emphasis on containing China and hawking a trade agreement empty of potential access to the US domestic market (Congress needs to approve that), the trip is not going to make much headway in re-establishing US leadership in the region. Asia really needs to see the colour of America’s money. Furthermore, the reliability of the US as a partner has taken a further hit today, with White House officials explicitly refusing to rule out the possibility that the US could enact crude oil export restrictions to help cap energy prices domestically. The US doesn’t have a crude oil problem, it has a refining and transportation problem, but let’s not let facts get in the way. I have warned about food nationalism previously, but if President Biden prioritises November’s mid-term elections over the economic war with Russia, and supporting Europe, it really is every man for himself globally. I can’t see that being positive for equities anywhere, or European asset markets full stop, or for Ukraine. Only the Kremlin is likely to be popping champagne as the US does Russia’s divide and conquer for them. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Follow FXMAG.COM on Google News

Nasdaq slides, Asia in mixed mood Overnight, a procession of poor US data delivered another kidney punch to US equities, with the tech-heavy Nasdaq bearing the brunt once again, as the more value-heavy Dow Jones remained steady. The S&P 500 fell by 0.80% as the Nasdaq slumped by 2.35%, while the Dow Jones managed a tiny 0.16% gain. In Asia, US index futures are seeing their usual counter-trend move. S&P 500 futures are 0.65% higher, Nasdaq futures have jumped by 0.95%, and Dow futures have gained 0.40%.   Asian markets are a mixed bag but appear to be focussing on the overnight moves on Wall Street being counterbalanced by mainland China equities rising modestly. The latter is a big surprise as Beijing Covid-19 cases climb and the port city of Tianjin nearby locks down its city centre. It wouldn’t surprise me if China’s “national team” was taking advantage of a relatively quiet day to buy.   Japan’s Nikkei 225 gave up some early gains and is now down by 0.10% for the day. South Korea’s Kospi though, has ignored the missile tests from North Korea to post a 0.85% gain. In a similar vein, the Nasdaq futures rally has lifted Taipei 1.05% higher.   Mainland China’s Shanghai Composite has risen by 0.60%, with the CSI 300 edging 0.15% higher. Hong Kong has climbed by 0.70%. Singapore though has fallen by 0.20%, with Kuala Lumpur rising by 0.20%. Jakarta has fallen by 0.45%, while Bangkok has climbed by 0.70%, with Manila adding 0.45%. Australian markets are also cheering the US futures rally, the ASX 200 rallying by 0.65%, and the All Ordinaries gaining 0.55%.   Asia’s mixed bag is unlikely to give European markets many clues. The underperformance by more value-orientated markets in Asia today may translate to early weakness, but I feel that the US refusal to rule out oil export restrictions will weigh more heavily. At the frontlines of the economic war with Russia, any sort of threat to Europe’s tenuous energy security, either by supplies or higher prices, won’t be good news for European equities. UK markets could be in for a frisky day as the No.10 “party gate” report comes out. I’m not sure whether BoJo going would be bullish or bearish for UK equities though. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Asian equities ease once again on China worries It was another rollercoaster session on Wall Street, with equities rallying powerfully as JP Morgan raised its income outlook and was upbeat on the US economy. The S&P 500 jumped by 1.86%, the Nasdaq rallied by 1.59%, while the Dow Jones leapt 2.0% higher. Snap’s downbeat forecast for this quarter saw its stock slump in aftermarket trading, dragging Meta with it. In what has become typical whip-saw price action these days, US index futures have slumped with investors having zero appetite for positioning moving against them. Nasdaq futures have slumped by 1.45%, S&P 500 futures are 0.85% lower, and Dow futures have fallen by 0.50%. In Hong Kong, the Hang Seng is 1.35% lower. Japan’s Nikkei 225 has eased by 0.65%, with South Korea’s Kospi losing 1.10%, and Taipei falling by 0.70% Asia has shown a reluctance to blindly follow New York of late, with China concerns being a more existential threat. The fall of US futures has been followed by JP Morgan and UBS sharply downgrading China growth, while Covid-19 cases remain stubbornly high by local standards in Beijing, prompting lockdown fears. That has seen Asian markets fall into the red today for the most part. Read next: Altcoins: What Is Monero? Explaining XMR. Untraceable Cryptocurrency!? | FXMAG.COM In mainland China, the overnight stimulus measures were forgotten as the Shanghai Composite falls by 1.10%, with the CSI 300 losing 1.15%. In Hong Kong, the Hang Seng is 1.35% lower. Japan’s Nikkei 225 has eased by 0.65%, with South Korea’s Kospi losing 1.10%, and Taipei falling by 0.70%. European equities will likely open a bit softer this afternoon Singapore is just 0.15% higher, while Jakarta has jumped by 1.10% as markets price in no change in interest rates from BI later today. Kuala Lumpur is down 0.10%, while Bangkok has eased by 0.30% and Manila has retreated 1.0% lower. Australian markets are unchanged today. Read next: Altcoins: Ripple Crypto - What Is Ripple (XRP)? Price Of XRP | FXMAG.COM European equities will likely open a bit softer this afternoon, in line with the price action in Asia. Their fate will be dictated on the day how firm, or not, the pan-Europe PMI data is. As for New York, that really depends on how much coffee the gnomes of Wall Street decide to consume before work, it’s that sort of market. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Follow FXMAG.COM on Google News

Oil markets continue to slumber Oil prices moved sideways once again overnight, trading in relatively narrow ranges as China growth fears cap the upside of prices, while the Ukraine conflict and the refined petroleum product supply squeeze in the US support the downside. Brent crude finished 0.70% higher overnight at USD 113.35 a barrel, with WTI unchanged at USD 110.55 a barrel. In Asia, downgraded China GDP growth forecasts and increasing worries about wider virus restrictions in Beijing has pushed oil prices lower. Brent crude has fallen 1.10% to USD 112.05, and WTI is 1.25% lower at USD 109.00 a barrel. Read next: Altcoins: Ripple Crypto - What Is Ripple (XRP)? Price Of XRP | FXMAG.COM Brent crude has resistance at USD 114.00 and USD 116.00, with support at USD 111.50 and USD 110.50 a barrel. WTI has resistance at USD 112.00 and USD 113.00, with support at USD 108.00 a barrel. Overall, I am expecting Brent crude to bounce around in a USD 111.00 to USD 117.00 range this week. Gold grinds higher Gold traded in a wide range overnight, probing above USD 1860.00 as the US dollar weakened, before retreating to finish 0.38% higher at USD 1853.50 an ounce. A rise in US yields probably took the edge off the gold rally, balancing out the weaker US dollar. In Asia, trading is moribund, with gold edging slightly higher to USD 1855.00 an ounce. What is notable, is that gold has held up well in the face of US dollar strength in the Asian session. Read next: Altcoins: Cardano (ADA) What Is It? - A Deeper Look Into Cardano (ADA) | FXMAG.COM The technical picture continues to remain supportive, and it seems only a marked US dollar recovery will cap gold’s rally. Gold took out resistance at USD 1860.00 overnight but has traced out a double top at USD 1865.00 an ounce which could be tough to overcome. That is followed by USD 1885.50, its 100-day moving average. Support is at USD 1845.00 and USD 1840.00, followed by USD 1832.00 an ounce. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Follow FXMAG.COM on Google News

Hawkish Lagarde sends dollar lower EUR/USD leapt 1.30% higher to 1.0690 overnight after the Lagarde comments The US dollar slumped overnight, losing ground against both the G-10 and EM space. That contrasted with a rise in US yields, but equities, bonds and currencies seem to be running their own separate races now. ​ The catalyst was a hawkish blog post by ECB head Christine Lagarde who said rate hikes were on the way in the next few months. That prompted a massive rally by EUR/USD which spread to other currencies. The dollar index slumped 0.90% to 102.09, closing below support at 102.50. That should see the dollar index test 101.00 before the reality of a hawkish Fed reasserts itself. In Asia, China concerns have seen equities fall and some short-covering come into the US dollar, pushing the index back up to 102.25. EUR/USD leapt 1.30% higher to 1.0690 overnight after the Lagarde comments. It has eased back to 1.0665 in Asia but has nearby support now at 1.0650. Initial resistance lies at 1.0700 and then 1.0750 followed by 1.0820, the multi-decade breakout line. A weekly close above the latter is needed to suggest a medium-term low is in place. I believe sustaining rallies above 1.0700 will be challenging though. GBP/USD coat-tailed EUR/USD higher by 0.77% to 1.2585 overnight, easing to 1.2865 in Asia. It now has support at 1.2500, with resistance at 1.2600 and then 1.2650. Read next: Altcoins: Cardano (ADA) What Is It? - A Deeper Look Into Cardano (ADA) | FXMAG.COM AUD/USD and NZD/USD booked another night of gains, rising the sentiment wave 0.90% higher overnight Higher US yields have kept USD/JPY steady at 127.60 today with initial resistance at 128.00. We would need a large rise in US yields now to offset the weight of long USD/JPY positioning in the nearer term. Failure of support at 127.00 could trigger a capitulation trade potentially targeting the 125.00 support area. Once again, at those levels though, given the trajectory of US and Japan interest rates, being short becomes a dangerous game. AUD/USD and NZD/USD booked another night of gains, rising the sentiment wave 0.90% higher overnight. In Asia, China’s nerves have seen AUD/USD fall 0.40% to 0.7080, and NZD/USD fall by 0.50% to 0.6435. Any rally above 0.7200 or 0.6500 will be challenging though as both currencies remain at the mercy of sudden negative swings in investor sentiment, especially from China. Asian currencies have rallied powerfully overnight, led by a 1.25% gain by the KRW, and 0.75% gains by the THB and TWD. Both USD/CNH and USD/CNY have fallen by 0.50% also overnight. Notably, the MYR and IDR had little to show for the US dollar sell-off. China nerves have already reversed some of those overnight gains by Asia FX, highlighting the low risk appetite and fragile sentiment typifying currency markets and others now. USD/KRW has risen by 0.50% to 1264.50, making the won the worst performer in Asia today. Read next: Altcoins: Ripple Crypto - What Is Ripple (XRP)? Price Of XRP | FXMAG.COM The recovery in Asian currencies has been led by stronger CNY fixings from China but is overall, a weak US dollar story. A reassertion of risk aversion, or a jump in US yields, will have the recovery back to square one as quickly as it began. I believe Asian central banks will need to accelerate tightening to stave off medium-term weakness. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Follow FXMAG.COM on Google News

Snap, Crackle, Pop may bring back memories of breakfast cereals, but for Snap Inc their quarterly guidance was more of a dog’s breakfast. Snap’s stock price went snap, crackle, pop, as it fell by over 30% in extended trading after the CEO, in a note to employees, said it would miss quarterly guidance on growth and revenues. Blame was apportioned to the usual suspects, rising inflation and interest rates, supply chain shortages, and the impact of the Ukraine conflict amongst others. I’m not sure how any of that impacts a company that monetises self-destructing 24 hours selfies taken by “the kids,” but what would I know in my Boomer dotage? Stock markets had finally staged a broad rally overnight, after JP Morgan’s Jamie Dimon said things weren’t as bad as everyone thought I do know that my two millennials have the most inelastic of demand for selfies, other photos, and little stories. I’m reasonably confident that I can extrapolate the social media habits of my girls to their wider demographic, plus 5 years and minus 10 years, with 100% certainty. None of the factors mentioned above plays a part in their need to “tell their story,’ making the memo complete nonsense. One of them has never heard of Bruce Springsteen; heinous, but you can’t tell me that as she publishes across Snap, TikTok (the fav), or Instagram Stories, she is thinking about supply chain disruption. By the way, Facebook is for old people in case you didn’t know. Meta stock got slammed as well. What intrigued me about the Snap story wasn’t Snap, it plays no part in my life. It was the price action. Stock markets had finally staged a broad rally overnight, after JP Morgan’s Jamie Dimon said things weren’t as bad as everyone thought. After an extended run of down days, the brain-washed buy-the-dip FOMO gnomes were desperate for a reason to buy, and that was as good as any on a slow news day. But when the Snap story hit the wires, after-markets index futures were sold heavily, led by Nasdaq futures, which are down by 1.40% in Asia as I write. Read next: Altcoins: Ripple Crypto - What Is Ripple (XRP)? Price Of XRP | FXMAG.COM That’s stopped all the “worst is over” pundits in their tracks. It highlights how fleeting swings in sentiment are now and also that investors are running at the first sign of trouble. The market continues to turn itself inside out and back to front as it tries to decide if it has priced all of the impending rate hikes, soft landing or recession, inflation or stagflation, China, Ukraine, US summer driving season, supply chains, the list goes on. The result is a day-to-day chop-fest, and it seems clear that volatility is the winner. From my point of view, stagflation and food security keep me awake, with lower being the path of least resistance. The Fed, for example, hasn’t even started balance sheet reduction yet, lest we all forget. But I am a mere pilot fish of the financial market, not an island in its ocean. The ECB’s Christine Lagarde came out hawkishly swinging in a blog post overnight It is not just stock markets of course that are chasing their tails. The ECB’s Christine Lagarde came out hawkishly swinging in a blog post overnight. Ms Lagarde said the ECB policy rate would no longer be negative by September with rate hikes impending at the next meetings, all in the name of reigning in inflation. I’m not sure how raising the deposit rate from -0.50% to 0.00% represents an aggressive stance on controlling inflation, especially when you are still quantitatively easing at the same time, but what do I know? The European financial system has been on QE-driven life support since the GFC anyway, so I suppose this does represent a shift of sorts. That saw the euro rally by over 1.0% against the US dollar, and it sparked a general risk sentiment rally through the G-10 and EM FX complex, sending the US dollar lower across the board. Combined with the strong CNY fixing from the PBOC yesterday, the US dollar is poised for a much deeper bull market correction. But I will note, the Fed is just getting started on rate hikes, and will soon be selling USD 95 billion of bonds a month into the open market, something the street seems to have forgotten/ignored. The US dollar’s time will come again, and perhaps sooner than we think. Likewise, US bond markets continued gyrating as well. Long-dated yields rose overnight, unwinding much of the falls from the day before. Bond markets are running around like headless chickens, much like equities, as they try to price in much the same reasons as outlined above. The Fed’s quantitative tightening may yet see US 10-years and out heading well north of 3.0%, although the 5y-30y OIS Curve has been flirting with inversion for some time. The contradictory signals pouring into markets from all directions mean we can expect to see plenty of volatility across asset classes in the weeks ahead, even if we don’t get a thematic directional move. I’m still not sure how that environment is going to be constructive for equities though. Read next: Altcoins: Cardano (ADA) What Is It? - A Deeper Look Into Cardano (ADA) | FXMAG.COM In Asia we have had a mixed bag of data. Overnight, Taiwan Industrial Production rose by 7.33% YoY for April, better than March, but continuing a pattern of slowing growth when extrapolated back of the last 12 months. Notably, semi-conductor orders hardly grew with other high-tech sectors contracting. The China slowdown, Covid domestically, and power outages are part of the story, but perhaps Taiwan is telling us that the monetary tightening around the world is already starting to have an impact as inflation erodes real incomes. We have a lot of PMI data coming in from across the globe today, and this morning, Australian Manufacturing and Services PMIs both eased to 55.3 and 53.0 for May. That is still comfortably expansionary, but like elsewhere, prices increases and the cost of living are nibbling away. Japan’s Jibun Manufacturing PMI eased to 53.2, while Services PMI rose to 51.7. The data likely reflects a China slowdown and domestic consumption rising as virus restrictions ease. Germany’s IFO data was firm yesterday and that suggests that it might not be all bad news from the pan-Europe Manufacturing PMIs this afternoon, with the Ukraine battlefield static and the natural gas payment issues sorted out for now. Services will have downside risks as the cost of living soars but if the PMI data has no horrible surprises, EUR/USD’s recovery rally could receive another boost. China equities are lower once again this morning Later today, Bank Indonesia will announce its latest policy decision. Having hiked at the last meeting, it is 50/50 whether BI raises by another 0.25% today. They may prefer to keep their powder dry for July and concentrate on supporting the economic recovery instead, especially if the palm oil export ban has taken some heat out of domestic inflation. The current account remains healthy, and USD/IDR has pulled back from recent highs, easing hiking pressures. China nerves persist in Asia though. China announced another package of fiscal measures to support businesses impacted by the Covid lockdowns. The CNY 140 billion (USD 21.0 bio) of tax cuts doesn’t add much when previously announced tax cuts and spending are factored in. China is persisting with targeted stimulus via fiscal measures, rather than easing monetary policy which threatens to increase leverage in the economy again, something they are trying to avoid. The jury is out on whether they will succeed but the torrent of financial institutions severely downgrading China GDP growth continued today. China equities are lower once again this morning, with the street nervous about much wider and tighter Beijing covid zero restrictions occurring. That seems to be the overriding theme driving China markets for now. Follow FXMAG.COM on Google News On a final note, I have warned before that food nationalism was a worrying theme for 2022. Overnight, Malaysia announced a ban on chicken exports to bring down prices and increase stocks domestically. For context, Singapore gets 34.0% of its chickens from Malaysia and it is the most widely consumed meat there. That follows the Indonesia palm oil export ban, since lifted, and wheat export restrictions from India, combined with the agricultural export disruption from Ukraine and Russia. Food scarcity, or an unattainable price, especially for poor nations, will cause inflation to rise and cause social unrest much faster than rising oil prices. It will deepen the stagflationary pressures as well. We are likely to see more food nationalism this year and apart from being a growth headwind as consumer budgets are squeezed, it will be another reason not to get too excited about equities either. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Asian equities ease once again on China worries It was another rollercoaster session on Wall Street, with equities rallying powerfully as JP Morgan raised its income outlook and was upbeat on the US economy. The S&P 500 jumped by 1.86%, the Nasdaq rallied by 1.59%, while the Dow Jones leapt 2.0% higher. Snap’s downbeat forecast for this quarter saw its stock slump in aftermarket trading, dragging Meta with it. In what has become typical whip-saw price action these days, US index futures have slumped with investors having zero appetite for positioning moving against them. Nasdaq futures have slumped by 1.45%, S&P 500 futures are 0.85% lower, and Dow futures have fallen by 0.50%.   Asia has shown a reluctance to blindly follow New York of late, with China concerns being a more existential threat. The fall of US futures has been followed by JP Morgan and UBS sharply downgrading China growth, while Covid-19 cases remain stubbornly high by local standards in Beijing, prompting lockdown fears. That has seen Asian markets fall into the red today for the most part.   In Mainland China, the overnight stimulus measures were forgotten as the Shanghai Composite falls by 1.10%, with the CSI 300 losing 1.15%. In Hong Kong, the Hang Seng is 1.35% lower. Japan’s Nikkei 225 has eased by 0.65%, with South Korea’s Kospi losing 1.10%, and Taipei falling by 0.70%.   Singapore is just 0.15% higher, while Jakarta has jumped by 1.10% as markets price in no change in interest rates from BI later today. Kuala Lumpur is down 0.10%, while Bangkok has eased by 0.30% and Manila has retreated 1.0% lower. Australian markets are unchanged today.   European equities will likely open a bit softer this afternoon, in line with the price action in Asia. Their fate will be dictated on the day how firm, or not, the pan-Europe PMI data is. As for New York, that really depends on how much coffee the gnomes of Wall Street decide to consume before work, it’s that sort of market. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

A quiet day for oil markets Oil prices edged higher on Friday in New York, as the persistent squeeze in refined petroleum products in the US, and ever-present Ukraine/Russia risk underpinned prices, with China slowdown and US recession noise limiting gains. Mind you, in one article I read this morning, China’s recovery hopes were supporting oil while China’s slowdown hopes were capping gains. I guess it’s not just equity markets that are very confused right now. I do note, though, that the Brent crude premium over WTI reasserted itself into the end of the week, so perhaps the worst of the US diesel and gasoline squeeze is passed for now. Brent crude rose by 1.10% to USD 112.55 on Friday, gaining another 0.70% to USD 113.30 a barrel in Asian trading. WTI rose 0.40% to USD 110.55 on Friday, gaining another 0.35% to USD 110.90 a barrel today. The price action is consistent with a market that is not strongly leaning one way or another at the moment. Overall, I am expecting Brent crude to bounce around in a USD 111.00 to USD 117.00 range this week Brent crude has resistance at USD 116.00 and support at USD 111.50 a barrel. WTI has resistance at USD 113.00 and USD 116.00 a barrel, with support at USD 108.00. Overall, I am expecting Brent crude to bounce around in a USD 111.00 to USD 117.00 range this week. Follow FXMAG.COM on Google News Gold rises on weaker US dollar Gold prices rose on Friday, climbing just 0.24% to USD 1844.00 an ounce. In Asia, they have gained 0.42% to USD 1854.00 an ounce. Although gold’s rally has been impressive over the past week, it has yet to be proven that it is not just the result of a weaker US dollar. The true test of its resolve will be its ability to maintain gains when the US dollar starts rising again. Nevertheless, the technical picture is swinging back to a further test of the upside with resistance at USD 1860.00 and then USD 1885.00 an ounce, its 100-day moving average. Support is at USD 1845.00 and USD 1840.00, followed by USD 1832.00 an ounce. Read next: Altcoins: Ripple Crypto - What Is Ripple (XRP)? Price Of XRP | FXMAG.COM This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Learn more on Oanda

US dollar eases in Asia after firm CNY fixing The US dollar posted modest gains on Friday, despite weaker US bond yields, as traders reduced US dollar shorts into the weekend. The dollar index rose 0.15% to 103.05. A firm CNY fixing by the PBOC seems to have been the catalyst for more US dollar weakening today, along with a slow newsreel over the weekend. That has allowed risk sentiment to reassert itself modestly, pushing the dollar index 0.33% lower to 102.69 today. It seems US recession fears are weighing on sentiment ever more heavily for now, and the technical picture suggests the US dollar correction has more to go. A close below support at 102.50 could see the dollar index test 101.00 before the reality of a hawkish Fed reasserts itself. GBP/USD has traced out a low at 1.2155 last week and has risen 0.40% to 1.2545 in Asia EUR/USD has risen by 0.35% to 1.0590 today, continuing its recovery from its 1.0350 lows last week. A test of 1.0650 and possibly even the 1.0800 37-year breakout line remain possible, but this is a weak US dollar story and I believe that any rally above 1.0700 will be hard to sustain in the medium-term. In a similar vein, GBP/USD has traced out a low at 1.2155 last week and has risen 0.40% to 1.2545 in Asia. A test of 1.2650 is possible this week but like Europe, the United Kingdom’s structural headwinds leave the longer-term picture still bearish. The fall in US long-dated yields on Friday has pushed USD/JPY down to 127.35 this morning. Given the weight of long USD/JPY positioning, failure of support at 127.00 could trigger a capitulation trade potentially targeting the 125.00 support area. At those levels though, given the trajectory of US and Japan interest rates, being short becomes a dangerous game. Read next: Altcoins: Ripple Crypto - What Is Ripple (XRP)? Price Of XRP | FXMAG.COM Beware of a dovishly hawkish RBNZ statement on Wednesday though AUD/USD and NZD/USD have resumed their recoveries after a quiet weekend news-wise green-lighted the sentimentalists to resume buying. AUD/USD has risen 0.60% to 0.7090, and NZD/USD has risen 0.70% to 0.6455. ​ Any rally above 0.7200 or 0.6500 will be challenging though as both currencies remain at the mercy of sudden negative swings in investor sentiment, especially from China. An RBNZ rate hike on Wednesday should allow the NZD to outperform AUD in the earlier part of the week. Beware of a dovishly hawkish RBNZ statement on Wednesday though. If US yields resume their move higher, I expect Asian currency weakness to reassert itself The PBOC has helped the recovery in risk sentiment rally by Asian currencies along today, setting the CNY at a much stronger than expected 6.6756. Most of USD/Asia is lower by around 0.25% today, although USD/MYR and USD/IDR are unchanged. It seems that USD/CNY above 6.8000 is a bridge too far now for the PBOC. But overall, they are probably more concerned about how fast it moved there, and not the overall direction of travel. In the short term, the PBOC’s actions will be supportive of Asian currencies in general. USD/INR and USD/KRW have put in decent tops at 77.80 and 1290.00 respectively. If US yields resume their move higher, I expect Asian currency weakness to reassert itself, although with regional central banks starting to hike now, we should see a slow grind and not an abrupt sell-off. Read next: Altcoins: Cardano (ADA) What Is It? - A Deeper Look Into Cardano (ADA) | FXMAG.COM This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Learn more on Oanda Follow FXMAG.COM on Google News

Asian markets cautious Asian equity markets are having a mixed session, mostly trading from the weaker side after a volatile session on Friday saw the gnomes of Wall Street finish the day almost unchanged, after unwinding some ugly intra-day losses. The S&P 500 finished 0.01% lower, the Nasdaq lost 0.30%, and the Dow Jones rose just 0.03%.   For some reason, US index futures are rallying impressively today, perhaps in a delayed reaction to the easing of long-dated yields on Friday, or just in another act of mindless following the leader we saw throughout last week. S&P 500 futures have rallied by 0.85%, Nasdaq futures have jumped by 1.05%, and Dow futures have climbed by 0.55%.   Asia, however, isn’t taking the bait, with most regional markets trading on the soft side after Beijing tightened virus restrictions in parts of the city, and Shanghai’s Jingan district closed shops and told residents to stay at home. Japan’s Nikkei 225, ever a slave to movements in the Nasdaq has posted a reluctant 0.63% gain today, but South Korea’s Kospi is unchanged, while Taipei has risen by 0.38%, with Bangkok climbing by 0.40%.   Otherwise, it is a sea of red. Mainland China’s Shanghai Compositae has fallen by 0.50%, with the CSI 300 slumping by 1.05%. Hong Kong’s Hang Seng has tumbled 1.90% lower, with Singapore down 0.50%, Kuala Lumpur is unchanged, Jakarta lower by 0.60%, and Manila down 0.40%. Australian markets have quickly unwound the post-election bounce this morning as well, the All Ordinaries now unchanged, while the ASX 200 has dipped into the red, edging 0.10% lower.   With no positive developments around the Ukraine situation over the weekend, and everyone important probably lowering their carbon footprint in Davos anyway, Asia’s negative price action should see European markets start the day weaker. A soft German IFO survey may darken the mood. US markets remain a complete turkey shoot of mind-bending sentiment intraday sentiment swings.   This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Learn more on Oanda

Recession concerns keep Asian markets in check Recessionary concerns continue to hold back the buy-the-dippers in Asia today, with Asian stock markets completely ignoring the strong rally by US index futures this morning. It is always worth taking Monday morning price action with a grain of salt and regional markets are probably placing more emphasis on a flat close by Wall Street, especially given another day of intra-session histrionics which saw the 3.0% swings intraday. Reaction to the Labour win in the weekend federal election in Australia has been muted. The new Prime Minister has already stated the obvious that the Australia/China relationship will remain challenging. Labour’s win had been expected and to a certain extent priced in anyway; the only variable is that after the 3 million postal votes have been counted, will Labour have an outright majority, or be forced into a coalition agreement with the independents, the big winners this weekend, or the greens. The Australian dollar is higher this morning, but that is a US dollar story, while stocks are unchanged. China sparked a local equity rally on Friday after the 5-year loan prime rate was cut by 0.25%. That is supportive of the mortgage market and was a boon to an under-pressure housing sector. Unfortunately, some of that work was undone this morning when the PBOC set a surprisingly strong CNY fix. USD/CNY was fixed at 6.6756 versus market expectations at 6.6934. A stronger yuan is weighing on mainland equities today but has been supportive of Asian currencies generally. China continues to try and support growth by targeted stimulus while keeping the purse strings tight and attempting to deleverage swaths of the economy. Simultaneously, its maintenance of the covid zero policy has resulted in sweeping lockdowns across the country, including Shanghai and Beijing, increasing global supply chain disruption, and also torpedoing domestic economic activity. Little wonder that Chinese equities continue to play the cautious side, and so is the rest of Asia. The economic calendar is light in Asia today. Most interesting will be Singapore Inflation this afternoon, and I can confirm, having been there last week, that the Red Dot is more expensive than ever. Inflation YoY in April is expected at 5.50%. A higher print than that will increase the chances of an unscheduled tightening by the MAS, supportive of the Singapore Dollar, but likely to be a negative for local equities. Germany releases its IFO Business Climate for May this afternoon, expected to remain steady at 91.40 as the Ukraine conflict continues to crush confidence. More important is likely to be the May Services and Manufacturing PMIs from Germany, France, and the Eurozone tomorrow. For obvious reasons, there is plenty of downside risk in that data. The euro has staged a semi-decent recovery over the last week, although I put that down to weaker US yields and rising hard-landing fears in the US, than Europe turning a corner. Ukraine-related risks only have upside for Europe and weak PMI data tomorrow should confirm the euro recovery as a bear market rally. The US releases Durable Goods, expected to be steady at 0.50% on Wednesday. Second estimate Q1 GDP on Thursday, and on Friday, Personal Income and Expenditure and the PCE index for April. The data should show the US is maintaining growth and that inflationary pressures are slowing, but not falling. To a certain extent, that is old news now, but I believe the real story will be in the US and the rest of the world, that inflation may be slowing, but it isn’t falling, and could just trade sideways at high levels for the rest of the year. Don’t put that stagflation definition back in the desk draw just yet. And I’ll say it again, stagflation does not provide fertile conditions for a stock market rally, so no, I don’t think the “worst is over.” The intraday tail-chasing histrionics of stock markets across the globe suggests they don’t either. The Asia-Pacific has a frisky week ahead on the central bank front though. Both the Bank of Korea and Bank Indonesia, as well as my own national embarrassment, the Reserve Blank of New Zealand, all have policy decisions. The Bank of Korea should hike by another 0.25% this week, maintaining a steady course of rate hikes for the months ahead with inflation modest by Western standards. Bank Indonesia may also be tempted to follow the Philippines’ lead from last week and hike another 0.25%. However, BI has been a reluctant hiker and may wish to see if the palm oil export ban has eased food inflation. It could pause this month as it is still very much in a supporting the recovery mode. The Reserve Blank of New Zealand is in a world of pain of its own making. Tomorrow’s Retail Sales have upside risks despite the soaring cost of living and will add to the pressure on RBNZ to get more aggressive in reeling in inflation. Anything less than 0.50% on Wednesday with guidance suggesting more 0.50% hikes ahead will see the New Zealand dollar punished. Having continued maintaining zero per cent interest rates, and unforgivably, maintained QE, even as the economy surged spectacularly, the RBNZ is now in a monetary box canyon. Pain will be necessary to put inflation back in the box in New Zealand and it, and Sri Lanka, are at the top of the list for a hard landing this year. In China, Shanghai restrictions are continuing to ease, although mass testing was ordered for one district today. Unfortunately, while China must get lucky 100% of the time, the virus only has to get lucky once. The inescapable fact other covid zero countries discovered. Thus, there is still a huge risk of Shanghai restrictions coming back. Beijing is taking a different approach to Shanghai but is in its own virus quagmire as well. That should hold back the optimism in Chinese equities and will be a drag on oil prices as well. Friday’s China Industrial Profits YTD in April data will retreat from March’s 8.50% surprise. Depending on who you talk to, it could be +2.0% to -5.50%, Either way, it has downside risks. With China tinkering with stimulus, deleveraging, and maintaining covid zero, don’t go bottom fishing just yet. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Learn more on Oanda

Jonny Hart speaks to APAC Senior Market Analyst Jeffrey Halley about news impacting the market and the week ahead. European PMIs are the week’s highlight tomorrow Welcome to a new week with policy decisions from the Reserve Bank of New Zealand, Bank of Korea, and Bank Indonesia. We start today’s podcast with a quick overview of Asian markets. A quiet news weekend has left Asian markets focusing once again on China and the covid zero slowdowns. We look at price action around Asia and discuss the future of China and covid zero. Next, it’s over to equity and currency markets. We discuss whether the worst is over for equities and if the US Dollar rally has run its course. We then look ahead to the data calendar which is fairly quiet this week. European PMIs are the week’s highlight tomorrow. We discuss them and their potential impact on the single currency. Read next: Altcoins: Ripple Crypto - What Is Ripple (XRP)? Price Of XRP | FXMAG.COM This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Learn more on Oanda

Asia markets ex-China show gains US equities rallied strongly overnight as US retail sales, industrial production, and manufacturing outperformed, while hawkish comments from Powell and former Chair Bernanke were ignored. The S&P 500 shot higher by 2.02%, the Nasdaq leapt 2.76%, and the Dow Jones gained 1.35%. In Asia, US futures have eased as short-term specs have cashed out. Nasdaq futures are down by 0.40%, with S&P 500 and Dow futures easing by 0.20%.   The overnight rally sees most of the Asia-Pacific trading in the green today, although the retreat lower by US futures this morning has limited the gains. Another headwind has been China, which has been unable to shake off the weak house price data this morning, leaving it in the red. The Shanghai Composite has fallen by 0.37%, the CSI 300 is down by 0.65%, while Hong Kong’s Hang Seng has edged 0.35% lower. That comes despite an easing of Shanghai restrictions and very supportive tech comments by the vice-premier. My days are filled with people asking me is this the low of China stocks (especially tech), it’s so cheap, should I buy? The price action today suggests that more patience is required.   Elsewhere though, Asia is recording modest gains. Japan’s Nikkei 225 is 0.75% higher, with South Korea’s Kospi up just 0.10%. Taipei has jumped 1.40% higher, while Singapore has gained 0.75%. Kuala Lumpur has risen by 0.40%, with Jakarta adding 0.65%, Manila by 1.25%, with Bangkok unchanged. Australian markets have also followed Wall Street higher, the ASX 200 rising by 0.90%, and the All Ordinaries by 0.80%.   European markets are likely to take heart over the EU’s advice on natural gas payments to Russia, lessening the odds of interrupted supplies, for now, having booked large gains yesterday. Falling oil prices should also soothe nerves. New York markets will depend on whether the street wants to continue with the bear market rally, or not. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

US dollar retreats on higher risk appetite The US dollar weakened overnight despite US yields moving higher and hawkish Fed officials. Like equity markets, currency markets concentrated on positive US data, and a fall in oil prices which lifted risk-seeking sentiment, although I believe this is all part of a bull market correction. The dollar index slumped by 0.85% to 103.30, edging higher to 103.40 in Asia as US index futures fell. Resistance remains at 105.00, and the daily close below 104.00 suggests support at 102.50 could be tested. Failure suggests a deeper correction still. EUR/USD was one of the main beneficiaries of the swing in risk sentiment, jumping 1.15% to 1.0555 before edging lower to 1.0535 in Asia. Having based at 1.0350 on Friday, EUR/USD has rallied through 1.0500 overnight and could test 1.0650 and possibly even the 1.0800 37-year breakout line. I continue to believe that any rally above 1.0700 will be hard to sustain in the medium term. In a similar vein, GBP/USD has traced out a low at 1.2155 last week and leapt 1.40% higher to 1.2490 overnight, where it remains in Asia. The next resistance is at 1.2650; however, like Europe, the United Kingdom’s structural headwinds leave the longer-term picture still bearish. The rise in US yields overnight has left USD/JPY trading sideways at 129.20 in Asia, barely changed over the past few days. If US yields remain at these levels, a deeper correction to 127.00 becomes unlikely. In the bigger picture, USD/JPY remains at the mercy of the US/Japan rate differential. The rally in global sentiment has allowed AUD/USD and NZD/USD to book 0.85% gains once again overnight, rising to 0.7030 and 0.6360 respectively, where they remain in Asia. Any rally to 0.7200 or 0.6500 is likely to see sellers lining up though as both will continue to be buffeted by swings in investor sentiment, especially in China. Likewise, Asian currencies had a good night overnight, with CNY, CNH, KRW, and SGD the standout performers. USD/CNY at 6.8000 and USD/CNH at 6.8500 have proved formidable barriers, and if both USD/Yuans remain below these levels, more Asia FX strength is possible. Lower oil prices will also help, but if US yields continue to track higher from here, then the US dollar correction versus Asia is likely to quickly run out of steam. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Venezuela/Europe send oil lower Overnight, oil prices touched multi-week highs until the US announced it was starting a process, potentially leading to an easing of sanctions on Venezuela. That immediately saw oil reverse all its impressive intraday gains and both Brent crude and WTI finished slightly lower on the day. The EU effectively allowing European importers to pay for Russian gas via roubles should take the edge off European gas prices and flow through to oil prices. Brent crude finished 1.05% lower at USD 112.70 a barrel, having tested USD 116.00 intraday. WTI, by contrast, finished just 0.10% lower at USD 113.60 a barrel, having also tested USD 116.00 intraday. Prices are unmoved in Asia. Tight API inventory data and soaring diesel prices in the US have combined to send WTI to a premium over Brent and is likely to limit the downside for both contracts, Venezuela, or not. Tonight’s official crude inventory data dump will now be closely watched, and sharp falls in gasoline and distillates inventories could increase the WTI premium over Brent crude. Brent crude has resistance at USD 116.00 and support at USD 111.50 a barrel. WTI has taken resistance at USD 116.00 a barrel as well, with support at USD 111.50. Any progress on Venezuela’s supply returning to international markets is potentially a game-changer and should mean the top of my longer-term range, at USD 120.00 a barrel, remains intact. Gold’s price action doesn’t inspire confidence Despite the US dollar falling heavily overnight, and risk sentiment rising generally, gold prices fell 0.53% to USD 1815.00 an ounce overnight, easing to USD 1814.50 in Asia. US yields climbing higher may have played a part, but the direction of the US dollar has been more important of late. When gold falls as the US dollar falls heavily, we should all take that as a warning sign, suggesting lower prices are the path of least resistance. As such, I believe gold’s downside risks have ratcheted higher. Support lies at USD 1789.00, followed by USD 1780.00 an ounce. Failure of the latter suggests a deeper correction to USD 1700.00. That move could occur quite quickly if USD 1780.00 fails. Gold has resistance at USD 1836.00, followed by the 200-DMA at USD 1836.80, and then USD 1850.00 an ounce. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Opposing inputs have sent asset classes in different directions, each choosing, it seems, the information that supported their respective paths of least resistance. Former Fed Governor Ben Bernanke warned about stagflation overnight, quite the statement from a former heavyweight. Present Chairman Jerome Powell, was also hawkish, saying the Fed Funds may have to move well above the market’s preferred terminal rate (around 3.50%), for a while, to bring inflation back down. Oil falls as EU allows ruble payments On the more positive side, the European Union clarified advice on what constituted meeting sanctions restricted payments for Russian natural gas for EU importers. Basically, the advice allows the importers to pay in euro or US dollars into Gazprombank, and then have it converted via a ruble account. Secondly, the US moved to ease restrictions on Venezuelan oil exports, allowing Chevron to have narrow conversations with Venezuela’s PDVSA. Restrictions could be eased on exports if talks between the government and opposition parties make progress. Those headlines sent oil tumbling, offsetting a surprise drop in API crude inventories, and soaring diesel prices in parts of the US.   Finally, despite the doom and gloom and predictions of recessions, US Retail Sales, Manufacturing and Industrial Production all posted excellent numbers last night. Helping the soft landing theory I suppose, although you could also say it meant harder and faster Fed rate hikes. Walmart’s downgraded outlook for 2022 was subsumed in that noise.   All-in-all it was a bottom pickers heaven. Equities chose to look at the US data, and the Venezuela headlines and sent stocks sharply higher. Oil markets had toughed multi-week highs yesterday but staged a huge reversal and slid on the Venezuela headlines, ignoring the fact that political progress is required for any unlocking of sanctions. Bond markets ignored everything else and concentrated on the Bernanke and Powell headlines, sending the yield curve sharply higher. Currency markets used the strong US data, EU gas capitulation and lower oil prices to sell the US dollar and load up on sentiment currencies like the euro and Australian dollar, with Asian FX having a decent session as well. Gold did nothing, but we’re all used to that.   To be fair, the overnight session did have something for everyone if you applied blinkered vision and ignored what didn’t suit your view. The FOMO gnomes of the stock market remain desperate to buy the dip, although I suspect they’re going to discover it will be a bear market rally. The US dollar had come a long way in a short time, and as mentioned yesterday, was overdue for a downward correction anyway. Oil was a surprise, but I believe an unfreezing of Venezuelan oil will be a game-changer for energy markets, should it occur. Notably, WTI prices are now higher than Brent crude prices, and I can’t remember when that last happened. I do believe the downside will be limited because of that as gasoline and diesel prices in the US soar.   Bond yields rightfully moved higher and get my vote for the only market overnight to cover itself in some sort of intellectual glory. That doesn’t mean we can’t see equities extend gains, helped along perhaps by soothing technology company noises from China and a Shanghai reopening. Similarly, the US dollar correction lower has plenty of room still and remains in a structural bull market. The Fed will hike by 0.50% next month and start reducing its balance sheet. That reality will return to markets the closer we get to the June meeting, but for now, we will let the remnants of the 2020/21 buy-everything rally have their day in the kiddie’s playground.   In Asia today, markets have been buoyed by supportive comments around China tech companies from a senior government official. Additionally, Shanghai authorities have announced that 864 financial institutions will be allowed to resume operations, and officials say a full mid-June reopening remains on track. The light at the end of the Shanghai tunnel will be a welcome lift to the sombre covid-zero mode afflicting China and other regional markets. However, we may not have heard the end of covid-zero.   Japan’s GDP data showed the economy contracting in Q1, but not by as much as expected as the weaker yen and rising imported costs weakened economic activity. Preliminary QoQ GDP Growth for Q1 fell just -0.20% versus -0.40% expected. Consumer spending for the same period held at 0.00% versus -0.50% expected. A pretty decent win in Japan terms. Additionally, the USD 21 billion supplementary budget has been passed to assist with cost-of-living increases and the government’s Upper House elections in July. Expect another one if the expected rebound in Q2 GDP and consumer spending doesn’t materialise.   Australian wage growth by 0.70% QoQ for Q1, and by 2.40% YoY, both slightly less than expected. The still-benign wage environment should take the heat off the RBA to hike by 40 bps in August, with 0.25% likely pencilled in. On the negative side, China’s House Price Index rose only 0.70% in April YoY, far below the 1.50% expected. The covid zero lockdowns are to blame but it will be interesting to see if housing market confidence returns after the lockdowns finish, with private developer leverage still a slow-moving trainwreck.   The UK releases inflation data this afternoon although its impact is likely to be muted given the brutally honest raising of the inflation white flag by the Bank of England Governor this week. More pressing is the UK sorting out the Brexit mess around the Northern Island protocol and avoiding a trade war with the EU. I will probably be saying that 10 years from now. Eurozone inflation is also due with the final YoY April number expected to be around 7.50%. That will keep the pressure on the ECB to start hiking, likely as early as next month, but that is mostly built into the euro now.   US Housing Starts and the Official Crude Inventory series dominate the calendar in US markets. If the overnight session is anything to go by though, markets direction will be dominated by Fed talking heads and whichever data they wish to selectively choose, or ignore, to support the narrative. That narrative being the worst is over for stocks because markets have priced all the bad news from the Fed in and a recession will slow inflation. Oh dear…. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Asian markets rise on hopes that China will ease lockdowns The seeds of a general relief rally didn’t land on Wall Street equities overnight, which had a mixed session, likely because it was driven elsewhere by recession concerns. The S&P 500 fell by 0.39%, the Nasdaq fell by 1.20%, and the Dow Jones edged 0.12% higher. In Asia, hopes that the worst is past for the Shanghai lockdowns have prompted US futures to rise. Nasdaq futures have jumped by 0.65%, with S&P 500 futures climbing 0.35%, and Dow futures adding 0.25%. Hopes that the Shanghai lockdowns will ease, along with the ensuing supply chain disruptions have been enough to lift Asian equities as well, which are staging a modest bounce in an otherwise quiet day. Japan’s Nikkei 225 has risen by 0.25%, with South Korea’s Kospi rallying by 0.84%. Taipei is also tracking the bounce by Nasdaq futures, climbing by 1.03%. In China, the Shanghai Composite has added 0.30%, with the narrower Shanghai 50 rising by 1.07%, and the CSI 300 climbing by 0.88%. The speculative casino of the Hang Seng has leapt 2.03% higher, gaining an additional tailwind from China developers today. In regional markets, Singapore has risen by 0.40%, Kuala Lumpur by 0.45%, and Jakarta by 0.75%. Bangkok has jumped 1.10% higher, with Manila adding 0.40%. Australian markets gains have been limited by the RBA minutes, which showed the policy committee considered a 0.40% increase before finally going with 0.25%. Nerves around more rate hikes have dampened enthusiasm to follow US futures higher today. The All Ordinaries has risen by 0.25%, with the ASX 200 adding 0.20%. With Hungary still stalling an EU ban on Russian oil imports, European markets should have an excuse to open cautiously higher today. Robust Eurozone and employment data this evening could dampen any rally as it brings the prospect of ECB rate hikes back into view, possibly as soon as June. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Modest US dollar strength in range-trading Asian session The dollar index fell again overnight, as recessionary concerns appear to be prompting the start of a long-overdue short-term correction to US dollar strength. Resistance at 105.00 held fast on Friday and overnight, the index continued its modest descent, falling 0.27% to 104.19, where it remains in Asia. A daily close below 104.00 could signal a deeper correction towards more important support at 102.50, relieving the overbought technical picture. United Kingdom’s structural headwinds leave the longer-term picture still bearish Having based at 1.0350 on Friday, EUR/USD has ground higher to 1.0445 today. EUR/USD has resistance at 1.0500, with a rally through it extending gains to 1.0650 and possibly even 1.0800, the 37-year breakout line. In a similar vein, GBP/USD has traced out a low at 1.2155 last week. It has risen 0.15% to 1.2340 today. Again, it too has the potential for a material correction higher with a close above 1.2400 opening the door for further gains to potentially 1.2650. However, like Europe, the United Kingdom’s structural headwinds leave the longer-term picture still bearish. Read next: Altcoins: What Is Monero? Explaining XMR. Untraceable Cryptocurrency!? | FXMAG.COM In the bigger picture, USD/JPY remains at the mercy of the US/Japan rate differential USD/JPY fell modestly overnight before a rise in US yields in Asian trading pushed it higher by 0.20% to 129.35 today. USD/JPY is displaying corrective potential as well which could extend to 127.00 initially, and possibly 125.00, especially if recession fears continue pushing US yields lower. In the bigger picture, USD/JPY remains at the mercy of the US/Japan rate differential. The rally in global sentiment has allowed AUD/USD and NZD/USD to recapture 0.7000 and 0.6300 today and both could potentially have another 200-300 points of gains ahead if the US dollar correction lower accelerates. In the shorter term, both will continue to be buffeted by swings in investor sentiment, especially around China. Read next: Altcoins: What Is Polkadot (DOT)? Cross-Chain Transfers Of Any Type Of Asset Or Data. A Deeper Look Into Polkadot Protocol | FXMAG.COM Asian currencies are slightly stronger today as investor sentiment swings to pricing in peak-Shanghai-lockdowns. That will only last if new cases remain at zero, of course. If USD/CNY remains below 6.8000, Asia FX could potentially stage recoveries versus the US dollar, although most remain near their lows versus the greenback. Oil prices remain at multi-week highs, which will be another headwind to an Asia FX recovery. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Oil prices remain firm Oil prices have remained near multi-week highs this week, supported by surging gasoline and distillate prices in the US, and fears around an EU ban on Russian oil imports remaining in play. If markets start pricing in peak-Shanghai-lockdowns, that will be an additional supportive tailwind for oil prices.   Brent crude rose by 2.45% to USD 113.85 a barrel overnight, where it remains in subdued Asian trading. WTI rose by 3.30% to USD 113.65 a barrel, where it remains in Asian trading. The gap between Brent and WTI has closed to zero over the past two sessions, highlighting the squeeze on refined supplies in parts of the US. This is a significant development in my opinion and suggests that the risks are starting to swing to the topside once again for oil after months of range trading.   Resistance at USD 115.00 a barrel for Brent crude has capped gains once again. Failure signals a retest of USD 120.00 in the sessions ahead. Support lies at USD 108.80 a barrel. WTI has taken out resistance at USD 111.50 a barrel, which now becomes support. It is now threatening the top of my longer-term range call at USD 115.00.   Gold stages relief rally Having wilted over the past two sessions, gold staged a corrective 0.72% rally to USD 1825.50 an ounce overnight, edging 0.16% higher to USD 1827.75 in Asian trading. A softer US dollar and softer US yields overnight saved gold from further losses, but it remains completely at the mercy of US dollar weakness for support.   The overnight lows around USD 1789.00 forms initial support, followed by USD 1780.00 an ounce. Failure of the latter suggests a deeper correction to USD 1700.00. Gold has resistance just above USD 1830.00, followed by the 200-DMA at USD 1836.50, and then USD 1850.00 an ounce. Only a sudden US dollar sell-off is likely to change the bearish technical outlook. ​ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

It was another night of tail-chasing overnight, this time led by Goldman Sachs who said a US recession is a real possibility and that the US dollar might fall as a result. That of course would lead to terminal Fed Funds rates sooner, so sell US dollars and buy US bonds. Oddly enough, the eternal bottom fishers of the equity market didn’t follow suit, and not did oil markets, which rose again overnight, despite an EU deal on banning Russian imports continuing to be held up by Hungary. All-in-all, the price action is suggestive of a market that can’t decide what it wants to do here, and in the equity market’s case, has still not been released from Accident and Emergency. Equity markets are creeping higher today in Asia as Shanghai records a third day of no covid-19 cases outside of quarantine facilities. Pencil in peak-covid equals peak covid-zero equals buy risk assets equals buy equities, Asian currencies, and gold, and sell US dollars. Ignoring the shocking data dump of yesterday although markets might argue that is “backwards-looking.” The world really should know by now that in a covid-zero country (you know who they were), the authorities have to get lucky 100% of the time, and the virus has to get lucky once. Let’s not get in the way of the “one dip to rule them all” narrative, markets have been conditioned to it these past two years. I won’t pour too much water on the optimism, I’m as keen as anyone for China to move past this. BoE’s Bailey gloomy about economy In fact, it is right to start being nervous about recessions. Apart from having any faith in Federal Reserve forward guidance, given their track record these past two years, we should all get nervous when they say, “soft landing.” The Bank of England Governor overnight said there wasn’t much he could do to stop inflation from hitting 10% this year. He was particularly concerned about food prices, with the impact on that value chain from the Ukraine/Russia conflict yet to be fully felt. He did trot out the favoured central bank mantra of unforecastable events causing inflation to accelerate; I don’t completely agree with him there. In any case, concerns around recessions make me feel that a decent correction lower from the US dollar and US yields are increasingly likely. That should provide some temporary relief to the Euro and Asian currencies and possibly gold and cryptos; at least until the Fed hikes by another 0.50% in June. I’m still not sure it provides markets with a reason to turn long once again on equities. The data calendar isn’t giving us too many clues in Asia today. Singapore’s non-oil exports held steady in April on a YoY basis but fell heavily, MoM. Thailand’s Q1 GDP barely exceeded forecasts as it rose 2.20% YoY. Meanwhile, Indonesia’s trade surplus in March leapt higher to USD 7.56 billion, thanks to a near 48% jump in exports YoY, with imports climbing below forecast 31.0%. Jakarta Airport was mobbed on Friday, and the infamous traffic is back, so Indonesia is definitely rebounding for now. If nothing else, it reinforces the thesis that commodity-exporting countries are likely to remain a least-worst choice in the stagflationary environment of 2022. Later today we receive India’s April WPI for food, manufacturing, fuel, and inflation. All of those data points have upside risks and could lock and load another Reserve Bank of India rate hike next month. The Philippines BSP will probably hike by 0.25% finally this week, with Indonesia to follow in June. While supportive of their currencies, it is likely to be a headwind for their equity markets with all three at the beginning of their tightening cycles. Weak UK Employment data this afternoon could deepen the gloom around the British pound, especially with the BOE raising the white flag over inflation and pricing in a recession next year. The saga of the Northern Ireland Protocol continues and is another risk point for UK markets if the government decides to enact legislation unwinding part of it unilaterally, provoking a trade response from Europe. US Retail Sales this evening should be good for some volatility, especially if it comes in lower than the expected 0.90% increase for MoM for April. We also get manufacturing and industrial production as well. Weaker than expected numbers will increase the R-word noise and could see the US dollar accelerate lower. Throw in the usual mix of Federal Reserve talking heads and another chop-fest session for New York looms. Asia’s next major data point this week will come Friday when China announces its one and five-year Loan Prime Rates. We should expect the 3.70% 1-year LPR to get trimmed, but the PBOC has consistently disappointed on this front this year. Otherwise, we should continue watching the headline ticker for daily omicron cases. Most especially, in Shanghai, where if literally one case appears again, any relief rally in Chinese markets could disappear in a puff of smoke. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Oil markets remain volatile Oil prices finished modestly higher overnight, after another chop-fest session which saw Brent crude and WTI fall nearly four dollars intraday. Powell’s soothing comments around 0.50% rate hikes stabilised sentiment in New York, but it is likely that the Russian natural gas sanctions on some European importers were the reason that oil rebounded. With European natural gas prices soaring, it is inevitable that some spillover into oil will occur. If anything, it should support the downside in prices for now, even if recession fears in China and Europe et al slow gains to the upside. An escalation by Russia on the sanctions front is likely to flow into oil price strength. Read next: Altcoins: What Is Polkadot (DOT)? Cross-Chain Transfers Of Any Type Of Asset Or Data. A Deeper Look Into Polkadot Protocol | FXMAG.COM Brent crude rose 0.30% overnight to USD 107.80 a barrel, having fallen as low as USD 104.75 intraday. WTI finished 1.05% higher at USD 106.70 a barrel, having traded as low as USD 102.70 intraday. Asia has immediately pushed prices higher this morning, likely hedging against weekend news risk around Eastern Europe. Brent crude has added 0.90% to USD 108.80 a barrel, and WTI has gained 0.60% to USD 107.30 a barrel. Brent crude has formed trendline support at USD 101.70 a barrel that goes back to January 2022, while WTI has formed the same pattern at USD 98.85 a barrel. Resistance remains at USD 114.75 and USD 111.50 a barrel respectively. Eastern European tensions will now skew risks to the topside once again. I am sticking to my broader calls for the past two months that ​ Brent crude remains between USD 100.00 to USD 120.00, and WTI between USD 95.00 and USD 115.00 a barrel. Read next: Stablecoins In Times Of Crypto Crash. What is Terra (UST)? A Deep Look Into Terra Altcoin. Terra - Leading Decentralised And Open-Source Public Blockchain Protocol | FXMAG.COM Gold wilts on US dollar strength Precious metals as a group suffered heavy losses overnight, with investors appearing to prefer the haven of the US dollar and US bonds, with their appealing yields. The impressive US dollar strength saw gold take out its 200-day moving average and triangle support between USD 1835.00 and USD 1836.00, finishing 1.65% lower at USD 1822.00 an ounce. In Asia, the modest correction by the US dollar had seen gold creep 0.20% higher to USD 1825.75 an ounce. The failure of USD 1835.00 now sets up a test of support at USD 1820.00 and then potentially USD 1780.00 an ounce. Failure of the latter suggests a deeper correction to USD 1700.00. Gold has resistance at USD 1835.00, USD 1860.00, and USD 1884.00 an ounce, its 100-day moving average. Only a sudden US dollar sell-off is likely to change the bearish technical outlook. ​ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Japanese yen pares gains The US dollar index shrugged off a plunging USD/JPY overnight, climbing an impressive 0.72% to 104.75 overnight, where it remains in Asian trading. The heavy weighting of the euro in the index explains the dollar index rally overnight, assisted by sterling easing as well. Having broken through 104.00, that becomes interim support, followed by 105.50. The longer-term picture still suggests that a larger move towards 120.00 remains on track. In the meantime, resistance at 105.00 is the index’s first target. EUR/USD plunged by 1.26% to 1.0380 overnight as Russia announced partial natural gas sanctions on some European importers. EUR/USD is holding its own today but the weaponisation of natural gas by Russia will ensure that any corrective rallies will struggle above 1.0500. Russia risks now bringing the support at 1.0330 into sight, and any escalation on this front is likely to see EUR/USD testing parity sooner rather than later. Soft UK data raised stagflation and recession fears overnight, sending GBP/USD 0.40% lower to 1.2200. Heavy EUR/GBP selling saved GBP/USD from a deeper move lower but is only likely to be a temporary respite. GBP/USD has well-defined resistance at 1.2400 and risks a move below 1.2100 in the near term as the economic picture darkens. It will also eventually become guilty by association with the euros natural gas travails. USD/JPY plummeted to 127.50 overnight, eventually closing 1.30% lower at 128.30 as risk aversion by Japanese investors, and a very long USD/JPY market, prompted heavy yen buying. That appears to have already run its course, with USD/JPY jumping 0.43% to 128.85 in Asia today. Support at 127.00 was never threatened, and with nothing materially changing on the US/Japan rate differential front, the risks now shift to a resumption of the rally back towards 131.00. AUD/USD and NZD/USD remain ugly on the charts but have rallied by 0.40% today to 0.6880 and 0.6250. AUD/JPY and NZD/JPY buying will be the culprit and is likely to provide only temporary support unless global risk sentiment suddenly shifts to the positive side. Asian currencies are staging a modest rebound today after another tough overnight session, averaging around 0.20% gains although the Korean won has jumped by 0.55%. The rebound looks corrective in nature as equities have stabilised in the last 12 hours. Given the retreat this week, today’s rally doesn’t suggest sentiment has materially changed, and with weekend risk ahead, we have probably seen the best of Asia FX gains today. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Asian markets rally on Powell comments Asia-Pacific equities are staging a relief rally today after Wall Street stabilised late in the session as Jerome Powell calmed nerves over potential 0.75% rate hikes. The rebound of cryptos and stable coins also lifted sentiment. Overnight, the S&P 500 closed just 0.13% lower, the Nasdaq rose 0.06%, and the Dow Jones fell by 0.28%. Given the losses intraday, that was an impressive finish. The rally is continuing in Asia, with futures on all three recording strong gains. S&P 500 futures are 0.70% higher, Nasdaq futures have jumped by 1.0%, and Dow futures have climbed by 0.55%.   The almost unchanged finish overnight, and the rally by US futures this morning, are lifting Asian equities. Japan’s Nikkei 225 has jumped by 2.55%, while South Korea’s Kospi has gained 1.65%. Despite Shanghai restrictions extending once again, Mainland China equities are also rising. The Shanghai Composite is 0.65% higher, with the CSI 300 rising by 0.55%. Meanwhile, the Hang Seng has rallied by 1.75%.   Regionally, Singapore is 1.40% higher, with Taipei gaining 1.25%, Kuala Lumpur 0.45%, but Jakarta has lost 0.75% after retail sales disappointed yesterday. Bangkok is closed today, while Manila has edged 0.25% higher. Australian markets are performing well, the All Ordinaries and the ASX 200 rallying by 1.30%.   Nothing has materially changed in the world from yesterday, and if anything, Russia/Europe risks are increasing. The rally today looks more like a technical rebound after a torrid week, than a structural turn in sentiment. As such, it should be taken with a grain of salt.   European markets fell overnight with the euro as Russia announced sanctions on some European gas importers. Finland is expecting much the same treatment as soon as it announced formally it will join NATO. The weaponisation of natural gas by Russia towards Europe was always the single biggest threat to the Eurozone. With that process starting, European equities will struggle to maintain rallies, even if markets elsewhere manage to do so.   On a final note, I am heading to Singapore next week for the first time in nearly 2.5 years. It is a holiday in Singapore on Monday, my daily missive will resume on Tuesday. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

New York had another tumultuous session overnight, dominated by noise from the crypto sector where (un)stable coins continued to suffer from untethering. Either the crypto noise was pushing equities down, or vice versa, I know not. Regardless, the intraday sell-offs reversed, and a semblance of calm descended on Wall Street into the close. For that we can probably thank Jerome Powell, who stuck to the 0.50% rate hike script overnight, temporarily dispelling 0.75% nerves.   Currency markets, by contrast, continue to reflect risk concerns around the world. The US dollar pummelled Asian currencies yesterday, although USD/JPY bucked that trend by plunging 250 points to 127.50 at one stage, before finishing 1.25% lower at 128.30. Warnings from Toyota of massive material cost increases, as well as the noise elsewhere in the world, seemed to combine to create a repatriation event by Japanese investors, helped along by a market that is clearly long to the eyeballs of USD/JPY. Support at 127.00 remained safe though, and the overbought technical picture is now back to neutral. Nothing has changed with the US/Japan rate differential and USD/JPY is already heading north again in Asia today. At least that’s one dip you know you can buy.   The UK produced a very average dump of data yesterday, highlighting the stagflationary challenges the country faces. Sterling remained under pressure but was supported by EUR/GBP selling. The euro slumped overnight, trading at 1.3085 this morning. As I have previously warned, any hint of Russia weaponising its natural gas exports to Europe is a huge negative for the single currency. European natural gas prices soared as Russia announced sanctions on some European gas importers, and the euro duly headed south. Any escalation from here sets a move through parity by the euro in play, and as it is, the single currency will struggle to move back above 1.0500 now.   It certainly seems as if the US dollar and US bonds are investors’ haven of choice at the moment and earning 2.50% to 3.0% to shelter your money from events in the world is certainly appealing. That is probably going to keep the US dollar resplendent into the weekend. One casualty is the precious metals sector, where gold fell overnight, but silver and platinum took a real beating, while palladium catalytically converted itself into a near six per cent loss for the day.   The data calendar in Asia today is fairly light and the price action and as a result, it looks like Asia is trimming short US dollar and equity positions this morning ahead of the weekend. With Bank Negara having already hiked rates this week, the reaction to Malaysian GDP later will be muted. Conversely, India’s Inflation YoY for March, released late last night, blasted through the forecast, rising to 7.79%. The RBI may need to consider another rate hike at its June meeting instead of August, although it will be loath to do so.   Some time today, we should get New Yuan Loans and M2 Money Supply for April from China. There are downside risks to both numbers from the forecasts of CNY 1.5 trillion and 9.90% respectively. Lower numbers will spark more urgency from the market around meaningful stimulus from China. The more important data will come on Monday with Industrial Production, Retail Sales, and Fixed Asset Investment for April. The covid-zero lockdowns across the country, notably in Shanghai, are going to torpedo the data, it’s just a question of by how much. Once again, ugly data will increase market nerves around stimulus although China equities may rally perversely, as the street prices more robust action from the central government and the PBOC.   Europe releases a swath of inflation and industrial production data this afternoon, but none from the EU heavyweights. It does culminate in Eurozone Industrial Production though, which is expected to fall by 1.0% YoY in March. A weaker number than that is going to be another headwind for Eurozone equities and the euro itself. Intraday volatility will also be driven by developments regarding back-and-forth sanctions by Europe and Russia. None of it adds up to going home long euros or European equities into the weekend. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Oil markets remain volatile Oil prices spiked overnight, led by a combination of Shanghai reopening, potential gas supply disruption through Ukraine, Russian sanctions on EU energy entities and a plunge in gasoline inventories in the US. Brent crude rose 5.90% to USD 107.50, and WTI leapt 6.60% higher to USD 105.50 a barrel. In Asia, the risk aversion selling sweeping other asset classes in Asia today has pushed oil prices slightly lower. Brent crude fell 1.20% to USD 106.25, and WTI fell 1.10% to USD 104.40 a barrel. The continuing squeeze on US gasoline, diesel and other distillates is another supportive factor With tensions seemingly ratcheting higher after Russia sanctioned ex-Gazprom JVs in Europe, along with reduced trans-Ukraine pipeline flows, there is limited downside for oil prices in the near term. The continuing squeeze on US gasoline, diesel and other distillates is another supportive factor. Read next: Altcoins: What Is Polkadot (DOT)? Cross-Chain Transfers Of Any Type Of Asset Or Data. A Deeper Look Into Polkadot Protocol | FXMAG.COM Brent crude has formed a nice trendline support going back to January 2022 at USD 101.50, while WTI has formed the same pattern at USD 98.50 a barrel. Resistance remains at USD 114.75 and USD 111.50 a barrel respectively. Failure of the respective USD 101.50 and USD 98.50 trendline supports is likely to provoke a much stronger test of USD 100.00 for Brent, and USD 95.00 for WTI this time around. Eastern European tensions mean this is not my base case, however. I am sticking to my broader calls for the past two months. Brent crude remaining between USD 100.00 to USD 120.00, and WTI between USD 95.00 and USD 115.00 a barrel. Gold survives another day Gold probed the downside overnight, testing support in the USD 1835.00 an ounce region, before rallying to a 0.75% gain, closing at USD 1852.00 an ounce as US yields fell and risk-hedging flows appeared. In Asia gold is relatively quiet compared to the volatility seen in other asset classes today. It has edged 0.17% lower to USD 1848.20 an ounce. Read next: Stablecoins In Times Of Crypto Crash. What is Terra (UST)? A Deep Look Into Terra Altcoin. Terra - Leading Decentralised And Open-Source Public Blockchain Protocol | FXMAG.COM Gold’s support critical near-term support remains the triangle apex at USD 1835.00, the breakout of which in early February, signalled the gold rally to USD 2060.00 an ounce. Its importance is confirmed by the nearby 200-day moving average (DMA), today at USD 1836.00 an ounce. A daily close under USD 1835.00 would be an ominous technical development. Gold has resistance at USD 1860.00 and USD 1884.00 an ounce, its 100-day moving average Failure of USD 1835.00 sets up a test of support at USD 1820.00 and then potentially USD 1780.00 an ounce. Failure of the latter suggests a deeper correction to USD 1700.00. Gold has resistance at USD 1860.00 and USD 1884.00 an ounce, its 100-day moving average. Read next: (BTC) Bitcoin’s Price Tanks Along With Equities. U.S. Stock Market Awaits CPI Report, Poor Performance From The FTSE 100. If the risk-aversion selloff sweeping other asset classes, notably cryptos, accelerates, gold does stand to benefit. Especially is haven buyers also pile into US bond markets, pushing the US yield curve lower. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

US dollar in choppy waters The dollar index had another choppy range overnight but ultimately closed nearly unchanged once again as the G-10 currency space was content to watch from the sidelines. Recessions fears being offset by lower US yields. The dollar index closed slightly higher at 104.00. Although the index has support at 103.50, it is struggling to make a material close above 104.00, although it has moved higher to 104.07 in Asia. A daily close above 104.00 will signal rapid gains to 105.00 and in the bigger picture, the technical picture still says a multi-month rally to above 120.00 is possible. Support lies at 103.50 and 102.50. Read next: Stablecoins In Times Of Crypto Crash. What is Terra (UST)? A Deep Look Into Terra Altcoin. Terra - Leading Decentralised And Open-Source Public Blockchain Protocol | FXMAG.COM Asian FX weakness is being exacerbated by the fall of both the onshore and offshore Chinese yuan today Most of the activity today in Asia has been in the regional currency space and USD/Asia is sharply higher. With cryptos and equities falling heavily Asian currencies seems to be suffering as part of a generalised risk-aversion wave. USD/KRW has jumped 0.80% to 1289.50, with USD/TWD and USD/PHP rising by 0.55%, and USD/INR, USD/MYR, USD/SGD, and USD/IDR between 0.25% and 0.35% higher. EUR/USD is treading water at 1.0510 this morning having failed ahead of 1.0600 overnight Asian FX weakness is being exacerbated by the fall of both the onshore and offshore Chinese yuan today. USD/CNH has risen 0.555 to 6.8000, and USD/CNY by 0.65% to 6.7650. Their next target is the 6.8500 region. Until the PBOC signals that yuan depreciation has gone far enough, Asian currencies will remain under pressure, and I fully expect to see a few regional central banks in the market selling US dollars today. Read next: Tech Stocks Plunging!? Trade Desk Earnings Announcement Pushes Tech Giant Stock Down, Russian Ruble Strengthening and Ford Motor Co.  EUR/USD is treading water at 1.0510 this morning having failed ahead of 1.0600 overnight. Any negative developments around Russian natural gas exports today are likely to spur another wave of selling, testing support at 1.0450. Notably, despite ECB officials overnight signalling rate hikes soon, EUR/USD finished lower than its open overnight. GBP/USD has fallen 0.30% to 1.2210 this morning and faces plenty of downside risk on Northern Ireland developments, emergency budgets, or poor data this afternoon. Rallies should be limited to 1.2400 with 1.2000 a real possibility in the next 36 hours. Short-dated US yields are rock solid though, limiting USD/JPY downside USD/JPY has finally eased slightly to 129.70 as long-dated US yields fell again overnight. Short-dated US yields are rock solid though, limiting USD/JPY downside. ​ Overall, the US/Japan rate differential and technical picture suggest further USD/JPY appreciation is a matter of when, and not if. Read next: (BTC) Bitcoin’s Price Tanks Along With Equities. U.S. Stock Market Awaits CPI Report, Poor Performance From The FTSE 100.  AUD/USD and NZD/USD both gave up intraday gains overnight a sentiment turned sour in New York. The general risk aversion selloff sweeping Asia today has punished both currencies. AUD/USD has fallen through support at 0.7000 on its way to 0.6880, and NZD/USD dropped through 0.6400 on its way to 0.6240 in Asia. The 1.0% losses have left both oversold on short-term technical measures, but unless risk sentiment swings abruptly higher for some reason, both still look like sells on rallies, caught in a US rate hike, China slowdown, pincer move. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Asian equities follow Wall Street lower Asian equities markets are mostly lower today after Wall Street tumbled once again after US inflation data reinforced the Fed tightening path. Admittedly, it took Wall Street some time to come to that conclusion, but the day finished with the S&P 500 down 1.65%, the Nasdaq tumbling by 3.18%, and the Dow Jones losing 1.01%. In Asia, some bottom-fishing had pushed futures on all three a little higher initially, but they have since fallen by -0.20% for the session. In Asia, markets are almost all in the red. The exception, once again, is mainland China where the Shanghai Composite has edged 0.25% high, while the CSI 300 is just 0.10% higher. Although there has been more noise around the room for more stimulus in China, I suspect that China’s “national team” is “smoothing” again. I suspect they were busy yesterday as well. Take the rally with a huge grain of salt. With Sunac missing a foreign currency bond payment, Hong Kong is probably a more realistic reflection of China’s actual performance today. The Hang Seng is down by 1.90%. Elsewhere, Japan’s Nikkei 225 has dropped by 1.70%, with South Korea’s Kospi 1.05% lower, and Taipei slumping by 1.80%. Singapore is down 0.75%, with Kuala Lumpur up 0.05% with a BNM rate hike out of the way. Jakarta has tumbled by 2.10%, with Bangkok losing 1.0%, and Manila down 0.45%. Australian markets are also deeply in the red, the All Ordinaries retreating by 1.80%, and the ASX 200 falling by 1.80%. With Ukraine gas pipeline disruptions, Putin sanctions on European energy companies, and the poor performance by the US and Asian markets today, we can reasonably assume that European equity markets will open lower. Once again, I must reiterate, that any threats to European gas flows from Russia are very negative for European equities. US markets are a complete turkey shoot and at the mercy of swinging intra-day sentiment and Fed-speak hitting the wires. It wouldn’t surprise me if the rear guard buy-the-dippers managed to generate a dead-cat bounce. You can pick and choose your pricing inputs this week in deciding how equities have done what they have done, but I believe that the underlying reason is that the reality of global stagflation and wars is where all roads are leading to. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

US inflation higher than  expected US Inflation printed at 8.30% YoY overnight, less than the previous month’s 8.50%, but slightly more than the 8.10% median forecast by markets. Equities vacillated after the data as the street tried to make up its mind whether to price in “peak-US-inflation,” or not. In the end, the no’s won the day as the realisation sunk in that the data reinforced the Federal Reserve’s hawkish bias, and that even if US inflation is coming down now, it’s going to do so at a snail’s pace. That reality was reflected in the US yield curve, with 2-year yields firming, while 10 and 30-year yields fell once again. The pivot in the yield curve likely explains why currency markets were left in neutral, while equities indulged in their usual schizophrenic tail-chasing. US crude inventories showed a surprise leap in crude stock by around 8.5 million barrels Energy prices also ramped higher overnight, with oil climbing by around 6.0%. Trans-Ukraine gas pipeline disruptions are playing their part, as did an improvement in the covid situation in Shanghai, which is rapidly reopening. US crude inventories showed a surprise leap in crude stock by around 8.5 million barrels, but gasoline stocks slumped by over 3.60 million barrels, and distillates were flat. ​ The market remains incredibly tight for refined oil products in the US and if one adds in the 6 million barrels fall in US SPR stocks, crude inventories only rose by around 1.50 million barrels. Trans-Ukraine gas flows have slowed as well as Ukraine declares a force-majeure on one its pipelines from Russia to Western Europe The energy picture is further muddied today by the news that President Putin has announced sanctions on European energy companies that were previous JV partners with Gazprom and its ilk. Trans-Ukraine gas flows have slowed as well as Ukraine declares a force-majeure on one its pipelines from Russia to Western Europe. I’m not sure what impact the Putin sanctions will have on European gas supplies, if any. But if Russia is messing with European gas supplies, and with an EU import ban on Russian oil in the works, you can be fairly certain that oil prices have limited downside. That is another inflationary headwind to the world and with grain disruptions from Ukraine and Russia, markets continue to under-price the Ukraine war’s risks to the global economy this year. Hold off on buying euros on the dip as well. Philippine’s GDP today leapt by 8.30% in Q1 YoY and will likely force the BSP to hike next week That reality is grudgingly starting to permeate Asian markets. In a stagflationary environment, there are no good choices for central bankers and monetary policy. Keep rates low and watch inflation explode and your currency evaporates, hike rates and watch a sharp slowdown develop in economic activity. Singapore and South Korea have already started tightening although I believe the chances of an unscheduled move to tighten by Singapore’s MAS are rising. India has also moved to hike rates and yesterday Bank Negara Malaysia also hiked by 0.25%. Philippine’s GDP today leapt by 8.30% in Q1 YoY and will likely force the BSP to hike next week. Indonesia will not be far behind them in June. Philippine RPI and Indonesian Retail Sales later today could reinforce that premise. Read next: (BTC) Bitcoin’s Price Tanks Along With Equities. U.S. Stock Market Awaits CPI Report, Poor Performance From The FTSE 100.  That will leave China and Japan as the last doves standing. Thankfully, both have benign inflation environments. Google Japan, deflation, 30-years for an explanation there. Markets tried to price in more China stimulus yesterday, lifting equities as Shanghai’s reopening accelerates. But it has run out of steam today despite the noise around supporting the economy by the PBOC this morning. China’s covid-zero policy will continue crimping growth, but it won’t be immune from the Ukraine/Russia stagflationary wave either. Nor has China’s property developer debt woes gone away, with news that major developer Sunac has missed a foreign currency bond payment, and statements suggesting it will struggle to meet future ones. Read next: Stablecoins In Times Of Crypto Crash. What is Terra (UST)? A Deep Look Into Terra Altcoin. Terra - Leading Decentralised And Open-Source Public Blockchain Protocol | FXMAG.COM Little surprise then that both the Japanese yen and the Chinese renminbi remain under pressure, with growth concerns and a widening US/Asia interest rate differential the key drivers. Interestingly, Asian currencies ex-Japan and China are also under the hammer today as well. It could be that financial markets are testing the resolve of Asia’s central banks now, or it is part of a general de-risking across the globe by investors. Either way, with the US expected to hike much faster than Asia, I expect the next six months to be torrid for local currencies, exacerbating imported inflation pressures. The United Kingdom releases the mother of all data dumps early this afternoon Asian time. It features GDP, Business Investment, Industrial Production, Construction, Trade Balance, and Manufacturing. You would have to say that all of that data has downside risks. Along with cost-of-living pressures prompting speculation of an emergency budget, the UK is also making its life even harder by once again making noises about suspending the Brexit Northern Ireland protocol. The EU has quite rightly said that it will suspend the entire agreement if that happens. You would think that with a war in Eastern Europe the UK government would leave Northern Ireland for another day, but this BoJo is not for turning. Little wonder with that smorgasbord of risk outlined above that sterling slumped overnight, even as Euro remained relatively calm. Sterling may be oversold on short-term indicators, but data and politics could subsume that. GBP/USD is wobbling at 1.2215 this morning and I would not be surprised to see a 1.1900 handle on it by the end of the week. This evening, the US releases its PPI data for April and weekly Initial Jobless Claims. The impact should be limited now that inflation data has been released. We will have the usual plethora of Fed speakers to shake up volatility intraday, but I expect to see attempts to reprice inflation/recession/tightening/geopolitics continue to dominate proceedings. Sitting on the sidelines with a bag of cash and some earplugs in is my preferred strategy. Read next: Tech Stocks Plunging!? Trade Desk Earnings Announcement Pushes Tech Giant Stock Down, Russian Ruble Strengthening and Ford Motor Co.  Finally, I am continuing to monitor the crypto-space. Bitcoin closed below USD 30,000.00 overnight, sinking 6.50% overnight, and falling another 6.30% to USD 27,150.00 this morning. My chart picture is calling for a fall to the USD 17,000.00 region and bitcoin would need to close above USD 33,000.00 to give pause for thought. Only a close above USD 38,000.00 would signal the downside danger has passed. The rot has spread from the turmoil in the (un)stable coin space. If the one-to-one pegs on the US dollar backed instead of algorithmic (un)stable coins crack, things are going to get ugly fast and may lead to cross-margining selling in other asset classes. Off course, the main (un)stable coin issuers could release to the public view, incontrovertible proof that they hold a US dollar for every coin they’ve issued, in real-time. Just asking for a friend. Otherwise, crypto markets may find themselves at the end of their tether. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Oil rallies in Asia Oil prices continued falling overnight as China slowdown nerves and increasingly, US recession fears weighed on prices. In Asia, we have seen a sharp bounce as energy markets price in most China stimulus after benign inflation data, with Ukraine gas disruption likely having a flow-through impact on oil prices.   Overnight, Brent crude finished 3.55% lower at USD 101.50, and WTI closed 3.45% lower at USD 99.00 a barrel. Prices have jumped in Asia with Brent crude rallying by 3.30% to USD 104.80, and WTI leaping 3.10% higher to USD 102.05 a barrel. I suspect the gas disruptions in Ukraine are having a steadily increasing impact, as hopes of more China stimulus alone would not just the bounce we have seen today. As a result, I see more upside to oil prices in Europe this afternoon. US Natural Gas has moved 2.50% higher today, after rallying 4.0% higher overnight.   Brent crude has formed a triple top at USD 114.75 a barrel, which will be a formidable barrier in the near term. It has support at USD 101.50 a barrel. I am sticking to my broader USD 100.00 to USD 120.00 a barrel wider range ahead for now. WTI has resistance at USD 111.50 with support at USD 98.50 a barrel. Once again, I remain comfortable with a USD 95.00 to USD 115.00 a barrel outlook in the medium term.   Gold looks shaky Gold’s price action can only be described as negative overnight. Despite lower US yields and a sideways US dollar, gold fell by 0.84% to USD 1838.50 an ounce, taking out support at USD 1850.00. In Asia, gold is unmoved from the New York close with little interest from regional players ahead of US inflation data.   Gold is now just above the triangle apex at USD 1835.00, the breakout of which in early February, signalled the gold rally to USD 2060.00 an ounce. A daily close under USD 1835.00 would be an ominous technical development although it must be said, gold’s recent price action suggested downside risks were in play.   Failure of USD 1835.00 sets up a test of support at USD 1820.00 and then potentially USD 1780.00 an ounce. Failure of the latter suggests a deeper correction to USD 1700.00. Gold has resistance at USD 1850.00 and USD 1882.00 an ounce, its 100-day moving average. I foresee more whipsaw trading ranges in the days ahead. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

US dollar trading sideways Currency markets were content to leave the equity FOMO gnomes to chase their tails overnight, while currencies traded sideways ahead of US inflation data tonight. The dollar index is almost unchanged over the past 24 hours at 103.80 this morning. ​ A daily close above 104.00 will signal rapid gains to 105.00 and in the bigger picture, the technical picture still says a multi-month rally to above 120.00 is possible. Support lies at 103.50 and 102.50.   Likewise, EUR/USD and GBP/USD are almost unchanged over the past 24 hours, trading at 1.540 and 1.2335 today. A move above 1.0600 or 1.2400 could see a further short squeeze worth another 100 points, but the overall technical picture remains very bearish. Only a sharp fall in US inflation tonight changes the picture temporarily.   USD/JPY is trading sideways at 130.35 today with the price action most notable overnight for the fact that USD/JPY did not fall with longer-dated yields. In the short end, 2-years were almost unchanged and that is perhaps where we should look for directional signals in the near term. Overall, the US/Japan rate differential and technical picture suggest further USD/JPY appreciation is a matter of when, and not if.   AUD/USD and NZD/USD have consolidated at the bottom of their ranges these past two days. AUD/USD is at 0.6960 today, with NZD/USD at 0.6305. Of the two, the NZD/USD looks most vulnerable to further losses, but both are being buffeted as risk-sentiment indicators. Failure of 0.7300 or 0.6250 will signal another move lower is beginning.   The Asian currency space was quiet overnight, prices moving sideways. Much the same price action has been seen in Asia today and it appears that the US inflation data tonight will be the next directional spark. Lower inflation should be Asia FX supportive, while higher inflation will be negative for Asian currencies. The Malaysian ringgit could see some volatility this afternoon over the BNM policy decision. It could move sharply higher if BNM surprises with a hike. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Stock markets look for direction It was an inconclusive session overnight in New York as recession fears and lower oil prices seemed to weigh on value stocks while the buy-the-dip gnomes piled back into growth as longer-dated US yields headed lower. The S&P 500 edged 0.25% higher, while the Nasdaq gained 0.98%, but the Dow Jones ended the session 0.26% lower. In Asia, that has continued with Nasdaq futures rising 0.75%, S&P 500 futures rising 0.35%, and Dow futures edging 0.23% higher. Part of the rally in US futures could be explained by China’s stock market outperformance today. With inflation data benign, China markets have quickly moved to price in room for heavier China stimulus going forward. That has seen the Shanghai Composite jump higher by 1.63%, the CSI 300 rally by 2.04%, and the Hang Seng gain 1.62%. Elsewhere in the Asia-Pacific, the performance is more mixed as China recession fears and Fed rate hikes continue to buffet local markets. The more Nasdaq-aligned Nikkei 225 has risen by just 0.12%, but the Kospi has slipped 0.20% lower, with Taipei unchanged. Singapore is down by 0.60%, with Kuala Lumpur edging 0.15% higher ahead of the BNM policy decision. Jakarta is 0.60% higher, while Bangkok has lost 0.50% and Manila is 0.70% lower. In Australia, the All Ordinaries have slipped by 0.12%, and the ASX 200 has lost 0.28%. Overall, the picture is one of the markets left to their own devices after an inconclusive US session and a slow headline reel in Asia. European markets are likely to take fright at potential trans-Ukraine natural gas disruptions and track lower initially. US markets will continue to be buffeted by the Fed speaker rent-a-crowd, with US inflation data set to define the session. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Mainland China stocks are leading the way higher today after China’s Inflation data showed a still very benign inflation landscape. Inflation YoY in April climbed to 2.10% (1.8% exp), and Inflation MoM for April increased by 0.40% (0.20% expected). PPI also eased to 8.0% from 8.30% last month. In the context of the inflation landscape elsewhere in the world, China is in a very sweet spot at the moment, markets today are pricing that it gives China’s government room to unleash some juicy stimulus GFC-style. Of course, what the market wants, and what the market gets are often two different things, especially where the Chinese government are concerned. Premier Li continues to make noises about the potential for broader economic support, but with China still hell-bent on covid-zero, even if it crushes the economy, and the PBOC showing no signs of loosening the liquidity tap, along with the continuing rhetoric of “targeted stimulus,” I’m not seeing any signs, yet that China has moved away from its deleveraging stance. Even opening the taps now would be of limited impact if workers can’t leave lockdown to build roads or go back to factories. That sort of mixed messaging doesn’t do markets any favours, but China isn’t the only one guilty of it. The rent-a-crowd of daily Fed speakers are also a bit “mixed.” We saw some big ranges in stocks and bonds overnight as increasingly frantic markets chase their tails in the vice grip of recessions and Fed hiking/inflation. The Fed’s Loretta Mester, on Bloomberg television, didn’t help things by saying “we don’t rule out 75 forever,” meaning 75 bps hikes could happen. ​ US longer-dated yields fell quite heavily overnight as the street tentatively priced in “peak-hiking,” but the more rate-sensitive 2-year was unchanged. This kind of mixed messaging isn’t at all helpful and may be why equities gave back some gains overnight. The US National Federation of Independent Business (NFIB) survey overnight suggests US inflation isn’t going to fall precipitously soon. The price change and 3-month pricing plan sub-indices were as robust as ever, suggesting cost increases, and the ability to pass them on to consumers is as robust as ever. That isn’t stopping the US federal government, now looking nervously at mid-terms in November, from trying to do something about inflation as diesel and gasoline prices soar. President Biden has hinted a temporary suspension of Federal fuel taxes could be on the cards, and he is actively exploring removing the Trump-era tariffs on Chinese goods to push the CPI lower. That has given US equity futures a leg up today. However, even if we may be nearing the top of inflation, that doesn’t mean it will suddenly drop; it could just as easily move sideways at the levels globally for some time. One risk factor constantly being ignored when it shouldn’t be is the Ukraine war. Ukraine has announced the suspension of west-bound gas exports through a compressor hub, ostensibly because Russia is siphoning the gas to its vassals in Donetsk. It is trying to redirect flows to another interchange that remains under Ukrainian control. Naturally, Gazprom disagrees, but the threat of disruption to European gas supplies appears to be pushing oil sharply higher in Asia today, helped along by stimulus hopes from China. All bets are off on inflation if Russian gas gets cut to Europe. New Zealand has announced today that it will fully reopen borders in about six years, I mean weeks’ time on July 1st. The New Zealand dollar is 0.25% higher, but that is due to a modest risk-sentiment recovery. Like everything to do with the Covid recovery by the government and the Reserve Blank, it is too little, too late. AUD/NZD above 1.1000 might encourage some Australian skiers to venture across the Tasman Sea for the winter season, but they’ll be shocked at how many New Zealand pesos will be required to buy anything. New Zealand remains my no.1 pick for a hard landing later this year among developed countries unless Russian gas gets turned off to Europe. Another central bank on a growing list having to make least-worst choices is Bank Negara Malaysia today. The Malaysian Ringgit has performed terribly these past two months, showing none of the resource-based support that the Indonesian rupiah had achieved. In that respect, the ringgit appears to have become a China-proxy like the Australian dollar. Headline inflation is still quite manageable at 2.20%, but food price inflation is heading above 4.0%. That reduces the pressure on BNM to hike rates today, but like the RBI last week, and Indonesia next month, they will likely have to move soon unless they want to start burning through foreign reserves to defend the currency. Malaysia encapsulates the least-worst choices facing many an Asian central bank as 2022 goes on, especially as China’s PBOC seems quite happy to allow the yuan to continue depreciating in a back-door stimulus for exporters. All eyes on US inflation The evening’s highlight will be the US Inflation data. April Core Inflation YOY is expected to ease from 6.50% to 6.0%, with Headline Inflation YoY expected to ease to a still-eye-watering 8.10%. Expect a binary outcome from the data. Lower prints will see peak-Fed hiking priced in, good for equities and bonds, bad for the US dollar. Stubbornly high prints see more Fed tightening. Bad for equities and bonds, but good for the US dollar. Keep an eye on official US Crude Inventory data as well, particularly the refined gasoline and distillates categories. The US has plenty of oil but seems to be struggling to refine it into diesel, like the rest of the world. We could see a sharp move higher by WTI if the sub-category’s inventories fall sharply, and it will be another headwind for equities as well. Finally, cryptos have a volatile session, bitcoin had an impressive rally intraday before losing much of those gains to finish 3.0% higher at USD 31,000.00. Bitcoin failed just ahead of resistance at USD 33,000.00 overnight, a bearish technical development. Failure of USD 30,000.00 likely signals the next wave down for bitcoin which should target USD 17,000.00 in the week (or days) ahead. I am watching the (un)stable coin situation, with 1 to 1 to the US dollar pegs breaking in the space. I have warned before that so-called stable coins made me nervous due to the opacity of whether they actually have one US dollar in reserves for every (un)stable coin issued. Turmoil here could result in more downward pressure in the cryptocurrency space. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Asian markets fall, ex-China Wall Street suffered another day of recession fears overnight, with equities slumping once again, relying on Bostic’s comments to salve the wounds and cap US yield rises and the US dollar rally. The S&P 500 retreated by 3.20%, with the Nasdaq slumping by 4.29%, and the Dow Jones losing 1.97%. No sector was spared, notably, and despite high inflation, cash is increasingly becoming King. The rot has stopped in Asia, with US futures attempting to claw back some of the overnight losses as the bottom-feeders come out to play. S&P 500 futures have risen by 0.60%, Nasdaq futures have jumped by 0.95%, and Dow futures have gained 0.45%.   In Asia, equity markets initially tumbled in response to the Wall Street moves, in a rerun of yesterday. However, the recovery by US futures this morning seems to have taken the edge of the sell-off, with Asian markets recouping some of their earlier losses. Japan’s Nikkei 225 is now down just 0.44%, with South Korea’s Kospi down 0.47%,   Meanwhile, after a tough session yesterday, the intraday rally in sentiment has pushed mainland China exchanges well into positive territory. The Shanghai Composite and CSI 300 have rallied by 1.0%. Hong Kong was pummelled earlier today but has also recovered somewhat, but it remains 2.25% lower for the day.   In regional markets, Singapore is still down by 1.20%, while Kuala Lumpur is unchanged, and Jakarta has slumped by 2.90% led by resource stocks. Taipei has retreated by 1.65%, while Manila is down 1.0% post-election, with Bangkok managing a 0.30% gain. Australian markets are also in retreat, the ASX 200 and All Ordinaries falling by 1.30%.   What makes the session odd is that markets with a high sensitivity to the China slowdown are the worst performing in Asia today, but mainland equities have rallied. The cynic in me suspects that China’s “national team” are busy today supporting the market, especially as covid-zero policies remain in force and nerves are rising around mainland property developers once again.   European markets will struggle to construct a bullish case today as well, also President Putin not declaring a was on Ukraine at yesterday’s May Day parades could be a straw to grasp. The question is really whether the bounce in US equity futures today is the start of a recovery or merely a corrective bounce to short-term oversold indicators. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Wall Street fall on recession jitters Today is looking remarkably like a rerun of yesterday, especially in US markets. Equities slumped once again, led by the Nasdaq, as did oil and bitcoin. The Federal Reserve financial stability report highlighted risks around rising interest rates, wars, and high inflation amongst others which frazzled Wall Street’s nerves. US 10-years traded in an impressive 17 basis point range, rising to 3.20%, before settling lower at 3.03%.   The late rebound also saw the US dollar give back most of its intraday gains, although bitcoin only retraced part of its daily losses and stocks gained no solace. Markets can thank the Fed’s Bostic for the rebound, as he dampened down 75 bps hiking noise. The price action is endemic of a market on edge as markets find themselves in a multi-directional vice grip of high inflation, supply chain disruption, a hiking Fed, a slowing China thanks to covid-zero, and the Russian invasion of Ukraine.   That stagflationary noise just won’t go away, and it’s a scenario with no good choices for central banks. As a result, the rate hike globally inducing a recession is gaining more credence. Little surprise that it is not a favourable environment for equities in particular, and other darlings that were pimped up in the central bank QE orgy through the pandemic like cryptos.   Apart from a China-induced slump in oil overnight, the other big mover was the crypto space with bitcoin dropping a mammoth 14.25% to USD 30,900.00. The end of the era of central banks providing unlimited zero per cent money to the world economy, and backstopping downward cycles at the first sign of trouble has come to an end. Asset markets like cryptos, which rose that wave higher, are among the most exposed and it is becoming increasingly harder to hide for them, although they are not alone as the world resets itself to the late mid-’90s.   As far as bitcoin goes, I noted that a break of the 1-year symmetrical triangle support at USD 37,400.00 would signal a move lower, initially targeting the USD 32,000 region. That has been carved out and the technical picture suggests bitcoin could trade as low as the USD 17,000.00’s. That is a big call, and it does seem to be making a stand ahead of USD 30,000.00. Realistically, it needs to reclaim USD 37,000.00 to change the technical outlook and give the HODL’ers hope of a good night’s sleep.   In Asia today, the data calendar is light. Japan’s Household Spending MoM for March exceeded expectations, rising to 4.10% as the economy reopens and perhaps as Japanese consumers, front-load spending, faced with a non-deflationary environment for the first time in three decades. Japan officials have reiterated the Bank of Japan monetary settings though, capping JGB yields at 0.25%, so nobody should be expecting a sustained yen rally unless US yields take a tumble.   South Korean data remains firm. The Current Account for March shrank slightly to USD 6.73 billion, but exports remain robust, although import costs rose sharply due to a weaker won and soaring energy prices. That will flow through to higher inflation and keep the Bank of Korea on track for another hike at its next meeting. Similarly, Indonesian inflation popped through the topside of forecasts yesterday, and the pressure will increase on Bank Indonesia to hike next month. It seems to be capping USD/IDR around 14,500.00 still but that strategy relies on favourable moves in US yields. It will soon need help from monetary policy, as will India, where the RBI was intervening in USD/INR overnight. The election of the Marcos/Duterte ticket yesterday in the Philippines on subsidy promises means the BSP has another headwind to cap USD/PHP appreciation, and its rate hike hand will soon be forced.   Australia’s NAB Business Confidence plunged to 10 in April from 16 in March, another headwind for local markets pricing in a China slowdown and an imminent federal election. AUD/USD and NZD/USD remain at the mercy of global risk sentiment, and unsurprisingly, got clobbered once again overnight. Malaysian Industrial Production was a bright spot, increasing to 5.10% in March, although repeating that in April will be challenging. Like the Australian and New Zealand dollars, the Malaysian ringgit seems to be being used as a proxy for the China slowdown, and as a result, USD/MYR is going to remain bid unless US yields take a sudden and prolonged dive, leading to broader US dollar selling. Bank Negara is another that may be forced into a prolonged series of rate hikes, just when it doesn’t want to. As I said, stagflation leaves no good choices for monetary settings, just least-worst choices.   The data highlight this evening will be the German ZEW survey, which, for obvious reasons, has continued downside risks. The US NFIB Business Optimism Index for April makes for increasingly interesting reading these days, especially the broader report on the state of independent businesses in America. However, it will likely be the slew of Federal Reserve talking heads tonight that will dominate intraday volatility.   In Asia today, short-term moves in currencies and equities seem to be following the intra-day moves in bitcoin. Or it could be the other way round. I’m not sure if the dog is wagging its tail or the tail is wagging the dog. It is a powerful indication of the nervousness out there. Looking at real markets though, I am monitoring oil prices. Having tumbled heavily overnight, we are not seeing the usual Asian buy-the-dippers today. In fact, oil is lower in Asia today and that speaks much louder to me than noise in the crypto-space. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Oil prices trade sideways Oil prices booked modest gains on Friday night after an on-target US Non-Farm Payroll release suggested that the US economy continues to perform well. Brent crude rose 1.86% to USD 113.05, and WTI rose by 1.80% to USD 110.50 a barrel. China slowdown fears initially saw all those gains pared in Asia, but as the session has gone on, oil has clawed back most of its losses. Brent crude is down just 0.40% to USD 112.60, and WTI is down 0.55% to USD 109.85 a barrel. A proposed G7 ban on Russian oil imports has had zero impact on oil markets today, with China nerves taking precedence. Nevertheless, it seems inevitable that both the EU and Japan will be competing for more non-Russia supplies in the future, and this is underpinning prices. Soaring energy demand in India due to the heatwave, as well as tight natural gas markets, should mean coal, gas and oil prices remain self-supportive of each other. That leaves oil at the mercy of the Ukraine/Russia conflict and the EU oil ban supporting the downside, while China’s slowdown fears have capped prices. Ukraine/Russia conflict risks will be sorely tested today if Vladimir Putin declares war officially against Ukraine at today’s May 9th parade. I continue to believe that energy markets are under-pricing Russian risks, be it external sanctions, or Russia’s potential response. Brent crude has formed a triple top at USD 114.75 a barrel, which will be a formidable barrier in the near term. Support lies at USD 103.50 a barrel and I am sticking to my broader USD 100.00 to USD 120.00 a barrel wider range ahead for now. WTI has resistance at USD 111.50 with support at USD 100.00 a barrel. Once again, I remain comfortable with a USD 95.00 to USD 115.00 a barrel outlook in the medium term. Gold trades sideways Gold has eased by 0.50% today in Asia to USD 1874.00 an ounce, erasing Friday’s modest 0.35% gain. There are some constructive notes in gold’s recent price action. It is holding up remarkably well versus a rampant US dollar and a US yield curve where a lot of it starts with three in yield terms. It actually managed to rise slightly on Friday equities fell and the US dollar rose. I suspect some of that support was derived from weekend risk-hedging, which has evaporated today. Gold is definitely outperforming bitcoin right now, which has tumbled through support at USD 37,400.00 on Friday and is trading much lower at USD 33,740.00 this morning. That should give the gold bugs heart but could also be coincident with the return of China from holidays, or suggestive that there is more than a little risk-hedging based buying quietly going through the market. Gold looks set to continue vacillating around its 100-day moving average, today at USD 1882.50, in a wide but real range of USD 1850.00 to USD 1920.00 an ounce, for the time being. Risk aversion buyers supporting the downside, while US dollar strength caps rallies. Only failure of the break-out triangle apex at USD 1835.00 swings gold back into bearish territory. That said, gold needs to close above resistance at USD 1920.00, and preferably USD 1960.00 an ounce to signal a renewed structural move higher. I foresee more whipsaw trading ranges in the days ahead. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

China tightens lockdown in Shanghai Asian equity markets are off to a bad start today, although the US dollar has been steadily rising versus Asian currencies, and the risk-sentiment barometers, the Australian and New Zealand dollars are having a tough day at the office. There is no one theme that is causing Asian equities to crate, but if I had to pick one, it would be that concerns over the depth of the China slowdown are accelerating, with virus restrictions tightening in Beijing and apparently, Shanghai once again.   The weekend G-7 meeting may also be darkening the mood, agreeing t