However, June inflation numbers from China will move the dial.
There are no economic indicators from Australia or New Zealand to draw interest this morning. The lack of economic indicators will likely leave investors to consider the US Jobs Report and sentiment toward the Fed monetary policy outlook.
Later this morning, inflation numbers from China will draw interest. Economists forecast the annual inflation rate to hold steady at 0.2%. A 0.2% inflation rate would shift the market focus to the Producer Price Index, which could signal more doom and gloom. Economists forecast the PPI to fall 5% year-over-year versus a 4.6% decline in May.
Trend bullish
There are no economic indicators from Australia or New Zealand to draw interest this morning. The lack of economic indicators will likely leave investors to consider the US Jobs Report and sentiment toward the Fed monetary policy outlook.
Later this morning, inflation numbers from China will draw interest. Economists forecast the annual inflation rate to hold steady at 0.2%. A 0.2% inflation rate would shift the market focus to the Producer Price Index, which could signal more doom and gloom. Economists forecast the PPI to fall 5% year-over-year versus a 4.6% decline in May.
Trend bullish
Comment:
US Stocks Pop on Cooling Inflation
All major US stocks indexes were trading in the green on Wednesday afternoon as June CPI data came cooler-than-expected, raising hopes that Fed officials might rethink their stance on more rate hikes. The Dow Jones was up more than 100 points after reaching the highest level since November earlier in the session, as Salesforce, Goldman Sachs and Home Depot outperformed, adding nearly 2% each. The S&P 500 gained 0.8%, a level not seen since April of 2022, led by shares in the consumer discretionary, tech and basic materials sectors. The Nasdaq was up about 1.2%, also the highest since April last year. Bank stocks advanced firmly, with Citigroup and Goldman Sachs adding 2.9% and 2.5%, respectively. Also, regional banks such as Comerica(5.1%) and Zions Bancorporation (4.9%). In the news, Domino's Pizza surged over 11% after revealing its deal with Uber Eats.
All major US stocks indexes were trading in the green on Wednesday afternoon as June CPI data came cooler-than-expected, raising hopes that Fed officials might rethink their stance on more rate hikes. The Dow Jones was up more than 100 points after reaching the highest level since November earlier in the session, as Salesforce, Goldman Sachs and Home Depot outperformed, adding nearly 2% each. The S&P 500 gained 0.8%, a level not seen since April of 2022, led by shares in the consumer discretionary, tech and basic materials sectors. The Nasdaq was up about 1.2%, also the highest since April last year. Bank stocks advanced firmly, with Citigroup and Goldman Sachs adding 2.9% and 2.5%, respectively. Also, regional banks such as Comerica(5.1%) and Zions Bancorporation (4.9%). In the news, Domino's Pizza surged over 11% after revealing its deal with Uber Eats.Japanese Yen attempting fifth consecutive daily advance (first time since December)
USD/JPY plunge now approaching major support confluence- risk for price inflection
Resistance 140.10s, 140.93, 142.10/50 (key)- support 137.36/91, 136.15, 134.04
The Japanese Yen has continued to coil just below uptrend resistance with major event risk on tap into the close of the week. The focus is on a breakout of the monthly opening-range for guidance. These are the updated targets and invalidation levels that matter on the USD/JPY short-term technical charts.
Initial resistance now eyed at the 75% parallel (blue slope currently ~140.10s) backed by the objective May high at 140.93. Ultimately, a breach / close above the weekly open / 61.8% retracement of the 2022 decline at 142.10/50 would be needed to mark resumption of the broader USD/JPY uptrend.
Bottom line: The USD/JPY plunge us approaching the first major technical support hurdle just below the 138-handle. From at trading standpoint, look to reduce portions of short-exposure / lower protective stops on a stretch towards this key support zone – rallies should be limited to the weekly open IF price is heading lower on this stretch. I’ll publish an updated Japanese Yen Weekly Forecast once we get further clarity on the longer-term USD/JPY technical trade levels.
All major US stocks indexes were trading in the green on Wednesday afternoon as June CPI data came cooler-than-expected, raising hopes that Fed officials might rethink their stance on more rate hikes. The Dow Jones was up more than 100 points after reaching the highest level since November earlier in the session, as Salesforce, Goldman Sachs and Home Depot outperformed, adding nearly 2% each. The S&P 500 gained 0.8%, a level not seen since April of 2022, led by shares in the consumer discretionary, tech and basic materials sectors. The Nasdaq was up about 1.2%, also the highest since April last year. Bank stocks advanced firmly, with Citigroup and Goldman Sachs adding 2.9% and 2.5%, respectively. Also, regional banks such as Comerica(5.1%) and Zions Bancorporation (4.9%). In the news, Domino's Pizza surged over 11% after revealing its deal with Uber Eats.
All major US stocks indexes were trading in the green on Wednesday afternoon as June CPI data came cooler-than-expected, raising hopes that Fed officials might rethink their stance on more rate hikes. The Dow Jones was up more than 100 points after reaching the highest level since November earlier in the session, as Salesforce, Goldman Sachs and Home Depot outperformed, adding nearly 2% each. The S&P 500 gained 0.8%, a level not seen since April of 2022, led by shares in the consumer discretionary, tech and basic materials sectors. The Nasdaq was up about 1.2%, also the highest since April last year. Bank stocks advanced firmly, with Citigroup and Goldman Sachs adding 2.9% and 2.5%, respectively. Also, regional banks such as Comerica(5.1%) and Zions Bancorporation (4.9%). In the news, Domino's Pizza surged over 11% after revealing its deal with Uber Eats.Japanese Yen attempting fifth consecutive daily advance (first time since December)
USD/JPY plunge now approaching major support confluence- risk for price inflection
Resistance 140.10s, 140.93, 142.10/50 (key)- support 137.36/91, 136.15, 134.04
The Japanese Yen has continued to coil just below uptrend resistance with major event risk on tap into the close of the week. The focus is on a breakout of the monthly opening-range for guidance. These are the updated targets and invalidation levels that matter on the USD/JPY short-term technical charts.
Initial resistance now eyed at the 75% parallel (blue slope currently ~140.10s) backed by the objective May high at 140.93. Ultimately, a breach / close above the weekly open / 61.8% retracement of the 2022 decline at 142.10/50 would be needed to mark resumption of the broader USD/JPY uptrend.
Bottom line: The USD/JPY plunge us approaching the first major technical support hurdle just below the 138-handle. From at trading standpoint, look to reduce portions of short-exposure / lower protective stops on a stretch towards this key support zone – rallies should be limited to the weekly open IF price is heading lower on this stretch. I’ll publish an updated Japanese Yen Weekly Forecast once we get further clarity on the longer-term USD/JPY technical trade levels.
Comment:
Wall Street Ends Higher after CPI
The RICS UK Residential Market Survey house price balance, which measures the gap between the percentage of respondents seeing rises and falls in house prices, fell to -46 in June 2023 from -30 in May, posting the weakest reading in four months and coming in below forecasts of -34. This points to a slowdown in the British housing market as higher borrowing costs weighed on demand, with average two-year fixed mortgage rates in the country recently hitting a 15-year high. Expectations that the Bank of England will raise interest rates further this year to bring down inflation also dampened sentiment. Simon Rubinsohn, chief economics at RICS, said: “The latest increase in interest rates and the impact this has already had on mortgage rates is clearly visible in buyer enquiries, sales and prices which have all retreated over the past month.”
The BusinessNZ Performance of Manufacturing Index in New Zealand fell to 47.5 in June 2023 from 48.9 in the previous month. It marked the fourth straight month of contraction in the manufacturing sector and the steepest since last November as activities negatively influenced by declining demand, cost increases and production/staffing issues as the key negative influences on activity for the current month. Production (47.5 vs 45.7 in May) remained subdued and new orders (43.8 vs 50.8) fell back to contraction zone. Meanwhile, employment (47 vs 49.5) contracted further while deliveries (50.5 vs 46) rebounded.
Brazil’s Ibovespa stock index gave up on earlier gains to close 0.1% higher to finish around 117,700 on Wednesday, inline with global positive mood, after the US inflation data came in below expectations in June, even the core measures, suggesting a possible turning point for Federal Reserve policymakers in the coming months. On the domestic data front, services activity in Brazil grew by a more-than-expected 0.9% in May, following a decline of 1.5% in the previous month, placing the sector 11.5% above the pre-pandemic level of February 2020. On the corporate front, shares in the world's largest meatpacker JBS surged 9%, the most in the index, after proposing a dual listing of shares in Sao Paulo and New York in a securities filing today. It was followed by B3 (+2.4%), Gerdau (+2.1%) and PetroRio (+2%).
The RICS UK Residential Market Survey house price balance, which measures the gap between the percentage of respondents seeing rises and falls in house prices, fell to -46 in June 2023 from -30 in May, posting the weakest reading in four months and coming in below forecasts of -34. This points to a slowdown in the British housing market as higher borrowing costs weighed on demand, with average two-year fixed mortgage rates in the country recently hitting a 15-year high. Expectations that the Bank of England will raise interest rates further this year to bring down inflation also dampened sentiment. Simon Rubinsohn, chief economics at RICS, said: “The latest increase in interest rates and the impact this has already had on mortgage rates is clearly visible in buyer enquiries, sales and prices which have all retreated over the past month.”
The BusinessNZ Performance of Manufacturing Index in New Zealand fell to 47.5 in June 2023 from 48.9 in the previous month. It marked the fourth straight month of contraction in the manufacturing sector and the steepest since last November as activities negatively influenced by declining demand, cost increases and production/staffing issues as the key negative influences on activity for the current month. Production (47.5 vs 45.7 in May) remained subdued and new orders (43.8 vs 50.8) fell back to contraction zone. Meanwhile, employment (47 vs 49.5) contracted further while deliveries (50.5 vs 46) rebounded.
Brazil’s Ibovespa stock index gave up on earlier gains to close 0.1% higher to finish around 117,700 on Wednesday, inline with global positive mood, after the US inflation data came in below expectations in June, even the core measures, suggesting a possible turning point for Federal Reserve policymakers in the coming months. On the domestic data front, services activity in Brazil grew by a more-than-expected 0.9% in May, following a decline of 1.5% in the previous month, placing the sector 11.5% above the pre-pandemic level of February 2020. On the corporate front, shares in the world's largest meatpacker JBS surged 9%, the most in the index, after proposing a dual listing of shares in Sao Paulo and New York in a securities filing today. It was followed by B3 (+2.4%), Gerdau (+2.1%) and PetroRio (+2%).
Comment:
Japanese Shares Rise as US Inflation Eases
The Nikkei 225 Index jumped 0.8% to above 32,200 while the broader Topix Index gained 0.3% to 2,228 on Thursday, rising from one-month lows and tracking a rally on Wall Street overnight as cooler-than-expected US inflation data raised hopes that the Federal Reserve is closer to the end of its tightening cycle. Investors also bought back technology stocks following days of consolidation, with notable gains from SoftBank Group (1.9%), Advantest (1.4%), Socionext (2.8%), Tokyo Electron (0.6%), Z Holdings (2.8%) and Renesas Electronics (2.5%). Other index heavyweights also advanced, including Sony Group (4.5%), Fast Retailing (1%), Daiichi Sankyo (4.5%), Mitsui & Co (1%) and Eisai Co (1.6%).
Australia Inflation Expectations Stable inJuly
NZX Trades Slightly Higher
New Zealand Factory Activity Shrinks to 7-Month Low
Argentina Indicators
Industrial Production 1.1 1.8 percent May/23
Industrial Production Mom 1.2 3.2 percent Apr/23
Capacity Utilization 68.9 67.3 percent Apr/23
Changes in Inventories -20633 20148 ARS Million Mar/23
Car Production 53282 54399 Units May/23
Car Registrations 38.6 33.8 Thousand May/23
Leading Economic Index -0.48 -0.28 percent May/23
Corruption Index 38 38 Points Dec/22
Corruption Rank 94 96 Dec/22
The Turkish lira extended losses to new all-time lows of 26.2 per USD, amid increasing signs of a shift to a more orthodox approach and as the central bank reportedly stopped using its reserves to support the currency. On June 22nd, the central bank of Turkey raised interest rates by 650 bps to 15%, marking a reversal from its previous ultra-loose and unorthodox monetary policy although the move fell short of meeting market expectations for a higher rate of 21%. Few days later, policymakers loosened measures designed to boost the lira, including lowering the securities maintenance ratio to 5% from 10% and the threshold for the share of lira deposits to 57% from 60%.
The Nikkei 225 Index jumped 0.8% to above 32,200 while the broader Topix Index gained 0.3% to 2,228 on Thursday, rising from one-month lows and tracking a rally on Wall Street overnight as cooler-than-expected US inflation data raised hopes that the Federal Reserve is closer to the end of its tightening cycle. Investors also bought back technology stocks following days of consolidation, with notable gains from SoftBank Group (1.9%), Advantest (1.4%), Socionext (2.8%), Tokyo Electron (0.6%), Z Holdings (2.8%) and Renesas Electronics (2.5%). Other index heavyweights also advanced, including Sony Group (4.5%), Fast Retailing (1%), Daiichi Sankyo (4.5%), Mitsui & Co (1%) and Eisai Co (1.6%).
Australia Inflation Expectations Stable inJuly
NZX Trades Slightly Higher
New Zealand Factory Activity Shrinks to 7-Month Low
Argentina Indicators
Industrial Production 1.1 1.8 percent May/23
Industrial Production Mom 1.2 3.2 percent Apr/23
Capacity Utilization 68.9 67.3 percent Apr/23
Changes in Inventories -20633 20148 ARS Million Mar/23
Car Production 53282 54399 Units May/23
Car Registrations 38.6 33.8 Thousand May/23
Leading Economic Index -0.48 -0.28 percent May/23
Corruption Index 38 38 Points Dec/22
Corruption Rank 94 96 Dec/22
The Turkish lira extended losses to new all-time lows of 26.2 per USD, amid increasing signs of a shift to a more orthodox approach and as the central bank reportedly stopped using its reserves to support the currency. On June 22nd, the central bank of Turkey raised interest rates by 650 bps to 15%, marking a reversal from its previous ultra-loose and unorthodox monetary policy although the move fell short of meeting market expectations for a higher rate of 21%. Few days later, policymakers loosened measures designed to boost the lira, including lowering the securities maintenance ratio to 5% from 10% and the threshold for the share of lira deposits to 57% from 60%.
Comment:
Trade is open
DXY decreased to a 14-month low of 100.61
Wall Street Rallies after Softer Inflation
US stocks surged on Wednesday after both headline and core inflation fell more than expected in June, reinforcing the view the Federal Reserve may stop the tightening campaign sooner than expected. The Dow Jones gained around 250 points to 34548, the highest level since November last year, with 3M and Goldman Sachs up nearly 2% and among the top performers. The S&P 500 added 0.9% 4477, a level not seen since April of 2022, led by shares in the consumer discretionary, tech and real estate sectors. The Nasdaq was up about 1.2% to 13906, also the highest since April last year. Traders are currently pricing in a 92% chance for a 25bps increase in the fed funds rate this month, while the odds for another quarter-point hike in September fell to 13% from 20% before the CPI release and in November eased to 26% from 34%.
Brazil Business Morale Rises to 8-Month High
The Industrial Entrepreneur Confidence Index (ICEI) in Brazil rose by 0.7 points from the previous month to an eight-month high of 51.1 in July of 2023. This marks the second consecutive month in which the industry has shown confidence, attributed primarily to a more positive evaluation of the current economic conditions (+1.3 points to 45.5). Also, the indicator of future expectations increased (+0.4 points to 53.9), indicating optimism for the next six months.
FTSE MIB Close Rise to 15-Year High
The FTSE MIB index closed 1.8% higher at 28,573 on Wednesday, outperforming other benchmark European indices amid sharp gains for its heavyweight financial sector as markets digested the soft US inflation print. American consumer prices rose by 3% annually in June, below estimates of 3.1%, benefitting from a slowdown in core consumer prices. The development lifted equities amid hopes that the Fed will be able to ease its hawkish pressure. Banks were among the sharpest gainers as BTP yields fell by 15bps, aiding their balance sheet with Banca MPS and Banco BPM both adding more than 2%. In the meantime, STMicroelectronics shares surged 4.8% amid recommendation updates from Jeffries and Citigroup.