Title: Dollar Edges Higher, Lifted by Safe Haven Demand

Jul 01, 2022 03:00AM ET

By: AnalysisWatch

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The U.S. dollar edged higher in early European trading on Friday, trading near a one-year high as central banks fight inflation at the expense of economic growth and demand for safe havens rises.

At 03:00 AM ET, the dollar index, which tracks the greenback against a basket of six other currencies, was trading 0.2% higher at 104.688 after hitting a 20-year high of 105.79 in mid-June.

The dollar saw some weakness on Thursday after U.S. consumer spending rose far less than expected in May, causing 10-year Treasury bond yields to fall as low as 2.94%, setting the stage for the biggest weekly decline in seven weeks.

This came after Fed Chairman Jerome Powell's comments earlier in the week that the risk of higher interest rates hurting the economy was less important than restoring price stability.

However, the dollar quickly rebounded as investors dumped growth-sensitive assets amid fears that a slowdown in the U.S. would sweep the entire world.

The EUR/USD fell 0.3% to 1.0453, with the war between Russia and Ukraine adding to inflation and growth concerns in Europe.

GBP/USD fell 0.4% to 1.2131 after Bank of England Governor Andrew Bailey noted earlier in the week that the UK economy was beginning to slow, while inflation was expected to continue to rise.

The USD/JPY fell 0.6% to 134.97, with the safe-haven Japanese yen also seeing support. The risk-sensitive AUD/USD fell 1.1% to 0.6821, while USD/CNY rose 0.1% to 6.7078 after China's manufacturing activity expanded at its fastest pace in 13 months in June. The Caixin/Markit manufacturing purchasing managers' index rose to 51.7 in June, driven by the lifting of COVID freezes.

Title: Gold Price Forecast: XAUUSD breaks below $1,800, bears gearing up to challenge YTD low

Gold Price was dragged below the $1,800 mark at the end of the week, its lowest level since May 16.

Aggressive Fed rate hike bets and a goodish pickup in the USD demand exerted some pressure.

Recession fears and the risk-off mood did little to lend any support to the safe-haven XAUUSD.

Gold Price prolonged this week's bearish trend and witnessed heavy follow-through selling on Friday, marking the fifth successive day of a negative move. The downward trajectory extended through the early part of the European session and dragged spot prices to the lowest level since May 16, around the $1,792 region in the last hour.

Flows were driven away from gold by the prospects for more aggressive rate hikes by the US central bank. These were reaffirmed by Fed Chair Jerome Powell's remarks on Wednesday, which said that the US economy is well-positioned to handle tighter policy. Speaking at the ECB Forum in Sintra, Powell added that the Fed remains focused on getting inflation under control and the market pricing is pretty close to the dot plot. Apart from this, broad-based US dollar strength further exerted downward pressure on the dollar-denominated commodity.

Jul 01, 2022 06:25AM ET

By: AnalysisWatch

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Title: Oil prices fall on recession fears, on track for third weekly loss

Jul 01, 2022 03:10AM ET

By: AnalysisWatch

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Oil prices fell on Friday, continuing the previous day's slump, as lingering recession fears weighed on sentiment and benchmarks were on track for their third straight weekly loss.

At 02:53 AM ET, Brent crude futures were down 43 cents, or 0.4%, at $108.60 a barrel, giving up earlier gains of more than $1.

WTI crude futures for August delivery were down 60 cents, or 0.6%, at $105.16 a barrel, also giving up early gains of nearly $1.

Both contracts fell about 3% on Thursday.

On Thursday, the group of OPEC+ producers, which includes Russia, agreed to maintain its production strategy after two days of meetings. However, the producer group avoided discussing policy from September.

Earlier, OPEC+ decided to increase output by 648,000 barrels per day (bpd) in both July and August, instead of 432,000 bpd per month as previously planned.

U.S. President Joe Biden will leave in mid-July for a three-hour trip to the Middle East that will include a visit to Saudi Arabia. This puts energy policy in the spotlight as the United States and other countries face rising fuel prices that are driving up inflation.

Norway's 74 offshore oil workers on Equinor's Gudrun, Oseberg South and Oseberg East platforms will go on strike starting July 5, the Lederne union said on Thursday, which is expected to halt about 4% of Norwegian oil production.

Oil prices are expected to remain above $100 a barrel this year as Europe and other regions seek to break away from Russian supplies, according to a Reuters poll on Thursday, although economic risks could slow the rise.

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Image by Sara Kurfeß

Title: Euro zone factory production falls in June for first time in two years –PMI

Jul 01, 2022 04:42AM ET

By: AnalysisWatch

Euro zone manufacturing production fell last month for the first time since the initial wave of the coronavirus pandemic two years ago as higher prices and a darkening economic outlook kept consumers wary of making purchases, a survey showed.

S&P Global (NYSE:SPGI)'s final manufacturing Purchasing Managers' Index (PMI) fell to 52.1 in June from May's 54.6, its lowest since August 2020 but just ahead of a preliminary reading of 52.0.

An index measuring output, which feeds into a composite PMI due on Tuesday and seen as a good gauge of economic health, sank below the 50 mark separating growth from contraction to a two-year low of 49.3. In May it was 51.3..

The new orders index fell further below the breakeven mark to 45.2 from 48.7, its lowest since May 2020. Consumers have held back on making purchases, deterred by soaring prices and recession fears.

Inflation in the currency union reached 8.4% last month, official preliminary data is expected to show later on Friday, more than four times the European Central Bank's 2% target rate.

The ECB has lagged most of its global peers in winding back pandemic-era ultra-loose monetary policy but is expected to raise its deposit rate above zero for the first time in a decade in September, a Reuters poll found. It is likely to start raising rates this month. [ECILT/EU]

Forward looking indicators in S&P Global's survey painted a somewhat gloomy picture, with inventories of raw materials and unsold stock rising due to lower than expected production and sales volumes while backlogs of work fell.

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Title: Australia stocks lower at close of trade; S&P/ASX 200 down 0.43%

Jul 01, 2022 03:45AM ET

By: AnalysisWatch

Australian stocks fell after the close on Friday, with losses in the energy, resources, metals and mining sectors leading shares lower.

At the close of the Sydney session, the S&P/ASX 200 index was down 0.43 percent.

The best performing stock on the S & P/ASX 200 during the session was Austal Ltd., which rose 25.00%, or 0.45 points, to close at 2.25. Meanwhile, Mesoblast Ltd added 11.48% or 0.07 points to end at 0.68 points and Zip Co Ltd rose 9.09% or 0.04 points to end at 0.48 points in late trade.

The worst performer during the session was Woodside Energy Ltd, which fell 4.37 per cent, or 1.39 points, to trade at 30.45 at the close. Mineral Resources Ltd fell 4.12 per cent or 1.99 points to 46.28 points and Polinovo Ltd dropped 3.69 per cent or 0.05 points to 1.30 points.

On the Sydney Stock Exchange, advancing shares outnumbered decliners by 884 to 467, while 343 ended unchanged.

The S&P/ASX 200 VIX index fell 1.08 percent to 18.97 points, measuring the implied volatility of S&P/ASX 200 options.

Gold futures for August delivery fell 0.62 percent, or 11.25 cents an ounce, to $1,796.05. Elsewhere in commodities trading, crude oil for August delivery fell 0.32%, or 0.34, to $105.42 a barrel, and the September Brent crude contract fell 0.13%, or 0.14, to $108.89 a barrel.

The Australian AUD/USD pair fell 1.38% to 0.68, while AUD/JPY dropped 1.79% to 91.9.

ICE US Dollar Index futures rose 0.22% to 104.70.

Title: Japan stocks lower at close of trade; Nikkei 225 down 1.73%

Jul 01, 2022 03:35AM ET

By: AnalysisWatch

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Japan's stocks were weaker after the close on Friday as losses in the mining, shipbuilding, chemicals, petroleum, and plastics sectors led shares lower.

At the close of trading in Tokyo, the Nikkei 225 was down 1.73%.

Among the best performers on the Nikkei 225 were shares of Takashimaya Co., Ltd., which rose 8.80%, or 117.00 points, to close at 1,447.00. In late trading, Tokyo Electric Power Co, Inc gained 2.12% or 12.00 points to close at 579.00, while Seiko Epson Cor gained 2.03% or 39.00 points to close at 1,959.00.

Tokyo Gas Co., Ltd. was the worst performer, falling 9.83% or 276.00 points to close at 2,530.00 in late trading. Osaka Gas Co., Ltd. fell 6.93% or 180.00 points to close at 2,416.00, while TDK Corp. fell 5.97% or 250.00 points to close at 3,940.00.

On the Tokyo Stock Exchange, falling stocks outweighed rising ones by 2810 to 746, and 221 ended unchanged.

Shares of Takashimaya Co., Ltd. rose to a 3-year high, gaining 8.80%, or 117.00 points, to 1,447.00, and shares of Tokyo Electric Power Co., Inc. rose to a 3-year high, up 2.12%, or 12.00 points, to 579.00.

Nikkei Volatility, which measures the implied volatility of Nikkei 225 options, rose 3.40% to 23.43.

The USD/JPY fell 0.45% to 135.12, while the EUR/JPY fell 0.78% to 141.15.

The US dollar index futures rose 0.27% to 104.75.

Title: European Stock Futures Lower; Eurozone CPI Looms Large

Jul 01, 2022 01:58AM ET

By: AnalysisWatch

European stock markets are expected to open weaker Friday as investors are increasingly concerned about the global economic outlook as central banks tighten monetary policy to combat rising inflation.

At 2 AM ET, DAX futures in Germany traded 0.9% lower, CAC 40 futures in France fell 0.7%, and FTSE 100 futures in the U.K. dropped 0.5%.

European Central Bank President Christine Lagarde warned in a speech at the central bank's annual forum earlier this week that the central bank will go "as far as necessary" to bring inflation back to its 2% target.

The main focus will be on consumer price data for the eurozone, which will be released later on Friday, and investors will be looking for signs that inflation has peaked. Inflation in Germany unexpectedly slowed last month, but the annual consumer price index for the euro area is expected to rise to 8.4% in June, a new record high after reaching 8.1% the previous month.

In addition, data on the Purchasing Managers' Index for the manufacturing sector in the eurozone, and especially in Germany, the powerhouse of the region, will be released on Friday and is expected to show a deterioration in confidence in this key sector.

It is not only in Europe that economic growth is slowing. Consumer spending growth in the U.S. weakened in May for the first time this year, while manufacturing activity in Asia, excluding China, stalled in June, weighed down by supply disruptions, rising costs, and persistent material shortages.

One bright spot was China, where manufacturing expanded at its fastest pace in 13 months in June, helped by the lifting of COVID freezes.

Sodexo will be in the spotlight after the French food services group reported third-quarter sales above expectations and led strong growth across all business segments and regions, supported by price increases and a recovery in volumes following the Omicron effect.

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Title: Rouble heads away from 50 vs dollar as authorities flag interventions

Jun 29, 2022 08:21AM ET

By: AnalysisWatch

The ruble pared gains during volatile trading on Wednesday as Russia's finance minister pointed to possible interventions to ease pressure on the currency after it approached 50 against the dollar for the first time since May 2015.

The ruble has become the world's best-performing currency this year, buoyed by measures-including restrictions on Russian households withdrawing foreign currency savings-taken to shield Russia's financial system from Western sanctions imposed after Moscow sent troops into Ukraine on Feb. 24.

The strong ruble is raising concerns among officials and export-oriented companies as it reduces Russia's revenue from selling raw materials and other goods abroad for dollars and euros.

Many Russian companies, mostly exporters of goods other than oil and gas, are already experiencing financial difficulties, says Yevgeny Suvorov, an economist at CentroCreditBank.

At the same time, Finance Minister Anton Siluanov said Russia may cut government spending and channel funds into currency interventions to contain a strengthening ruble that threatens budget revenues.

Following the comments, the ruble pared its gains and was 0.4 percent weaker on the day at 52.00 per dollar, having reached 50.01.

Receipts from commodity exports, a sharp drop in imports and the payment of taxes in roubles at the end of the month by export-oriented Russian firms were additional factors in the currency's appreciation.

Since the beginning of the year, the ruble has risen nearly 44% on the Moscow Exchange but remains much weaker in banks. VTB, Russia's No. 2 bank, has offered to sell dollars and euros in cash at 63.45 and 67.85, respectively.

Against the euro, the ruble was 0.6% stronger at 54.20, having earlier topped 53 for the first time since April 2015.

On the stock market, the dollar-denominated RTS index fell 1.1% to 1,449.1 points. The Russian MOEX index, which is denominated in rubles, fell 1% to 2,384.5 points.

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