Todays’ Market Summary
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On Tuesday, the US dollar index fell for the 3rd day in a row.
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Yesterday, US stock indices rose strongly.
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On Tuesday, oil quotes rose for the 3rd day in a row.
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Precious metals have halted their decline as investors now expect a more modest Fed rate hike.
Top daily news
On Tuesday, the US dollar index fell for the 3rd day in a row. Since investors expect a more modest increase in the Fed rate. On July 27, it can be increased not by 1%, but only by 0.75% - up to 2.5%. In addition, a significant negative for the US dollar index was the growth of EURUSD on the eve of the expected increase in the rate of the European Central Bank. US stocks rose strongly yesterday thanks to good quarterly earnings from Netflix.
Forex news
| Currency Pair | Change |
|---|---|
| EUR USD | +0.09% |
| GBP USD | +0.07% |
| USD JPY | -0.03% |
On Tuesday, the US dollar index fell for the 3rd day in a row. Several representatives of Fed immediately expressed doubts about the excessive tightening of monetary policy. Now investors no longer expect the Fed to raise the Fed rate by 1% from the current level of 1.75% at the next meeting on July 27th. According to CME FedWatch, the probability of a rate hike of 1% at once is now 35.6%. Last week it was much higher and amounted to 80.3%. Most likely the Fed rate will be increased only by 0.75% - up to 2.5%. A significant negative for the US dollar index was the growth of EURUSD. The strengthening of the euro started at the end of last week after the publication of good data on EU foreign trade for May. The trade deficit (-26 billion euros) unexpectedly turned out to be much better than forecasts (-40.6 billion euros). In addition, investors are looking forward to the next meeting of ECB, which will be held tomorrow, July 21. For the first time since October 2008, the rate may be increased from the current 0% to 0.25% or even 0.5%. An important, additional factor in strengthening the euro was Russia’s decision to resume natural gas supplies to Europe via the Nord Stream gas pipeline. This morning the UK inflation data for June (+9.4% y/y) was released. It turned out to be much worse than expected. However, this has not yet hurt the quotations of the British pound. Bank of England Governor Andrew Bailey announced a possible rate hike (1.25%) by another 0.5% at the next meeting on August 4
Bitcoin is showing good growth. It has risen in price by almost a quarter in a week. The $20,000 psychological mark is now a support level. The main catalyst for the growth of the entire crypto market was the message from the developers of Ethereum about the transition to a new principle of mining and settlement, which should take place on September 19. You can read more about this in the Technical Analysis section. Note that Ethereum has risen in price by one and a half times in a week.
Stock Market news
| Indices | Change |
|---|---|
| Dow Jones Index | +2.43% |
| S&P 500 | +2.76% |
| Nasdaq 100 | +3.11% |
Yesterday, US stock indices rose strongly. The S&P 500 Telecom Services industry index (+3.6%) was the leader of the increase. This was facilitated by good quarterly reporting from Netflix (+13%) and investors’ expectations that the Fed would still raise the rate by only 0.75% (up to 2.5%), and not immediately by 1%. High interest rates increase the corporate lending burden and may be a negative factor for share prices. According to Refinitiv, the increase in total profits of corporations from the list of S&P 500 in the 2nd quarter will be +5.8% y/y. Now futures for US stock indices are growing in anticipation of the publication of Tesla Inc quarterly reports, which are also expected to be positive. Abbott Labs, Biogen, United Airlines Holdings, Alcoa and other US companies will also report today. In addition, there will be data on the secondary residential real estate market Existing Home Sales. Note that the forecast is negative. Against the backdrop of high inflation (+9.1% y/y in June), the US housing market is stagnant.
Commodity Market news
| Commodities | Change |
|---|---|
| WTI Crude | -1.51% |
| Brent Crude Oil | -1.2% |
| Natural Gas Prices | -0.55% |
| COPPER | +1.58% |
On Tuesday, oil quotes rose for the 3rd day in a row. However, US West Texas Intermediate (WTI) has not yet been able to gain a foothold above the psychological level of $100 per barrel. Last week U.S. President Joe Biden visited the countries of the Middle East. Negotiations on a possible increase in oil production were neutral. Recall that in May, oil exports from Saudi Arabia were at a 4-month low. Oil is getting cheaper this morning. The main reason for this was the report of the independent American Petroleum Institute on the increase in oil reserves in the US by 1.86 million barrels per week.
Natural gas in the US is getting cheaper today for the 2nd day in a row amid reports about the resumption of Russian pipeline gas supplies to Europe via the Nord Stream gas pipeline.
Coffee quotes have risen markedly (+10% in 3 days) due to the drought in Brazil.
Gold Market News
| Metals | Change |
|---|---|
| Gold | -0.3% |
| Silver/US Dollar | +0.04% |
Precious metals have halted their decline as investors now expect a more modest Fed rate hike. On July 27, it can be increased not by 1%, but only by 0.75% - up to 2.5%. The yield of the US 10-year Treasury has been around 3% per annum for 2 weeks now. Gold is trading above the psychological support level of $1,700 an ounce.