2022-07-01 08:25:00

Daily Markets View

Daily Technical & Fundamental View

Growth concerns clearly outweigh inflation concerns at present .Markets  today likely to be light ahead of long US July 4th weekend

Nasdaq had its largest-ever Jan-June percentage drop, while  Dow suffered its biggest first-half percentage plunge since 1962.S&P 500 records steepest first-half slide since 1970 - the equities are going to trade this quarter  between  two narratives :it can`t get worse or it can`t get better

Softer core PCE price index - Disposable income inched lower, consumer spending decelerated, inflation remained hot and jobless claims inched higher. However ancedotal evidence that Wages catching up with inflation moreso on labour shortage -American Airlines has offered pilots nearly 17% raises -Upward spiral incoming and unemployment to inch lower

OPEC+ decision to maintain the planned 648,000 bpd oil increase in August went as expected -  focus on  Biden’s trip to Saudi Arabia where he would try to get them to pump more .

EUR USD outlook still bearish into new month.ECB`s new defragmentation plan, beyond the PEPP one, is expected at  July 27 meet.Despite fall in US yields, spread between 10-year Bund and 10-year US Treasury yield widened in favour of USD
Downmove was as per script - Support 1.0340/60 validated by yesterday`s price action.Resistance at the 10 dma  at 1.0519

Korea June exports beat exp +5.4% y/y .China`s official non-mfg PMI rose to 54.7 in June from  50.5, and eclipsing a slight miss in the mfg PMI.Data should dampen remnant hopes for further China easing  which could also be a plus for the yuan as the U.S.-China bond yield gap turns less negative.CNY Fixing Back To firmer Bias.
USD/CNH made three rallies above 6.7100 over recent sessions but halted.Today`s close below 6.6700 - unlikely - needed to engage downtrend channel

Mark Carney, a former BoE governor, warned in 2016 that Britain was reliant on the "kindness of strangers" to finance its current account deficit.UK BoP deficit hits record 8.3% of GDP -the biggest in records going back to 1955. Life for GBP is tough with inflation also setting records .BoE`s rate hiking stamina  under check as MPC nears a shift in personnel.Cable to stay below  1.2165 after extending from 1.2093.

Japan’s tax revenue the highest on record, about 67 tln yen in FY 21.Tokyo June core CPI +2.1% y/y, as exp .BoJ Tankan weaker -global recession fears - Japan firms expect consumer prices to rise 2.4% a year from now vs +1.8% in prev survey.JPY saw decent buy-backs at month and quarter-ends yesterday. 135.50 137.00 range

This decadal dynamics can very well be different as carry trades might not be flavourful of the season  in an inflationary backdrop . External debt -acceptable name for a carry trade- a concern when  it is well known that most of it is not Hedged either for interest rate or for exchange rate
Reserve figures at the end of the day can`t be passed off as usual.Anyway support getting stronger at 78.85 . Skies open up in Mumbai