2022-08-12 07:45:00


Key questions driving all the asset classes are: Should we expect a soft or a hard landing? And what’s already priced in? Oversold sentiment has set the stage for a tactical bounce, but whether such a bounce is sustainable will depend on the answer to the soft versus hard landing debate.  

Yields reversed intraday led by the long end, helped by a soft auction. Bond markets tells that they have taken the risk of a recession off the table and in its place refocused on the potential for Fed to successfully navigate a soft-landing.This resulted in  habitual dollar sellers loosing  their appetite & Fed pivot theme went off the radar

Risk appetite wobbly but S&P futures picking up, +0.1%.Fed`s Daly thinks 50pt Sept hike `makes sense`, 75pt possible. USD index should stay between  104.34, 61.8% of May-Jul rise &  21dma at 106.33 which leaves the market to lean toward the ‘choppy summer trading’

Energy prices made some headway on a better view of global growth - feeding back into rising inflation expectations in  bond market.IEA boosted its `22 global demand growth projections by 380K bpd even as  OPEC cut its own `22 demand growth forecast by ~260K bpd  - pipeline and oil & gas field closures in the Gulf of Mexico due to leaks.

Little news, so EUR strength on short covering in thin summer markets.1.0369, 50% of the May-July fall capped -Close below 21 dma at 1.0210  base in August would set off the decline .

BoE - weakening regulators would undermine market reforms .Drought could be the next hurdle for  UK economy 
1.2185-1.2249 NY range could hold for now.

There may be more to USD/JPY`s drop than meets the eye -There is a talk in the air that USD/JPY`s recent plummet from near 140 towards 130 is suspect & might be the result of stealth intervention from semiofficial names .What makes covert selling more likely is the extent of  dollar`s drop compared other pairs. Higher long end UST yields provide USD/JPY support- Nikkei +1.85%.USD/JPY trades within the usually resilient range  131.60-134.60.

Long week end - markets in no mood to get serious with Conference bells ringing after three years . 79.50 79.70.