Earnings euphoria started early and a buy recommendation for a major US bank sent shares rocketing. The overnight risk aversion was reversed in NY trading to say the least. The S&P 500 jumped 2.5% and closed back above the psychologically significant 900 level to boot. Longer dated Treasuries were sold and the US 10-year yield crept back up to 3.35%, adding 5 basis points on the day. Oil closed flattish after tumbling out of the gates towards the $58.30 area. Gold saw good buying interest once again into the 908/905 zone, as has been the case for the last few days now. Resistance lurks into 920/925 still.
In FX it was the classic ''risk on'' trade. EUR/USD recovered from an overnight low of 1.3898 to sit near the 1.4002 highs as the close approached. 1.4030/40 is the next hurdle to upside while below 1.3963 (200-hour sma) shifts the near-term focus lower. Cable recovered smartly after posting an intraday low of 1.6034. The pair was sitting about 200 pips higher near the NY close. The carry trade caught a bid and USD/JPY was now flirting with 93 resistance after putting in a floor at 91.74 – where an option barrier ostensibly lurks. EUR/JPY meanwhile was comfortably above the 130 area from a low of 128.00 overnight. The focus shifts to US earnings tomorrow in early NY and the durability of the current rally hinges on these meeting or exceeding analyst expectations. If the opposite is true, we could be in for a sharp reversal across the board.
Upcoming Economic Data Releases (Asia Session) prior expected
- 7/13 23:01 GMT UK BRC June Retail Sales Monitor 13-Jul
- 7/13 23:01 GMT UK RICS House Price Balance JUN -44.10% -40.00%
- 7/14 1:30 GMT AU NAB Business Conditions JUN -14 - -
- 7/14 1:30 GMT AU NAB Business Confidence JUN -2 - -
- 7/14 3:00 GMT NZ Non Resident Bond Holdings JUN 73.30% - -
