Market update: Q2 GDP numbers for the Eurozone and Germany

Andria Pichidi HFM

Improved demand for risk boosted Wall Street overnight and weighed on Treasuries amid myriad crosscurrents. The markets are busy repositioning in the last week of July now that the Fed is safely out of the way with little likelihood for a tapering announcement until at least November. The miss on Q2 GDP was overlooked as inventories were the major culprit, while the surge in the price indicators to near 4-decade highs added to the pressure on bonds.

The focus turned back to earnings, data, the Delta variant, and the infrastructure deal out of Washington.

Good earnings news in general supported stocks with the USA30 and USA500 leading the way with gains of 0.4%, while the USA100 rose 0.1% as concerns over guidance from heavyweights, including Facebook and Paypal (beat earnings estimates, but guided lower), limited enthusiasm. Amazon’s online sales growth is slowing as lockdowns ease. Amazon’s core online store business disappointed, since it grew 15%, the slowest rate since 2019, despite it bringing forward its flagship Prime Day sales event to June. In Europe, GER30 and UK100 futures are also down -0.7% and -0.6% respectively.

In FX markets: EUR and GBP corrected against a stronger USD, leaving EURUSD at 1.1877 and Cable at 1.3980. USDJPY lifted to 109.60, although the Yen was steady to higher versus most other currencies. USOIL is at $73.38 per barrel. Gold was little changed at $1,831.

US OIL’s rally to 2-week highs over $73.20 on tight US supplies helped the CAD today as well. The market ignored the small uptick in Canada May average weekly earnings. USOIL stabilized at 72.60 today while PP is set at 72.45 and Resistance is at 73.00 and 73.30.

Today: The calendar is busy and focuses on Q2 GDP numbers for the Eurozone and Germany, which is expected to show a strong rebound from the contraction in the first quarter, while preliminary HICP readings could come in higher than anticipated, after strong German numbers yesterday. US CPI is also on tap, and it should decline -0.8% in June following the -2.0% May drop. Spending is forecast rising 0.9% after the unchanged reading in May. Weakness should result in a -5.5% decline in “current transfer receipts” after an -11.7% May plunge, as this measure tracks the pull-back in stimulus spending. This will more than offset the 0.5% rise in compensation. The savings rate should fall to 10.8% from 12.4% in May and a 27.6% peak in March.

Author

Andria Pichidi

HFM

Having completed her five-year-long studies in the UK, Andria Pichidi has been awarded a BSc in Mathematics and Physics from the University of Bath and a MSc degree in Mathematics, while she holds a postgraduate diploma (PGdip) in

EUR/USD hits two-day highs near 1.1820

EUR/USD picks up pace and reaches two-day tops around 1.1820 at the end of the week. The pair’s move higher comes on the back of renewed weakness in the US Dollar amid growing talk that the Fed could deliver an interest rate cut as early as March. On the docket, the flash US Consumer Sentiment improves to 57.3 in February.

GBP/USD reclaims 1.3600 and above

GBP/USD reverses two straight days of losses, surpassing the key 1.3600 yardstick on Friday. Cable’s rebound comes as the Greenback slips away from two-week highs in response to some profit-taking mood and speculation of Fed rate cuts. In addition, hawkish comments from the BoE’s Pill are also collaborating with the quid’s improvement.

Gold climbs further, focus is back to 45,000

Gold regains upside traction and surpasses the $4,900 mark per troy ounce at the end of the week, shifting its attention to the critical $5,000 region. The move reflects a shift in risk sentiment, driving flows back towards traditional safe haven assets and supporting the yellow metal.

Crypto Today: Bitcoin, Ethereum, XRP rebound amid risk-off, $2.6 billion liquidation wave

Bitcoin edges up above $65,000 at the time of writing on Friday, as dust from the recent macro-triggered sell-off settles. The leading altcoin, Ethereum, hovers above $1,900, but resistance at $2,000 caps the upside. Meanwhile, Ripple has recorded the largest intraday jump among the three assets, up over 10% to $1.35.

Three scenarios for Japanese Yen ahead of snap election

The latest polls point to a dominant win for the ruling bloc at the upcoming Japanese snap election. The larger Sanae Takaichi’s mandate, the more investors fear faster implementation of tax cuts and spending plans.

XRP rally extends as modest ETF inflows support recovery

Ripple is accelerating its recovery, trading above $1.36 at the time of writing on Friday, as investors adjust their positions following a turbulent week in the broader crypto market. The remittance token is up over 21% from its intraday low of $1.12.