One minute market rundown – Equities continue to hold

Equities continue to hold.
USD trades sideways.
RBNZ hikes 50bps.
Crypto holds in.

Well everything is just a bit blah isn’t it and I’m concerned this note will follow suit. Nothing much is happening at all currently. We have the July FOMC minutes and I suspect the market is patiently awaiting the release before deciding which direction to head in.

Yesterday saw equities marginally close lower whilst the USD traded lower in FX. In yesterday's piece I highlighted the key level of resistance for the S&P 500 at 4320. This is exactly where the equity rally ran out of steam yesterday. Keep a close eye on this level as if we were to breach it may well lead to a leg higher in risk across the board. There definitely seems to be some repricing as the market is deciding that whilst inflation is high and rates will go up it may not be the worst scenario they had envisaged - deep recession and stagflation. Question remains though if this equity rally can be sustained. My personal opinion is not without more data that growth isn’t being strangled as much as feared and inflation is continuing to tick lower.

I used the USD sell off yesterday to sell EUR/USD and GBP/USD and still think we see parity and sub 1.2000 in each respectively. Overnight saw the RBNZ hike 50bps as expected and the statement after the release indicated a central bank that is still focused on a hawkish rhetoric that came across as jawboning. NZD/USD quickly gave up the gains seen on the announcement.

Crypto continues to trade in a tight range. ETH pushed higher overnight trading upto 1950 before coming under pressure. The levels in the majors are well defined and we need to see BTC and ETH above $25200 and $2050 respectively. Depending on what the mins show this evening we may well see these levels breached in the coming sessions or…we may be in for some dull markets until September. In the options world, there is no respite as ETH open interest now stands at $8bn versus BTC open interest at $5.3bn. Clearly talking up my view but makes me want to sell more ETH/BTC!

Good luck out there.

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