One minute market rundown – Equities continue to hold

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

BCB Group Team BCB Group

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.

Author

BCB Group Team

BCB Group

BCB Group is the leading provider of business accounts and trading services for the digital asset economy.

EUR/USD remains bid, focus stays on 1.1900

EUR/USD has broken its two-day run of losses and is ticking modestly higher on Thursday, hovering around the 1.1880 area as the US Dollar struggles to find clear direction. Weekly Initial Jobless Claims rose more than expected, taking a bit of shine off the Greenback, but markets are largely in wait-and-see mode ahead of Friday’s US CPI release.

GBP/USD sticks to the bid bias, still below 1.3700

GBP/USD is trading with decent gains around 1.3650 on Thursday. Indeed, Cable is attempting to shake off the weakness seen earlier in the week amid another choppy session for the Greenback, while a run of disappointing UK data has so far failed to derail the pair’s tentative recovery.

Gold recedes slightly, trades below $5,100

Gold remains stuck in choppy trade on Thursday, deflating marginally just below the $5,100 mark per troy ounce as the US Dollar drifts without a clear trend. Softer US Treasury yields across the curve are offering some support, but with markets treading carefully ahead of Friday’s US CPI release, conviction remains limited and price action continues to look hesitant.