The NZD is the strongest and the CHF is the weakest as the North American session begins. Today in Canada they will observe Canada Day (July 1st holiday) and as a result will be closed for the day. The US is open to start the day, but stocks will close early at 1 PM as they start the July 4th celebration early (in reality many traders will be taking the day off today as well). The US bond market will close at 2 PM ET. The USD is mostly higher to start the 2nd half of the year.

In the second quarter, Tesla reported record vehicle deliveries of 466,140, an 83% increase from the same period last year and beating expectations of 448,350. This strong performance is believed to be a result of price cuts implemented earlier in the year to stimulate demand. Tesla’s shares rose by over 6% in pre-market trading.

As the second half of 2023 begins, U.S. stock futures remained mixed ahead of a shortened trading week due to the Independence Day holiday. The Nasdaq Composite was the standout performer in the first half of the year, experiencing its best first half since 1983. The gains were largely influenced by artificial intelligence flows into shares like Nvidia, Microsoft, Alphabet. Apple shares also surged and reached the $3 trillion market in capitalization level

Having said that, Apple is reportedly cutting its production targets for the mixed reality Vision Pro headset due to the product’s complexity. Despite its potential to be as influential as the iPhone, concerns remain about the headset’s $3,500 price tag and potential demand impact. Apple shares are trading down marginally by 0.43% in premarket trading

The future of Microsoft’s proposed $75 billion deal to acquire Activision Blizzard is expected to be decided by a San Francisco court this week, on a Federal Trade Commission request to temporarily block the merger due to potential anti-competitive impacts.

Finally, oil prices fluctuated as traders weighed the potential impact of additional Federal Reserve interest rate hikes on global economic activity and oil demand. Other analysts have suggested that oil supplies will likely tighten later this year following Saudi Arabia’s commitment to reduce output in July.

Overnight, several significant economic releases were reported. In China, the Caixin Manufacturing Purchasing Managers‘ Index (PMI) registered at 50.5, slightly below the previous figure of 50.9 but above the anticipated 50.0. This indicates a marginal expansion in China’s manufacturing sector. Meanwhile, Switzerland’s Consumer Price Index (CPI) saw a 0.1% month-over-month increase, falling short of the expected 0.2% rise and underperforming the prior rate of 0.3%. This result signifies a lesser-than-expected inflation rate in Switzerland’s economy. In Spain, the Manufacturing PMI was recorded at 48.0, aligning with expectations but showing a decline from the earlier 48.4, suggesting a contraction in Spain’s manufacturing sector.

For the upcoming economic releases:

• The Institute for Supply Management (ISM) Manufacturing PMI for the United States is due. The last recorded figure was 46.9, and it is forecasted to rise slightly to 47.0. The ISM Manufacturing Prices for the United States will also be released. The previous figure stood at 44.2, while the expected figure is slightly lower at 44.0. Employment is expected at 50.5 versus 51.4 last month. For your guide new orders were at 42.6. There is no estimate for that component.

Before the ISM, the S&P global manufacturing PMI for June will be released. Last month’s final came in at 48.4. The flash estimate came at 46.3 on June 23.

A snapshot of the markets currently shows:

• Crude oil is trading near unchanged at $69.90
• Spot gold is trading down $2.60 or -0.14% $1904.67
• Silver is down $0.18 -0.80% to $22.37
• Bitcoin is trading higher at $30,929, but below the high price of $31,268

In the premarket for US stocks, the major indices are trading mixed in premarket trading. The NASDAQ is higher while the S&P and Dow are trading down in early premarket trading.

• Dow Industrial Average is trading down -55 points after Friday’s 285.18-point rise
• S&P index is trading down -2.2 points after Friday’s 53.92-point rise (up 1.23%)
• NASDAQ index is trading up 8 points after Friday’s 196.59-point surge (1.45%)

In the European equity markets, the major indices are trading mostly higher with the exception of the German DAX

• German DAX is down -0.16%
• France’s CAC is up 0.10%
• UK’s FTSE 100 is up 0.39%
• Spain’s Ibex is up 0.45%
• Italy’s FTSE MIB is up 0.89%

In the Asian Pacific market today, markets closed higher

• Japan’s Nikkei rose 1.7%
• Australia’s S&P/ASX 200 index rose 0.59%
• China’s Shanghai composite index rose 1.31%

In the US debt market yields are continuing it’s run higher

• 2-year yield 4.952% +7.6 basis points
• 5-year yield 4.192% +6.0 basis points
• 10-year yield 3.856% +3.7 basis points
• 30-year yield 3.867% +1.4 basis points

In the European debt market, benchmark 10-year yields are higher as well:

This article was written by Greg Michalowski at www.forexlive.com.

• S&P 500 futures flat
• Nasdaq futures +0.1%
• Dow futures -0.2%
• Eurostoxx +0.2%
• Germany DAX -0.2%
• France CAC 40 +0.1%
• UK FTSE +0.4%

It is a sort of long weekend in the US with the 4th of July holiday coming up tomorrow. Adding to that, markets will close early today so appetite might be a bit sapped. But the encouraging part for investors is that we did see stocks brush aside the selling that took place two weeks ago, which prompted this question.

It could still be a bit too early to dismiss growth worries but at the end of it all, June was a stellar month for equities. We’ll see if that can continue into July. For now, it’s waiting on the next big data again and that will be the US non-farm payrolls on Friday.

This article was written by Justin Low at www.forexlive.com.

Headlines:

• A catch up to central banks as we get into the second-half of the year
• Oil jumps as Saudi Arabia extends voluntary output cuts for another month
• UK June final manufacturing PMI 46.5 vs 46.2 prelim
• Eurozone June final manufacturing PMI 43.4 vs 43.6 prelim
• Switzerland June CPI +1.7% vs +1.8% y/y expected
• SNB total sight deposits w.e. 30 June CHF 491.9 bn vs CHF 508.0 bn prior
• UBS ups ECB terminal rate forecast to 4% as well
• Morgan Stanley bumps up ECB terminal rate forecast to 4% from 3.75% previously

Markets:

• NZD leads, JPY lags on the day
• European equities slightly higher; S&P 500 futures flat
• US 10-year yields up 3.4 bps to 3.852%
• Gold down 0.4% to $1,912.24
• WTI crude up 1.0% to $71.31
• Bitcoin up 0.9% to $30,649

It is a brand new week, month, quarter, and half-year for markets. But things are starting off with a calmer mood for the most part.

Instead, the notable headline came from the oil market as Saudi Arabia says that it will extend output cuts for one more month while Russia is also pulling back on oil exports by 500k bpd. That resulted in a spike in oil prices, with WTI crude running up from $70.30 to a high of $71.72 before keeping around $71.31 currently.

Meanwhile, the dollar is steady across the board, holding light gains as it covers back some losses from Friday. USD/JPY continues to tip toe towards the 145.00 mark but traders are still cautious of intervention risks by Japan.

EUR/USD is sitting just below 1.0900 while GBP/USD did drop to a low of 1.2660 before holding around 1.2675 currently, down 0.2% on the day.

There wasn’t much for major currencies to work with, as equities are lightly changed as well. US futures are holding flattish mostly while European indices are seeing just very minor gains, hoping to build on the optimism from the latter stages of last week.

In the bond market, Treasury yields are also up against a key technical test so there is that to watch out for.

This article was written by Justin Low at www.forexlive.com.

The Dow Jones continues to
climb higher as the US economic data shows a resilient economy with a good
disinflationary trend despite an aggressive monetary tightening seen in the
past year and a half. In fact, despite the Fed members keep talking about two more
rate hikes coming this year, the market continues to rally as strong data
raises the chances of a soft landing. It’s likely that only ugly economic data
will start to weigh on the Dow Jones.

Dow Jones Technical
Analysis – Daily Timeframe

On the daily chart, we can see that the Dow Jones
found support at the
red 21 moving average as the
US Consumer Confidence report surprised to the upside and the buyers started to
lean on the moving average to position for another rally. The price has broken
above the key 34477 resistance again and it will now probably look towards the
35289 high.

Dow Jones Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can see that the price
couldn’t pull back all the way to the 34448 support where we had also the 61.8%
Fibonacci retracement level.
Instead, the Dow Jones started to bottom out on a previous swing high level and
jumped higher after the consumer confidence release. The moving averages have
crossed to the upside again as the trend turned bullish, and now the buyers
will target the 35289 resistance.

Dow Jones Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can see that from
a risk management perspective, a good support zone for the buyers would be the
34477 level where we can also find the 38.2% Fibonacci retracement level. The
sellers, on the other hand, will want to see the price breaking below the
support zone to pile in and target the 33448 level.

Upcoming Events

It’s
a full week on the data front
beginning with the US ISM Manufacturing PMI today, the US Jobless Claims and
ISM Services PMI on Thursday and concluding the week with the main event: the
US NFP.

This article was written by FL Contributors at www.forexlive.com.

To be more specific, how does this play out on the outlook for 10-year Treasury yields? Here’s a look at the chart at the moment.

At the start of the year, the narrative was that this was supposed to be where the dollar and yields peak as major central banks – especially the Fed – will start to look for a policy pivot. That hasn’t quite been the case as inflation is still rather sticky and the economy is holding up well, making it easier to navigate a soft landing.

During the banking crisis in March through to April, there was a strong bid in bonds amid safety flows but even that didn’t really take 10-year yields in the US below 3.30%. Since then, we’ve gotten a decent bounce as markets reprice in Fed odds but we are now hitting another critical juncture on the charts.

The 3.85% mark is where the upside stalled in May and June, and we are back up against that level now with the added technical level from the key trendline resistance (solid white line) from the October and March highs.

That is posing a major technical test for traders as a break of that will open up the path towards 4% rates next.

The question is how convinced is markets that the Fed will continue to keep tightening after the pause in June? There seems to be an air in markets that they are somewhat certain that it is just a „skip“. However, if the data in the next few weeks points to softer price pressures again, will we see just another „skip“ in July?

I would argue that the next move in the bond market is going to highly depend on the data. And that will make this week’s US non-farm payrolls a critical one to watch just in case. Of course, the US CPI data on 12 July warrants more attention and will be a more decisive one. But as seen in the chart above, traders are already getting angsty.

A break of the key levels highlighted above opens up space to 4% with the March high near 4.09% also a potential marker next.

And that will in turn have an effect on Japanese yen pairs, so just be mindful of that considering USD/JPY is already sitting near intervention territory.

This article was written by Justin Low at www.forexlive.com.