• UK June CPI +7.9% vs +8.2% y/y expected
• Sterling falls on softer UK inflation numbers
• UK bond yields sharply lower after inflation data earlier
• BOE watch: A 25 bps rate hike is now more favoured in August
• USD/JPY moves towards 140.00 as Ueda casts doubts on imminent policy tweak
• Aussie holds lower on softer Chinese yuan today
• Eurozone June final CPI +5.5% vs +5.5% y/y prelim
• US MBA mortgage applications w.e. 14 July +1.1% vs +0.9% prior

Markets:

• USD leads, GBP lags on the day
• European equities higher; S&P 500 futures flat
• US 10-year yields down 2.9 bps to 3.760%
• Gold down 0.3% to $1,973.18
• WTI crude up 0.2% to $75.88
• Bitcoin up 0.8% to $30,018

UK inflation was the highlight of the session and it didn’t disappoint, or at least unless you are a sterling bull. The numbers pointed to an easing in price pressures for June, which sent the pound and UK yields lower on the day.

Markets worked to reprice the more hawkish BOE rate outlook, with a 25 bps rate hike now preferred over a 50 bps move for August. GBP/USD fell sharply from 1.3030 to 1.2905 and is holding near the lows now, with a firmer dollar also helping to keep the downside pressure on the pair.

There were several other decent movers on the session but they all owed much to separate factors.

USD/JPY pushed higher towards 140.00 from around 139.30, helped by the more dovish remarks by BOJ governor Ueda from yesterday. Meanwhile, the antipodean currencies are marked lower due to a softer Chinese yuan on the day. AUD/USD is down 0.7% to 0.6765 after having seen USD/CNY push up from 7.18 to near 7.22 in trading today.

In other markets, equities kept steadier across the board after the gains from yesterday while bond yields are generally lower – with UK yields leading the downside push after the softer inflation numbers.

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

• Prior +0.9%
• Market index 210.7 vs 208.4 prior
• Purchase index 163.2 vs 165.3 prior
• Refinance index 446.4 vs 416.0 prior
• 30-year mortgage rate 6.87% vs 7.07% prior

Mortgage applications increased slightly again in the past week, owing this time to a notable decline in the average rate of the most popular US home loan. That comes alongside a heavy slide in US bond yields, following the softer CPI report.

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

After the
news of BlackRock filing a Bitcoin ETF on June
15th, we saw the cryptocurrency surging in value going briefly from the 25K
level to the 31K one. Bitcoin resilience has been remarkable given the hawkish
repricing in interest rates expectations and the regulatory crackdowns we saw
in the past weeks/months. The struggle to break above the 31K level though suggests
that we might be at a point where if the risk sentiment turns negative, Bitcoin
can selloff pretty hard. In fact, despite the positive risk sentiment in the
markets due to the miss in the US CPI report
and the soft-landing vibes, Bitcoin couldn’t rally. This is a worrying sign.

Bitcoin Technical Analysis
– Daily Timeframe

On the daily chart, we can see that after breaking
above the trendline and
rallying into the 31K resistance, Bitcoin
stalled and started to range just beneath the level. The moving averages have
crossed to the downside, but they are not reliable in rangebound markets. It
looks like we will need some big fundamental catalyst to make it breakout on
either side.

Bitcoin Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can see more closely the
range created between the 29500 support and the 31000 resistance. The best
strategy would be to just sit and wait until we get a clear breakout supported
by a fundamental catalyst, but more aggressive traders can “play the range” by
buying at support and selling at resistance.

Bitcoin Technical Analysis
– 1 hour Timeframe

On the 1 hour chart, we can see that we
have a mid-range level that acted as kind of a sentiment line where the bias
becomes more bearish below the level and more bullish above it. In fact, we
should see the buyers leaning on the 29500 support to target the resistance and
the eventually the breakout, but we should also see more buying pressure as
soon as the price rises above the sentiment line. Conversely, the sellers are
likely to lean on the resistance to target the break below the support, and
then increase the selling pressure if the price falls below the sentiment line.

Upcoming Events

The next data to watch will
be the US Jobless Claims report on Thursday. Given the current soft-landing
narrative, a small miss to the expectations shouldn’t cause much damage and in
fact an eventual spike might be faded soon after. A big miss, on the other
hand, should give the markets recessionary vibes again and lead to more
weakness in Bitcoin. Conversely, a big beat should support the idea of a soft
landing and support the cryptocurrency.

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

In case you missed Ueda’s remarks from yesterday, you can check them out here. That is weighing on the Japanese yen as he certainly doesn’t sound like he is about to bring about any imminent changes to the BOJ policy settings. USD/JPY is up over 100 pips currently to 139.80 as buyers set their sights on the 140.00 mark:

The pair is also running into some near-term resistance from the 200-hour moving average (blue line) at 139.74. If buyers keep a hold above that, it will see the near-term bias turn more bullish but I would argue that will be more so the case on a break back above 140.00 nonetheless.

If you’re wondering why the yen is rather sensitive to remarks from Ueda, you can check out my earlier posts since last week below:

• Higher Japanese yields tees up potential for another BOJ disappointment
• The Fed and ECB may not be the biggest central bank risks to markets this month

Should Ueda not deliver again next week, that should lead to added selling in the currency considering the positioning flows that we have seen in the past two weeks. The feeling among yen bulls right now:

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