Copper experienced a strong rout last week with market participants blaming
the soft Chinese economic
data and the increase in inventories in most global warehouses suggesting some
weak demand.

The PBoC tonight surprised with rate cuts across many key
benchmarks. Moreover, the recent PBoC policy framework reform suggests that the
Chinese officials could take more actions to spur growth.

In the big picture, stable global growth and major central banks cutting
rates into resilient economies should be bullish drivers for the copper market and
more expansionary policies from Chinese officials might give an even stronger boost.

Copper
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that copper eventually broke through the key 4.35 support where we had also the 50% Fibonacci retracement level for confluence, and extended the drop into the
4.21 level.

There’s not much else to glean
from this timeframe as the sellers might want to see a pullback before piling
back in while the buyers will look for opportunities on the lower timeframes to
position for a rally back above the 4.35 level.

Copper Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see that from a risk management perspective, the sellers will have a much
better risk to reward setup around the 4.35 level where they can step in with a
defined risk above the resistance. The buyers, on the other hand, will want to
see the price rising back above the 4.35 resistance to increase the bullish
bets into the 4.67 level next.

Copper Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can
see that the recent price action formed what looks like a falling
wedge. This is generally a reversal pattern, so the buyers will want to see
the price breaking above the minor downward trendline
to pile in for a move higher.

The sellers, on the other
hand, will likely keep on leaning on the minor trendline to keep pushing lower
but if the price were to break higher, the next entry point for the sellers
should be the trendline around the 2.28 level. The red lines define the average daily range for today.

Upcoming
Catalysts

This week is pretty empty on the data front. We begin on Wednesday with the
release of the US Flash PMIs. On Thursday, we will get the latest US Jobless
Claims figures. Finally, on Friday we conclude the week with the US PCE report.

This article was written by Giuseppe Dellamotta at www.forexlive.com.

• No need to rush decisions
• Data will set the stage for September decision
• The door remains open to additional easing should conditions warrant it

The ECB narrative now is that they would want to cut rates further but are going to let the data in the coming weeks to decide that. Not much of a change to the status quo since last month really.

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

Week Ahead 22nd-26th July:

• Mon: PBoC LPR
• Tue: NBH Policy Announcement; US Existing Home Sales (Jun), Richmond Fed (Jul), EZ Consumer Confidence Flash (Jul)
• Wed: BoC Policy Announcement & MPR; Japanese Flash PMIs (Jul), German GfK (Aug), EZ, UK & US Flash PMIs (Jul)
• Thu: CBR Announcement, CBRT Announcement; EZ M3 (Jun), German Ifo (Jul), US Durable Goods (Jun), GDP Advance & PCE (Q2), IJC (20th Jul)
• Fri: Moody’s Bulgaria, Czech Republic, Latvia Review; Japanese CPI Tokyo (Jul), US PCE (Jun), Uni. of Michigan Final (Jul), German Import Prices (Jun)

Note: Previews are listed in day order.

PBoC LPR (Mon):

The PBoC is expected to maintain its benchmark Loan Prime Rates next week with the 1-year and 5-year LPR to be kept at the current levels of 3.45% and 3.95%, respectively. The likelihood for China to maintain its benchmark rates follows the central bank’s decision to keep its 1-year Medium-term Lending Facility rate at 2.50% as this serves as a fairly accurate leading signal for the intentions regarding the LPRs which are the rates that most new loans and mortgages are referenced on. The central bank is also seen to be focusing on short-term liquidity measures which was evident in the increased injections during this week’s 7-day reverse repos announcements, while it was reported earlier this month that it would conduct temporary overnight repos or reverse repos based on market conditions to keep banking system liquidity reasonably ample and to increase the accuracy and efficiency of open market operations. Furthermore, industry sources cited by PBoC-backed Financial News stated that the PBoC will make clear it will start to use a short-term interest rate as its main policy rate after reducing the importance of the MLF rate as a policy benchmark which suggests a lack of urgency to adjust the benchmark LPRs. Nonetheless, future rate adjustments cannot be ruled out given recent data releases including a contraction in imports, as well as softer-than-expected CPI and Retail Sales data which suggest weak domestic demand, while GDP data for Q2 also missed estimates and House Prices have continued to contract. As such, if the data continues to deteriorate, it could stoke slowdown concerns and warrant support measures, while analysts cited by Shanghai Securities News recently noted that China may see a window to cut its interest rates or RRR at the end of Q3 or in Q4 to support its economy.

EZ Flash PMI (Wed):

Expectations are for manufacturing PMI to tick higher to 46.0 from 45.8, and services to rise to 53.0 from 52.8, leaving the composite at 50.8 vs. prev. 50.9. As a reminder, the prior release saw the manufacturing print fall to 45.8 from 47.3, and services decline to 52.8 from 53.2, leaving the composite at 50.9 vs. prev. 52.2. The accompanying report noted, “while the manufacturing sector weakened considerably in June, activity growth in the services sector continued to be nearly as robust as the month before.“ This time around, attention will in part be on whether any of the political uncertainty has filtered its way into the data and to what extent. Furthermore, given the more cautious stance by the ECB on price pressures in the Eurozone, cost metrics in the release will likely get extra attention. From a policy perspective, with the ECB’s July meeting only just in the rearview mirror and a lot of data between now and the September meeting, the release will likely not have too much sway on market pricing. Inflationary developments and comments from ECB officials will act as more of a guiding force for that meeting which currently assigns a circa 64% chance of a cut.

UK Flash PMI (Wed):

Expectations are for the services print to nudge higher to 52.5 from 52.1, manufacturing to rise to 51.2 from 50.9, leaving the composite at 52.6 vs. prev. 52.3. As a reminder, the prior release saw the services print decline to 52.1 from 52.9, and manufacturing slip to 50.9 from 51.2, leaving the composite at 52.3 vs. prev. 53.0. The accompanying report noted that the UK is “on track for another quarter of GDP growth…albeit one that will be less punchy than the first quarter’s 0.7%.“ This time around, analysts at Investec note that the certainty provided by the outcome of the General Election and the “new government’s key focus on strengthening growth, should help companies to firm up their own plans for the future”. As such, the desk expects a bounce for both the services and manufacturing components. On prices, Investec notes “in June, despite some easing in input cost pressures, the prices charged index moved up. A reversal of this would be very welcome from the MPC’s perspective”. From a policy perspective, the release will be the main data highlight before the August BoE announcement, which is a near-enough coin flip. The release may cause some move in market pricing on the day, however, it is unlikely to seal the deal one way or the other given the MPC’s fixation on services inflation and real wage growth.

BoC Announcement (Wed):

The current analyst poll has not been released yet, but money markets currently assign an 80% probability of a rate cut in July after soft data while ING, RBC, and Scotia all look for the BoC to follow up with another 25bp rate cut after cutting by 25bp in June. Recent data has been on the cool side, inflation continued to ease with the average of the BoC core measures rising 2.6% Y/Y in June, down marginally from the prior 2.63%, albeit this was revised down from 2.70%. Meanwhile, the June jobs report was soft with the unemployment rate ticking up to 6.4% from 6.2%, above the 6.3% forecast. The monthly employment change was also disappointing, falling by 1.4k, with a decline of 3.4k full-time jobs, and a gain of 1.9k part-time jobs, well beneath the expected 22.5k and prior 26.7k. The latest business outlook survey saw that most respondents expect inflation to return close to target in 2-3 years, while outlooks were mostly unchanged from the prior quarter, remaining more pessimistic than average. The share of firms reporting labour shortages is at near survey lows, but only a few firms plan to reduce headcounts. On prices, firms expect the growth of their input prices and selling prices to slow, suggesting that inflation will continue to decline over the coming year. A soft labour market and more signs of cooling price pressures ahead opens up the door for another rate cut in July. Looking ahead, markets are fully pricing in two 25bp rate cuts this year, with a 60% probability of a third. The focus of this meeting will be on the rate decision, but any guidance on rates in the statement will also be key. This meeting will also be accompanied by the latest Monetary Policy Report, which will also be used to gauge how the BoC expects the economy to perform, which may provide insight into their future easing process. ING is of the view that the BoC cut rates again in July, and expects a further 50bp of rate cuts thereafter. The desk acknowledges the rise in the unemployment rate and sub-forecast inflation led the bank to shift its view to expect a rate cut at the upcoming meeting.

US GDP Advance (Thu):

The US advance Q2 GDP report will be released on Thursday, July 25th. The Final Q1 print saw growth at 1.4%, while Q2 growth is currently tracking at 2.7%, according to the Atlanta Fed GDPNow estimate, albeit this will be updated on Wednesday, July 24th. Over Q2, retail sales data saw the April report revised lower to -0.2%, falling from March’s 0.6%, whilst May saw a 0.1% gain, and June was unchanged, although above the -0.3% forecast. Nonetheless, the control metric, which is a strong gauge of consumer spending, declined 0.5% in April, rose 0.4% in May, and surged 0.9% in June, suggesting the consumers were spending more in the latter parts of the quarter. Within the durable goods reports, it is the nondefense capital goods ex-aircraft shipments that are incorporated into the GDP report, and that saw a 0.4% rise from March to April, but a 0.5% decline from April to May; with the nominal Dollar amount of shipments in the latest report only marginally beneath the March number. The current consensus for GDP is for 1.8% growth in Q2, but analyst forecasts are varied, ranging between 1.2-2.6%. The consensus will likely adjust closer to the data as more submit their forecasts. ING are towards the top end of forecasts, pencilling in 2.5% to reflect better consumer spending, rising inventories and slightly stronger investment readings. Looking ahead, they expect weaker growth in H2 with the Fed to start cutting from September.

CBRT Announcement (Thu):

The CBRT is likely to maintain its rates at its meeting on Tuesday, which has been rescheduled from the usual Thursday announcement. Expectations for the Weekly Repo Rate to be maintained at 50.00% come amid the cautious policy stance widely telegraphed by the central bank and its governor Karahan. Turkey’s inflation slowed in June, sparking talks of potential rate cuts. Despite speculation of a rate cut due to slowing inflation, Karahan stressed maintaining a cautious stance and emphasized that policy actions must align with hitting the inflation target in 2025 and beyond. The central bank projects inflation to decrease to 38% by the end of 2024, 14% in 2025, and 9% in 2026. Some suggest the central bank aims to see clearer improvements in inflation expectations before easing policy.

Japanese Tokyo CPI (Fri):

Tokyo Core CPI for July is expected to tick up to 2.2% from 2.1% in June; Tokyo inflation data is seen as a leading indicator of the national price trend. The data will also come a week before the BoJ meeting. Analysts at ING “expect Tokyo core inflation to rise 2.0% YoY, which is above the BoJ’s target of 2%”. The desk also posits that “Together with strong wage growth, a recovery in the auto sector, and retail sales, the BoJ is expected to deliver a 15bp hike at its July meeting.”

US PCE (Fri):

US PCE for June, the Fed’s preferred gauge of inflation, is due on July 26th whereby current analyst forecasts for core PCE M/M are ranging between 0.15-0.2%. Moreover, ING notes that the core PCE deflator is expected at 0.2% M/M, with risks skewed towards the downside. The bank adds that the core CPI print was just 0.1% M/M, but some of the PPI inputs into the PCE deflator, such as portfolio fees and transport, favour 0.2%. Even so, this would be tracking at the run rate required to deliver 2% Y/Y inflation over time and should keep those interest rate cut expectations in place. In June, US CPI was cooler-than-expected across the board highlighted by Core M/M rising only 0.1% (exp. & prev. 0.2%), while the Y/Y pace eased to 3.3% (prev. & exp. 3.4%). The headline came in beneath all analyst forecasts at -0.1% (exp. +0.1%, prev. 0.0%), with the Y/Y easing to 3.0% (prev. 3.3%), beneath the 3.1% forecast. The June PPI was hot, but there were chunky revisions to May’s numbers and analysts at Bank of America noted that overall, the components of the PPI report that affect the PCE report, were softer. Following the inflation metrics, WSJ’s Fed watcher Nick Timiraos said that based on the June CPI and PPI, forecasters who map out the PCE expect core prices rose 0.17% in June, which would hold the 12-month rate at 2.6%. Moreover, the six-month annualized rate would tick up to 3.3% and the three-month annualized rate would fall to 2.1%. However, Pantheon Macroeconomics note that „The core PCE print can’t be predicted perfectly, as the BEA uses expert judgement in the seasonal adjustment of some components, and some series are derived from non-CPI/PPI data sources that are unavailable prior to publication“. Lastly, Fed’s Waller noted the recent inflation data makes him more confident that the Fed will achieve its inflation goal, but on monthly PCE inflation, he needs to see a bit more evidence that this will be sustained, which is in fitting with recent commentary seen from other officials. Money markets are currently fully pricing in the first cut by September, with 62.5bps priced in by year-end (implying two-three 25bp rate cuts for 2024), with a near zero percent chance at the next meeting on July 31st.

This article originally appeared on Newsquawk.

This article was written by Newsquawk Analysis at www.forexlive.com.

• Monday: PBoC
  LPR.
• Wednesday: Japan/Australia/Eurozone/UK/US
  Flash PMIs, BoC Policy Decision.
• Thursday: US
  Durable Goods Orders, US Jobless Claims, US Q2 Advance GDP.
• Friday: Tokyo
  CPI, US PCE.

Monday

The PBoC is expected to keep the LPR rates
unchanged at 3.45% for the 1-year and 3.95% for the 5-year. The central bank
left the MLF rate unchanged at 2.50% last week and it’s generally a leading
indicator for the LPR decision.

As a reminder, the PBoC recently introduced
a new cash management mechanism and Governor Pan Gongsheng said that the
seven-day reverse repo rate „basically fulfils the function“ of the
main policy rate. ING published a nice article on the new policy framework
reform here.

Wednesday

Wednesday will be the Flash PMIs Day for
many major economies with the Eurozone, UK and US PMIs being the main
highlights:

• Eurozone Manufacturing
  PMI: 46.3 expected vs. 45.8 prior.
• Eurozone Services PMI:
  53.0 expected vs. 52.8 prior.
• UK Manufacturing PMI: 51.1
  expected vs. 50.9 prior.
• UK Services PMI: 52.5
  expected vs. 52.1 prior.
• US Manufacturing PMI: 51.5
  expected vs. 51.6 prior.
• US Services PMI: 55.0
  expected vs. 55.3 prior.

The BoC is expected to cut interest rates
by 25 bps and bring the policy rate to 4.50%. Such expectations have been
influenced by another soft labour
market report and strengthened after the
last Canadian
CPI data where the underlying inflation
measures eased further. Including the July cut, the market expects 62 bps of
easing by year-end.

Thursday

The US Jobless Claims
continue to be one of the most important releases to follow every week as it’s
a timelier indicator on the state of the labour market.

Initial Claims remain
pretty much stable around cycle lows and inside the 200K-260K range created
since 2022. Continuing Claims, on the other hand, have been on a sustained rise
recently with the data printing new cycle highs every week.

This shows that layoffs are
not accelerating and remain at low levels while hiring is more subdued. This is
something to keep an eye on. This week Initial Claims are expected at 238K vs.
243K prior, while there’s no consensus for Continuing Claims at the time of
writing although the prior reading saw an increase from 1847K to 1867K.

Friday

The Tokyo Core CPI Y/Y is
expected at 2.2% vs. 2.1% prior. Inflation in Japan is basically at target and
there are no strong signals that point to a reacceleration. It’s hard to see a
rate hike given that Japan strived to achieve inflation for decades and it
might ruin this accomplishment by tightening policy too much.

Nonetheless, besides the
expectations of BoJ trimming its bond purchases by a “substantial” amount, the
market is also assigning a 60% probability of a 10 bps hike at the upcoming
meeting.

The US PCE Y/Y is expected
at 2.4% vs. 2.6% prior, while the M/M measure is seen at 0.1% vs. 0.0% prior.
The Core PCE Y/Y is expected at 2.5% vs. 2.6% prior, while the M/M reading is
seen at 0.1% vs. 0.1% prior. Forecasters can reliably estimate the PCE once the
CPI and PPI are out, so the market already knows what to expect.

This report won’t
change anything for the Fed as the central bank remains in a “wait and see” mode. The market has
already fully priced in a rate cut in September and one in December with some
chances of a back-to back cut in November. The Fed is expected to be more
dovish at the upcoming meeting but won’t deliver a rate cut nor pre-commit to
one.

The next CPI release will
be key (barring quick deterioration in the labour market) as another benign
report will likely see the Fed Chair Powell pre-committing to a rate cut in
September at the Jackson Hole Symposium.

This article was written by Giuseppe Dellamotta at www.forexlive.com.

Notably, long dated Treasury yields jumped in the immediate aftermath of the debate on June 28 in a signal about a Republican sweep coupled with further tax cut and a deficit running around 6.5% of GDP for the next five years.

Then the market had a rethink. Whether that was due to cross-currents, the still-long timeline before the election or the likelihood of Biden dropping out is debatable. BMO thinks the market is also factoring in the second-order effects of a Republican sweep:

Recall in the wake of the Biden/Trump debate, the
Treasury market bear steepened on supply/reflation concerns. Once the initial
dust settled, the kneejerk response to improved Trump odds appears to be a bear
flattener – the logic being that any rebound of inflationary pressures will
slow the FOMC’s normalization (i.e. cutting) process during the latter part of
2025 and beyond. We suspect the first order response to a Biden withdrawal
would be incrementally bond friendly and most likely still a steepener. Simply
a reversal impulse.

To translate this into FX, the takeaway would be:

• Trump positive = dollar bullish
• Biden/Democrat positive = dollar bearish

I’m on board with this thinking but I wouldn’t get carried away with the idea that it will dominate markets. Also, the most-underappreciated race in 2024 is the House. Betting sites put Democrats only narrowly behind for House control despite all the turmoil and that could quickly turn and lead to a split Congress and the inevitable gridlock that comes with it.

Another thing to keep in mind is that bond seasons are constructive for the next few weeks, meaning the bias in yields is to the downside. None of this is happening in a vacuum and the outlook for the economy and inflation is in flux.

This article was written by Adam Button at www.forexlive.com.

The FTSE China A50 Index Futures (ticker: XIN9) are a vital tool for international investors aiming to tap into China’s vibrant A-share market. Traded on the Singapore Exchange (SGX), these futures mirror the performance of the 50 largest A-share companies listed on the Shanghai and Shenzhen stock exchanges, providing a comprehensive snapshot of China’s leading economic players. Their popularity is driven by high liquidity and accessibility, making them a favored choice for both hedging and speculative strategies.

The pros and cons of using technical analysis on FTSE China A50 Index Futures

Advantages

• Liquidity and volume: The FTSE China A50 Index Futures are highly liquid, ensuring smoother trade executions and minimizing slippage risk. This liquidity enhances the reliability of technical analysis by providing consistent price patterns and indicators.
• Market representation: The index includes top-performing companies, capturing broad economic trends and investor sentiment in China. This makes technical analysis more meaningful, as the index reflects significant market forces.
• Global accessibility: Available on SGX, these futures are accessible to international investors, attracting a diverse group of market participants. This global participation increases the validity of observed technical patterns.

Disadvantages

• Regulatory influences: The Chinese stock market is subject to regulatory changes and interventions that can cause sudden, unpredictable movements. These interventions can distort technical signals, complicating long-term analysis.
• Market volatility: High volatility, driven by economic data releases, policy announcements, and geopolitical factors, can create false signals and increase the risk in technical analysis despite the trading opportunities it presents.
• Economic and political sensitivity: The index’s sensitivity to economic policies and political developments in China can overshadow technical factors, making long-term predictions more complex.

Key technical indicators

For traders using technical analysis, identifying „tells“ such as rapid buying or reactionary support and resistance levels is crucial. These tells often appear through specific patterns and indicators:

• Support and resistance levels: Historical price levels where the index consistently finds support or faces resistance can indicate potential reversal points, useful for setting entry and exit points.
• Volume spikes: Significant changes in trading volume often precede major price movements. A sudden volume increase coupled with price action can indicate strong buying or selling interest, signaling potential breakouts or breakdowns.
• Candlestick patterns: Patterns such as Doji, Hammer, and Engulfing provide insights into market sentiment and potential reversals. Observing these patterns over longer time frames can help identify sustained trends and key turning points.
• Moving averages: Long-term moving averages (e.g., 50-day, 200-day) smooth out price action and reveal the underlying trend. Crossovers of these averages can signal the beginning or end of a trend, offering valuable clues for long-term analysis.

Simple tactic for confirmation

A useful tactic is to look for monthly price closes above significant historical levels, such as previous monthly lows. Markets often exhibit „fake-outs“ where prices temporarily breach key levels only to reverse. A monthly close above these levels provides greater confirmation that the price has settled into new territory and is more widely accepted by market participants.

How to invest in the FTSE China A50 Index Futures: A detailed plan (this is my opinion and trade at your own risk)

Based on the attached chart, here is a detailed plan for investing in the FTSE China A50 Index Futures:

• Entry point: Enter a long position if the monthly price closes above the July 2024 low at 11,894. This acts as a bullish confirmation signal.
• Stop loss: Set a stop loss at 11,840, just below the July 2024 low to minimize risk in case of a false breakout.
• Take profit: Set the take profit level at 16,647, just below the high of December 2021, targeting a substantial move with a favorable risk-to-reward ratio.
• Risk-reward ratio: This trade plan offers a 5:1 reward-to-risk ratio, which is highly favorable for long-term trading strategies.
• Monitor monthly closes: Continuously monitor the monthly closes to ensure the price stays above key support levels. Adjust the stop loss and take profit levels as necessary based on significant market developments and technical signals.

In summary, while the FTSE China A50 Index Futures present robust opportunities for technical analysis, traders must navigate challenges such as regulatory influences, market volatility, and economic sensitivity. By thoroughly analyzing support and resistance levels, volume patterns, candlestick formations, and moving averages, traders can enhance their ability to predict market movements and make informed trading decisions.

==============================================================

购买FTSE中国A50指数期货的长期交易计划

FTSE中国A50指数期货（代码：XIN9）为国际投资者提供了进入中国A股市场的机会。以下是详细的交易计划和技术分析：

技术分析的优缺点

优点

• 流动性和交易量：高流动性确保交易执行顺畅，减少滑点风险。
• 市场代表性：该指数包含顶级公司，反映中国经济趋势和投资者情绪。
• 全球可及性：在新加坡交易所（SGX）交易，吸引全球投资者。

缺点

• 监管影响：中国市场监管变化可能导致价格波动，影响技术信号的可靠性。
• 市场波动性：高波动性可能产生虚假信号，增加风险。
• 经济和政治敏感性：政策和经济发展对指数的影响较大，复杂化长期预测。

关键技术指标

• 支撑和阻力位：历史价格水平可作为潜在反转点。
• 交易量激增：交易量的显著变化通常预示价格大幅波动。
• 蜡烛图形态：观察长期时间框架内的形态如十字星、锤子和吞没形态。
• 移动平均线：长期移动平均线交叉点提供趋势信号。

确认策略

• 月线收盘：关注价格是否在重要历史水平上方收盘，以确认新价位的稳定性。

详细交易计划

• 进场点：若月线收盘价高于2024年7月低点11,894点，则买入。
• 止损点：设定在11,840点，低于2024年7月低点。
• 获利点：设定在16,647点，低于2021年12月高点。
• 风险回报比：5:1，非常有利于长期交易策略。
• 监控月线收盘：确保价格保持在关键支撑位上方，必要时调整止损和获利点。

在进行交易时，请注意监管、市场波动和经济政策的影响，确保做出明智的交易决策。

您可以在此查看详细的文章：Forexlive.com

This article was written by Itai Levitan at www.forexlive.com.

The announcement is usually on the 20th, but since that’s Saturday it’ll be on Monday instead.

Earlier this week we had the monthly Medium-term Lending Facility (MLF) setting:

• The PBoC has kept the 1-year MLF interest rate unchanged at 2.5%, as expected

When the People’s Bank of China leaves the MLF rate unchanged its often, but not always, a signal that LPRs will remain unchanged.

Current LPR rates are:

• 3.45% for the one year
• 3.95% for the five year

Won’t be cutting this month (is the widely held expectation).

—

The PBOC’s Loan Prime Rate (LPR):

• Its an interest rate benchmark used in China, set by the People’s Bank of China each month.
• The LPR serves as a reference rate for banks when they determine the interest rates for (primarily new) loans issued to their customers.
• Most new and outstanding loans in China are based on the one-year LPR, while the five-year rate influences the pricing of mortgages.
• Its calculated based on the interest rates that a panel of 18 selected commercial banks in China submit daily to the PBOC.
  • The panel consists of both domestic and foreign banks, with different weights assigned to each bank’s contributions based on their size and importance in the Chinese financial system.
  • The LPR is based on the average rates submitted by these panel banks, with the highest and lowest rates excluded to reduce volatility and manipulation. The remaining rates are then ranked, and the median rate becomes the LPR.

This article was written by Eamonn Sheridan at www.forexlive.com.

• Canada May retail sales -0.8% vs -0.6% expected
• Biden’s family has started discussing his exit plan – report
• Canada industrial product prices for June 0.0% vs 0.2% expected
• Fed’s Williams: Central banks must own the inflation-control mission
• Add Dem Senator Heinrich to the ranks of „It is time to quit Joe“… and more.
• Crowdstrike CEO: Many customers rebooting systems, could be some time for some to recover
• PBOC: We will keep yuan exchange rate basically stable

Markets:

• USD leads, NZD lags
• WTI crude oil down $2.53 to $80.29
• US 10-year yields up 5.3 bps to 4.24%
• Gold down $46 to $2399
• S&P 500 down 0.7%

There was no place to hide today as stocks, bonds, commodities and precious metals all fell. The lone exception was bitcoin, which notched an impressive 5% gain, perhaps as the Crowdstrike fiasco highlighted the fragility of the tech ecosystem.

For the rest of the market, it was a deleveraging event with political and economic uncertainty high. That meant selling in everything as the market looks to the Fed blackout and a quieter summer market. Given the turmoil recently, that might be a fanciful hope but the temptation to cash out after a 16% YTD stock market rally is real.

Unlike some other pockets of the market, the FX moves were modest. The dollar weakness early in the week continued to erode with the euro backing away from 1.10 and the pound retreating after briefly breaking 1.30. The later looks something like a break after an extended post-election move.

USD/JPY survived the rout in Wednesday and has steadied itself though was reluctant to push anywhere near 158 today. Yields were a tailwind and the talk about the BOJ refraining from further hikes helped. There is unease about intervention though or whatever the MoF playbook might be.

Commodity currencies present the most-compelling narrative as they slide on deteriorating growth prospects both at home and globally. China hasn’t offered up any change of course hints at the Third Plenum, though there are some hopes for post-even announcements in the coming week or two. Domestically, a poor Canadian retail sales report cemented a rate cut next week and has kicked off talk of a deeper, faster rate-cutting cycle.

Have a wonderful weekend. I’ll be off next week so see you in a couple weeks.

This article was written by Adam Button at www.forexlive.com.

Today’s price action was influenced by $2.7 trillion in options expiring including $555 billion in single stocks. It was the largest-ever July month expiration and speaks to the incredible power of the options market at the moment.

Next week we will spin it up again and find some new memes.

• S&P 500 -0.7%
• Nasdaq Comp -0.8%
• DJIA -0.9%
• Russell 2000 -0.6%
• Toronto TSX Comp -0.1%

Have a great weekend.

This article was written by Adam Button at www.forexlive.com.

• Global tech outages impact markets at the European open
• Tech shares fall as global IT outage greets Europe in the morning
• Microsoft says underlying issue causing the tech outage has been resolved
• ECB’s Villeroy: market expectations on rates seem rather reasonable
• ECB’s Muller: It’s important not to pre-commit on September
• ECB’s Šimkus: I agree with markets which sees two more rate cuts this year
• BOJ bond meeting minutes shows some mixed views on pace of tapering
• UK June retail sales -1.2% vs -0.4% m/m expected
• Germany June producer prices +0.2% vs +0.1% m/m expected
• Eurozone May current account balance €37.0 billion vs €38.6 billion prior

Markets:

• USD leads, NZD lags on the day
• European equities lower; S&P 500 futures up 0.2%
• US 10-year yields up 0.6 bps to 4.210%
• Gold down 1.3% to $2,413.68
• WTI crude up 0.1% to $80.88
• Bitcoin flat at $63,979

The session started with a quieter mood initially, before a widespread of tech outages were reported across major networks around the globe. It started with Microsoft saying that it had some issues with its cloud system and that grounded several flights from smaller airlines.

Eventually, the world would soon realise that it was much a bigger problem as banks, media outlets, airlines, and pretty much all services with Microsoft-related systems were all down. Even trading brokerages were affected as we got to the European market open.

Microsoft said it had to do with a CrowdStrike update which was flawed, causing an error in its systems.

In any case, the chaos that ensued saw stocks sell off for bit in Europe before calmer heads prevailed. S&P 500 futures were up 0.2% before falling by 0.4%, then now recovering to be up by 0.2% again. European equities saw red at the open and didn’t really recover too much though, as tech shares are the ones leading the bounce.

The moves there didn’t quite translate to much action in major currencies though. FX was quieter as the dollar is holding steady ahead of the final stretch of the week.

EUR/USD is down 0.1% to 1.0890 while GBP/USD keeps with the rejection of 1.3000 to be down 0.2% to 1.2915 on the day. USD/JPY saw some light pushing and pulling but is now flattish at around 157.40 levels.

Well, as the global IT hiccup looks to have come and gone, the focus turns back towards whether Wall Street will stick to the selloff seen in the last two days to wrap up the week.

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