Headlines:

• US non-farm payrolls the main focus, but have the numbers been severely overestimated?
• ECB’s Lagarde: We still have work to do to bring inflation back down to our target
• ECB’s de Guindos: We will continue to follow a data-dependent approach
• ECB’s de Guindos: Evolution of core inflation will be key to future policy decisions
• BOJ likely to hold off YCC tweak in July, says ex-central bank official
• Germany May industrial production -0.2% vs 0.0% m/m expected
• UK June Halifax house prices -0.1% vs 0.0% m/m prior
• Yellen says US seeking healthy competition with China

Markets:

• JPY leads, USD lags on the day
• European equities mixed; S&P 500 futures down 0.1%
• US 10-year yields up 1.9 bps to 4.059%
• Gold up 0.3% to $1,916.72
• WTI crude up 0.5% to $72.15
• Bitcoin down 0.5% to $30,169

It’s all about the US jobs report today and that made it a bit of a quieter one in Europe, though there were some light market moves.

In particular, the Japanese yen gained across the board with USD/JPY briefly falling below 143.00 from around 143.50 in the handover from Asia trading. The downside momentum in the pair continues despite higher bond yields, so that divergence is something to be wary about as we move towards the closing stages of the week.

Meanwhile, the dollar itself is slightly softer on the balance of things despite the risk mood being fairly tentative and cautious. European stocks opened lower but are now keeping more mixed while US futures are marginally down on the day.

EUR/USD is little changed just below 1.0900 while GBP/USD is up just 0.2% to 1.2770 on the day. The antipodeans are also holding minor gains against the greenback, with AUD/USD up 0.2% to 0.6640 and NZD/USD up 0.3% to 0.6175 currently.

It’s not much but we should be getting more action before the weekend comes along with the non-farm payrolls report later set to induce another round of volatility surely. Will we get the same reaction as yesterday on a beat in the data?

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

The US economic data has
been surprising to the upside since the last FOMC meeting. Given the Fed
willingness of hiking another two or more times if the data remains strong, the
market repricing interest rates expectations on the more hawkish side. Although
this development led to higher Treasury yields, the USDJPY pair struggled to
take off and instead pulled back.

On the other hand, the BoJ
maintains its dovish stance keeping rates at -0.10 and the YCC at the usual
settings. Core inflation in Japan keeps on rising and there are only slightly
tentative signs of a possible exit from the current policy. So, ss long as the
policy divergence between the two central banks continues, we should see more
higher highs for the pair, all else being equal.

USDJPY Technical Analysis –
Daily Timeframe

On the daily chart, we can see
that we finally got a pullback in USDJPY. In fact, the price has fallen into
the trendline where we
can also find confluence with the
38.2% Fibonacci retracement level
and the red 21 moving average. We can
expect the buyers piling in here with a defined risk below the 142.17 support and
target the 150.00 handle. The sellers, on the other hand, will want to see the
price to break below the 142.17 support to pile in and extend the selloff into
the next trendline.

USDJPY Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see that the market
sold off pretty heavily yesterday although the US economic data was solid
pretty much across the board. This is a strange reaction as the US Treasury
yields rallied instead. The market may have just been too much overstretched and
it needed a pullback. This is a key zone now to decide where the USDJPY will go
next. A bounce should lead to another big rally, while a break lower would open
the door for a big selloff into the 139.00 handle.

USDJPY Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see that we
have a swing low resistance at 143.50. If the price pulls back into that level,
we can expect the sellers to pile in there to position for more downside. More
conservative buyers, on the other hand, will want to see the price to break
above that level to confirm the bounce and the continuation of the rally.

Upcoming Events

Today we have the US
NFP report. The market is already expecting good data so the only surprise may
come from a much higher than expected numbers or a miss to the forecasts. In
the first case, we should see the USD appreciate as the market will be pricing
a more hawkish Fed. In the second case, we can expect the USD to weaken as
Treasury yields will drop and take USDJPY with them.

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

There’s not much of direction so far on the session and you can understand why there is that sense of apprehension. Everyone is waiting on the US non-farm payrolls later and it’s tough to gather much conviction at the moment. European stocks started the day with losses but are now seeing a more mixed performance:

• Eurostoxx +0.3%
• Germany DAX +0.4%
• France CAC 40 +0.5%
• UK FTSE -0.3%
• Spain IBEX -0.5%

It still doesn’t chip away much at the heavy losses this week and US futures are also still looking rather tepid. S&P 500 futures and Nasdaq futures are down 0.1% while Dow futures are flattish currently.

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

The US data has been
consistently surprising to the upside since the last FOMC, and this has led the
market to price in a more hawkish path for the Fed. In fact, Fed Chair Powell
and other FOMC members repeated that they expect two or more rate hikes this
year if the data remains strong. .

The RBNZ decided to pause
at the last meeting, and it should keep rates on hold as long as the inflation
numbers continue to show disinflation and the other top tier economic
indicators don’t show too much strength.

NZDUSD Technical Analysis –
Daily Timeframe

On the daily chart, we can see that the price
action displays a bullish bias as we got a selloff and then a V-shaped
recovery. This is generally a bullish signal, and the target should be the 0.63
handle where we can also find the downward trendline. A lot
will depend on today’s NFP report though.

NZDUSD Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see more closely what
happened with the V-shaped recovery. In fact, the price broke out of the support and
after a little consolidation, rallied back strongly above the support turned resistance towards
the 0.62 handle. The price is now struggling to break above this swing high level,
but the bias remains bullish as the price has also broken out of the bullish flag. Once we
see a break above the 0.62 handle, the buyers should pile in and target the
0.63 resistance.

NZDUSD Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see that the
price is now rallying towards the 0.62 handle. We can expect the sellers
leaning on that 0.62 resistance with a defined risk above the high and target
the 0.61 handle as first target and then a break lower. Alternatively, the
sellers can also wait for the price to break below the minor upward trendline
before piling in.

Upcoming Events

Today we have the US
NFP report, and the market is solely focused on that. The labour market data we
got up to now has been solid and the market’s expectation is skewed to the
upside. In fact, we may have a sustained move only if we get a big beat or a
miss. In case of a beat, the USD should strengthen, while a miss should see the
USD offered across the board.

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

Headlines:

• USD/JPY backs away from the 145.00 mark
• Dollar slips across the board ahead of North America trading
• US Treasury secretary Yellen to meet with China’s Liu He on Friday
• China’s Xi calls to deepen war, combat planning in visit to Eastern Theater Command
• BOE’s Bailey says cannot give a date on when interest rates will start to come down
• SNB’s Maechler: Further rate hikes cannot be ruled out
• Germany May factory orders +6.4% vs +1.2% m/m expected
• Germany June construction PMI 41.4 vs 43.9 prior
• UK June construction PMI 48.9 vs 51.0 expected
• US June Challenger layoffs 40.71k vs 80.09k prior
• US MBA mortgage applications w.e. 30 June -4.4% vs +3.0% prior

Markets:

• JPY leads, CAD lags on the day
• European equities lower; S&P 500 futures down 0.5%
• US 10-year yields up 2.6 bps to 3.971%
• Gold up 0.5% to $1,926.66
• WTI crude up 0.3% to $72.03
• Bitcoin up 2.0% to $31,087

It was another soggy session for risk sentiment, as equities continue to slump further after yesterday’s losses. European indices are down over 1% across the board while US futures are holding lower ahead of key US data to come later today and also tomorrow.

The market continues to see higher rates and that is propping up bond yields, though the dollar is faltering today while the Japanese yen is the lead gainer instead.

Major currencies were initially little changed before the yen took charge, with USD/JPY falling just below 144.00 at the start of the session. That was then accompanied by a further dollar drop across the board later on, with the greenback seeing decent losses against the euro, pound, and antipodeans at the moment.

EUR/USD is up 0.4% to near 1.0900 while GBP/USD is up 0.5% to 1.2770 levels on the day. Meanwhile, despite the negative mood in stocks, the aussie and kiwi are holding their ground with AUD/USD up 0.4% to 0.6683 and NZD/USD up 0.6% to 0.6215 – both holding near the highs for the day.

It’s tough to make out the flows in broader markets today but it could just be start of the quarter/half-year positioning perhaps. We’ll get to US data later and that will make things more interesting before the non-farm payrolls tomorrow.

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

The JPY is the strongest and the USD is the weakest as the North American session begins. The USD is weaker ahead of a number of employment releases today. The ADP employment data which will be released at 8:15 AM. US jobless claims, the JOLTS employment data, and Services ISM PMI data will also be released today (including the employment component). The US jobs report will be released tomorrow at 8:30 AM ET with expectations near 220K.

The USD is lower despite the FOMC meeting minutes yesterday that showed that although the Fed was unanimous in keeping rates unchanged in June, there were some who felt a raise was warranted in June, considering the economy hadn’t slowed significantly. These officials argued that the economy’s activity had surpassed earlier expectations and inflation was not clearly on track to meet the committee’s 2% target. The minutes used terms like „resilient“ frequently to describe the U.S. economy, financial markets, and banking system. The June meeting officials suggested two more increases this year would help shape public expectations about the need to increase rates to bring inflation down to the Fed’s 2% target. The minutes also hinted at a potential challenge in maintaining unity in future decision-making, given differing opinions among the officials. While some argue the Fed should pause and let current policies work, others see an urgent need for further increases. Ahead of the minutes‘ release, investors saw an 88% chance that the Fed would raise rates to between 5.25% and 5.5% this month, which would be a 22-year high.

Later near the US close yesterday, New York Federal Reserve Bank President John Williams expressed concerns with the current state of inflation, affirming that combating it is a chief responsibility of the Federal Reserve. He noted progress on inflation, but still finds price pressures too high, despite pandemic factors driving inflation easing. He highlighted the economy’s continued demand for labor and resilience in the housing market, which came as a surprise to him. Despite this, he thinks the economy has weathered rate hikes fairly well. He proposed it’s an open question of how quickly inflation will decrease next year. He also mentioned that a slower pace of rate increases makes sense currently, but future actions will be dependent on incoming data. Finally, Williams fully backed the Fed’s decision to keep rates steady in the June FOMC meeting. He also suggested that if the markets anticipate quicker progress on inflation than the Fed, it wouldn’t be a problem.

The overall tone of his comments suggests that he believes the Federal Open Market Committee (FOMC) is not done with rate hikes yet, with a 25 basis point rate increase predicted for the upcoming meeting later this month.

Today in Europe:

• German Factory Orders (month-on-month): Orders increased by 6.4%, significantly outperforming expectations of 1.1% and prior results of 0.2%. This indicates a robust growth in manufacturing orders for Germany.
• United Kingdom Construction PMI: The UK’s construction industry has contracted slightly, with the Purchasing Managers‘ Index (PMI) falling to 48.9 from last month’s 51.6, missing the expectation of 50.9. A figure below 50 indicates a contraction in the construction sector.
• Eurozone Retail Sales (month-on-month): Retail sales remained stagnant with 0.0% growth, matching last month’s figure but missing the forecast of a 0.2% increase.

BOE’s Bailey was chirping and said:

• He anticipates a substantial decrease in inflation but warns that the transition could be difficult for borrowers.
• He refrains from providing a specific date when interest rates will start to decrease.
• He noted that actions taken by regulators, especially in the fuel market, will assist in reducing inflation.
• He brings attention to evidence suggesting some retailers might be overcharging customers, indicating a concern about possible unfair market practices impacting inflation.

U.S. Treasury Secretary Janet Yellen is set to embark on a four-day visit to China in an attempt to ease the recent strain in relations between Washington and Beijing, heightened by disagreements over semiconductors and Taiwan. This visit comes after China implemented export controls on critical chipmaking materials, a move it claims is for protecting „national security and interests.“ Despite Yellen’s planned meetings with senior Chinese officials, there is limited optimism about substantial improvements in the strained relations.

Crude oil is higher helped by the private API data released late yesterday. That data showed:

• Crude oil inventories had a drawdown of -4.382 million barrels, which was more than the expected decrease of -2.0 million barrels.
• Gasoline inventories decreased by -1.615 million barrels, significantly more than the expected decrease of -0.1 million barrels.
• Distillates increased by 0.604 million barrels, which was slightly more than the expected increase of 0.5 million barrels.

The EIA data for the week will be released at 11 AM today, a day later due to the July 4 holiday on Tuesday.

Also on the calendar today:

• At 8:15 am, the forecast for the ADP Non-Farm Employment Change is 228K, down from the last months estimate of 278K. The data is a prelude to the US jobs report which will be released tomorrow with expectations of around 224K (vs 339K last month).
• At 8:30 am, Unemployment Claims are expected to be at 245K, up from the last week’s claim of 239K. The claims took a turn back to the downside last week after hovering around 262K for 3 weeks straight.
• Also at 8:30 am, the Trade Balance is forecasted to be -$69.0B, narrower than the previous figure of -$74.6B.
• At 8:45 am, FOMC Member Logan is expected to speak.
• At 9:45 am, the Final Services PMI is projected to remain unchanged at 54.1.
• At 10:00 am, the ISM Services PMI is forecasted to be 51.0, slightly higher than the previous reading of 50.3. The employment component last month came in at 49.2.
• Also at 10:00 am, JOLTS Job Openings are predicted to be 9.93M, lower than the last report of 10.10M.
• At 11:00 am, Crude Oil Inventories are projected to decrease by 2.0M barrels, significantly less than the previous draw of 9.6M barrels.

A snapshot of the markets currently shows:

• Crude oil is trading up $0.33 or 0.46% at $72.12
• Spot gold is trading up $9.98 or 0.52% at $1924.44
• Silver is up $0.06 or 0.27% $23.17
• Bitcoin is trading at $31,185. The price was trading at $30,485 near 5 pm yesterday

In the premarket for US stocks, the major indices are trading lower. The major indices moved modestly lower yesterday as traders reacted to higher rates and tighter Fed ahead.

• Dow Industrial Average is trading down -162 points after yesterday’s -129.83 point decline
• S&P index is trading down -19.75 points after yesterday’s -8.77 point decline
• NASDAQ index is trading down -59 points after yesterday’s -25.13 point decline

In the European equity markets, the major indices are trading sharply lower:

• German DAX is down -1.20%
• France’s CAC is down -1.83%
• UK’s FTSE 100 is down -1.23%
• Spain’s Ibex is down -1.02%
• Italy’s FTSE MIB is down -0.93% (delayed)

In the Asian Pacific market today, markets closed higher

• Japan’s Nikkei fell -1.70%
• Australia’s S&P/ASX 200 index fell -1.24%
• China’s Shanghai composite index fell -0.54%

In the US debt market yields are higher in early US trading

• 2-year yield 4.965% +1.5 basis points
• 5-year yield 4.29% +3.5 basis points
• 10-year yield 3.969% +2.4 basis points
• 30-year yield 3.948% +0.4 basis points

In the European debt market, benchmark 10-year yields are higher. The UK 10-year yield is pushing toward its October 2022 high yield of 4.632%. The German 10-year yield is scraping near the highest going back to March 10 near 2.556%.

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

• Prior 80.09k

US layoffs fall to a seven-month low in June, as employers were seen cutting 40,709 jobs – down 49% compared to May. Still, the number for the month is well above that of the same period last year (32,517 job cuts). The year-to-date figure shows 458,209 job cuts so far and that is well above the 133,211 job cuts announced in the first six months of 2022.

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

The market is beginning to factor in a more hawkish
path for the Federal Reserve due to the consistently positive economic data
since the last FOMC meeting. According to Fed Chair Powell, if the data remains
strong, a majority of the FOMC anticipates two or more rate hikes this year.

Conversely, the European Central Bank (ECB) has
already committed to a rate hike in July, but there is a strong debate about
their plans for September. In fact, recent economic indicators for the Eurozone
have been disappointing significantly, indicating a potential recession in the
second half of the year.

All else being equal, we should see EURUSD pair
trending downwards as the market adjusts its expectations, discounting the
likelihood of ECB rate hikes and factoring in the possibility of rate cuts.

EURUSD Technical Analysis –
Daily Timeframe

On the daily chart, we can see that we might have a
major head and shoulders pattern
with the black neckline coming roughly at the 1.07 handle. The moving averages are
crossing to the downside indicating a possible change in trend, but the price
will need to fall below the 1.0840 to confirm it. In case we see a break below
the neckline, the target should be the 1.02 handle.

EURUSD Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see that the price has
recently broke below the upward trendline and made
a new lower low. In fact, the price has formed a king’s crown pattern, which is
similar to the head and shoulders pattern, but has the right shoulder low lower
than the left shoulder one. We now have a support level at
1.0840 where the buyers keep on piling in to target a breakout of the 1.1033
high.

EURUSD Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see that the
price has recently broke below the neckline of the double top
pattern marked by the two orange arrows. This is another signal that the
bearish momentum is prevailing, and the sellers are in control. Once the price
breaks below the support with conviction supported by a fundamental catalyst,
we can expect a selloff into the 1.07 handle. The buyers will need to break
above the 1.0940 resistance zone to invalidate the bearish setup and start
another uptrend.

Upcoming Events

Today the data to watch
will be the US Jobless Claims and the US ISM Services PMI, while tomorrow the
markets will focus on the main event of the week: the US NFP report. If we see
beats to the expectations, we will likely see the EURUSD falling as the market
will price in even more hawkishness from the Fed. On the other hand, if the
data misses forecasts, EURUSD may rally as some of the hawkishness will be
priced out.

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

• Prior +3.0%
• Market index 206.5 vs 216.1 prior
• Purchase index 162.4 vs 170.3 prior
• Refinance index 421.3 vs 439.2 prior
• 30-year mortgage rate 6.85% vs 6.75% prior

Mortgage activity sees a sharp fall in the past week ahead of the long weekend in the US, with both purchases and refinancing also falling significantly. That comes amid another acceleration in the average rate of the most popular US home loan by 10 bps to 6.85%.

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

Bitcoin
has displayed a remarkable resilience to lots of negative news like the
regulatory crackdowns or the more hawkish interest rates pricing. Despite
everything that has been thrown to it, the cryptocurrency remains strong and
it’s even targeting a new higher high. Looks like only a recession or a very
hawkish Fed can stop bitcoin from reaching new highs, but even if we see a
selloff to either of those scenarios, we are likely to see a much stronger
rebound once the Fed starts cutting interest rates.

Bitcoin Technical Analysis
– Daily Timeframe

On the daily chart, we can see that after breaking
out of the trendline, bitcoin
rallied strongly to the 31K high where it found resistance. This
will be a key level to watch because a clear break to the upside should open
the door for a rally towards the 45K level. The sellers are likely to pile in
here with a defined risk above the resistance and target the 25K support.

Bitcoin Technical Analysis
– 4 hour Timeframe

On the 4 hour chart, we can see that bitcoin has
been struggling a lot to break above the resistance and this has led to a
consolidation just beneath the level. We now have a support zone at the 29500
level and a resistance at the 31000 one. The best strategy in such cases would
be to wait for a clear breakout and ride the following momentum. One can also
“play the range” though buying at support and selling at resistance.

Bitcoin Technical Analysis
– 1 hour Timeframe

On the 1 hour chart, we can see more
clearly the rangebound price action. At the moment the price is making lower
lows and lower highs after the rejection from the resistance, and the moving averages are
crossed to the downside. The sellers are in control in the short term so the
target should be the 29500 support. If we see a break to the upside though, we
can expect new higher highs and the buyers piling in aggressively.

Upcoming Events

In the next days we will have some top
tier economic indicators like
the US Jobless Claims and ISM Services PMI tomorrow and the main event of the
week: the US NFP report on Friday. Strong data should lead to a more hawkish
pricing for interest rates and weigh on bitcoin, while negative readings should
support the cryptocurrency as the market is likely to price in a more dovish
path for interest rates.

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