More than 2% of global freight capacity is at a standstill in the North Sea, an expert from Germany’s IfW economic institute said, a „very unusual“ situation for the ports there.

„There is currently no end in sight to the congestion in container shipping,“ said IfW’s Vincent Stamer, adding that traffic jams were also growing outside Chinese ports.

„For Germany and the EU, this affects overseas trade in particular, especially with Asia, where consumer electronics, furniture and textiles, for example, are shipped from.“

So much for the light at the end of the supply-chain tunnel! 

This article was written by Ryan Paisey at www.forexlive.com.

Euro Extends Drop Versus Dollar, Falls 0.5% To 1.0213

Those calls for parity are set to increase volume! 

This article was written by Ryan Paisey at www.forexlive.com.

The low in May was 1.0350 and the low in January 2017 was 1.0340.

Both of those critical levels are under heavy pressure at the moment as a broad US dollar bid emerges. A breakdown would be the lowest in the euro since 2003.

Today’s PMIs emphasize the growing risk of a recession in the eurozone. The dollar is broadly bid today but the euro is particularly soft as German 10-year yields fall 7 bps.

In terms of technical levels, it doesn’t get any bigger than this.

The low so far is 1.0352 in a quick fall from 1.0432 just over an hour ago.

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

Watch the video for the key trading levels
for the week ahead for AUDJPY, AUDUSD, EURJPY, EURUSD, GBPJPY, and GBPUSD.

Last week AUDJPY, AUDUSD, EURJPY, EURUSD,
GBPJPY, and GBPUSD all finished down for the week. The first trading day of
July was very negative across all these pairs with AUDUSD closing below the
0.6826 monthly support level.

AUDJPY Daily chart:

Monthly support at 90.72 and 90.29,
resistance at 97.29.

Weekly support at 87.28, resistance at
94.31, 95.73, and 96.87.

Daily support at
91.95 and 91.16, resistance at 92.64 and 94.02.

Price
declined down from the 94.02-31 daily/weekly resistance area last week. Will price continue to decline and retest the 90.72-29 monthly
support levels this week?

AUDJPY daily chart 03-July-2022

AUDUSD Daily chart:

Monthly support at 0.6722 and 0.6671,
resistance at 0.6826, 0.6967, and 0.6991.

Weekly support at 0.6722, resistance at
0.6828.

Daily support at 0.6722, resistance at
0.6850 and 0.6869.

Price broke below the 0.6826 monthly
support level last week. Will price continue to decline and test the 0.6722 and
0.6671 monthly support levels this week?

AUDUSD daily chart 03-July-2022

EURJPY Daily chart:

Monthly support at 137.49 and 134.12,
resistance at 141.04 and 145.68.

Weekly support at 139.99 and 137.52,
resistance at 144.24.

Daily support at 139.38 and 138.31,
resistance at 141.39.

Price formed a triple top at the 144.24
weekly resistance level last week. Will price continue to decline and retest
the 138.31 daily support level this week?

EURJPY daily chart 03-July-2022

EURUSD Daily chart:

Monthly support at 1.0340, resistance at
1.0462, 1.0522, and 1.0635.

Weekly support at 1.0349, resistance at
1.0727 and 1.0787.

Daily support at 1.0359, resistance at
1.0469, 1.0601, and 1.0627.

Price declined down from the 1.0601 daily
resistance level last week. Will price continue to decline and test the 1.0340
monthly support level this week?

EURUSD daily chart 03-July-2022

GBPJPY Daily chart:

Monthly support at 158.21, resistance at
168.01.

Weekly support at 159.98 and 158.06,
resistance at 168.42 and 168.72.

Daily support at 161.85 and 161.00,
resistance at 164.64 and 166.93.

Price declined below the 164.64 daily
support level last week. Will price continue to decline and test the 159.98
weekly support level this week?

GBPJPY daily chart 03-July-2022

GBPUSD Daily chart:

Monthly support at 1.1986, 1.1958, and
1.1645.

Weekly support at 1.2074 and 1.1933,
resistance at 1.2155, 1.2195, 1.2251, and 1.2667.

Daily support at 1.1933, resistance at
1.2161, 1.2332, and 1.2407.

Price declined and retested the 1.1986
monthly support level last week. Will price continue to decline and test the
1.1933 weekly support level this week?

GBPUSD daily chart 03-July-2022

This content may have been written by a
third party. ACY makes no representation or warranty and assumes no liability
as to the accuracy or completeness of the information provided, nor any loss
arising from any investment based on a recommendation, forecast or other
information supplied by any third-party. This content is information only, and
does not constitute financial, investment or other advice on which you can
rely.

This article was written by ForexLive at www.forexlive.com.

FX MAJORS WEEKLY OUTLOOK

UPCOMING EVENTS:

• Monday: US Independence Day (holiday).
• Tuesday: RBA Monetary Policy announcement.
• Wednesday: US ISM Services PMI, FOMC Minutes.
• Thursday: Fed’s Waller and Fed’s Bullard speak.
• Friday: US Labour Market Report.

The week begins with a US holiday which should see lower liquidity and lower trading volumes and lead to some choppy price action. Nonetheless the very bad US ISM Manufacturing PMI on Friday and the revision in the Atlanta Fed GDPNow point to the US probably being already in recession. This coupled with a Fed that as of now cannot afford to pause or ease its policy tightening, should lead to more losses in risk assets and general risk aversion.

On Tuesday the Reserve Bank of Australia (RBA) is expected to hike the cash rate by 50 bps bringing it to 1.35%. The RBA stated that it is committed to do what is necessary to bring inflation down to target over time and the aggressiveness will be decided based on incoming data. From a trading perspective, in a synchronised global slowdown a commodity currency like the AUD suffers no matter how much the RBA hikes. The recent AUD spikes on RBA hikes were all eventually faded as you can see in the AUD/USD chart below. Will this be another fade?

FX MAJORS

On Wednesday the US ISM Non-Manufacturing PMI is expected to show another dip in the survey as the deteriorating economic environment weighs on activity. Note though that the services sector is not as cyclical as the manufacturing sector. During tough times, consumers slash spending first on the pricey manufactured goods like cars, furniture and so on, but they will do that much slower for services as there’s always demand for medical care, transportations, and communications.

That’s why the ISM Manufacturing PMI is a better forecasting tool of future economic conditions even though services make up for 80% of consumer spending. The market will be more focused on the prices sub-index to see if there’s some cooling on the inflation side, but even if there is, unless it’s a huge one, the economy is still headed for tough times exacerbated by tightening monetary conditions by the Fed.

The FOMC Meeting Minutes shouldn’t offer anything new regarding future policy actions, as the Fed is trying to be as transparent as possible when signalling its future policy moves, even if it has to supposedly give some inside info to a journalist right before a decision. Also, a key change in a line in their latest statement suggests that the Fed will go hard on fighting inflation even if it will cause some job losses.

On Thursday we will hear from Fed’s Waller (Hawk, Voter) and Fed’s Bullard (Hawk, Voter). They may give some comments on recent economic data, which the market may focus on to take clues about the aggressiveness of their future policy moves. Right now, it’s a debate between a 50 or 75 bps hike at the upcoming July meeting, although the debate takes a less bigger stage compared to the tightening during a recession.

Finally on Friday, the US Bureau of Labour Statistics will release the latest labour market report. The market expects job gains to start cooling with the consensus looking at a 295K gain compared to the previous 390K. Of course, the main focus of the market now is inflation and recession, so the market will move more in case of big losses in jobs or increases in average hourly earnings, with the latter weighing more in the debate whether the Fed will raise rates by 50 or 75 bps at the next meeting.

In the bigger picture though, we are clearly in a recessionary cycle coupled this time with an aggressive Fed tightening. For the Dollar Smile Theory, the US Dollar generally appreciates during a synchronised global slowdown or when the US economy outperforms its peers. The USD has been racking up in gains for a year now and there’s little indication it shouldn’t keep on doing so. The EUR/USD chart below is on the brink of a breakout lower, which would reinforce calls of a parity between the two major currencies.

FX MAJORS EUR/USD

This article was written by Giuseppe Dellamotta.

This article was written by ForexLive at www.forexlive.com.

Bitcoin is down 9.2% over the past week, finishing around $19,400 and trading near 19,000 on Monday morning. Ethereum has lost 13.3% in the last seven days, while other top altcoins in the top 10 have fallen from 8.6% (BNB) to 18% (Solana).

According to CoinMarketCap, the total capitalisation of the crypto market fell 9% over the week to $865bn. Bitcoin’s dominance index fell 0.3 points to 42.2%. The cryptocurrency fears index by Monday rose to 14 points.

Bitcoin has been under even pressure for almost all last week. A brief bounce at the beginning of the day on July 1 was more likely due to emotional excitement from the start of a new period (month, quarter, half-year) rather than fundamental changes in the situation. This rebound protected BTCUSD from updating lows.

Nevertheless, the global picture remains bearish as stock markets show no glimpses of tightening financial conditions by central banks. On the weekly charts, BTCUSD remains below the 200-week average, having failed a timid attempt to climb higher last week.

The RSI on the weekly charts remains oversold, which is a historical anomaly. Unfortunately for the bulls, this is not a sign of a better time to enter. Technically, a sustained return from extreme to norm would be a buy signal. The end of the second quarter of 2022 was the worst for bitcoin in 11 years.

FxPro’s Analysis: Bitcoin chart

Investor Michael Bury, who predicted the 2007 mortgage crisis, admits that the current market situation is only the middle of a bearish cycle for BTC and equities.

Changpeng Zhao, chief executive of cryptocurrency exchange Binance, called the current collapse of the crypto market a good time to buy bitcoin for the long term. He said that if traders can hold out in the current bear market, their investments will multiply in the next bullish trend.

According to IntoTheBlock, retail investors have stepped up after bitcoin fell below $20,000. This category of cryptocurrency holders has been the most aggressive in buying during the recent sell-off.

El Salvador continues to buy bitcoins amid a falling market. This time, the country’s government spent about $1.5 million to buy 80 BTC at an average price of $19,000.

On the other hand, Bank of America reported that the bank’s customers investing in cryptocurrencies has fallen by more than 50% since November last year.

This article was written by FxPro’s Senior Market Analyst Alex
Kuptsikevich.

This article was written by FxPro FXPro at www.forexlive.com.

Snippet via National Australia Bank:

• the market including NAB widely expecting another 50 bps hike to 1.35%.
• In his last outing two Fridays ago, Governor Lowe was reasonably explicit noting “we have a meeting in July, we’ll be discussing 25 or 50 again”.
• Robust retail sales and very strong job vacancies data last week only further strengthen the case to continue to move quickly away from emergency settings.

I posted earlier on ING also calling +50. 

• AUD approaches Tuesday’s RBA meeting with mostly headwinds – not much rebound expected

Also:

• WPAC: We expect the Board will decide to follow the 50bp rate increase in June with a further 50bp increase in July.
• UBS forecast 50bp rate hikes for the RBA in July
• ICYMI – RBA to raise the cash rate target by 50bp in July – BoA forecast

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

At 1500 GMT

• Keynote speech
• ECB vice president Luis de Guindos
• Venue is the Frankfurt Euro Finance Summit

The European Central Bank is about to lift off with tightening. We may get some further clues from DeG. ALso this week, and will be eyed for more, are European Central Bank minutes for the June meeting. Released on Thursday.

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

JP Morgan analysts outline potential retaliation by Russia if the G7 manage to put together a mechanism to cap the price of Russian oil:

• “The most obvious and likely risk with a price cap is that Russia might
  choose not to participate and instead retaliate by reducing exports.“
• “It is likely that the government could retaliate by
  cutting output as a way to inflict pain on the West. The tightness of
  the global oil market is on Russia’s side.”

Price impact:

• A 3 million-barrel output cut to daily supplies would push benchmark London
  crude prices to $190
• Worst-case scenario of 5 million could
  mean “stratospheric” $380 crude

Info comes via Bloomberg (gated)

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

• MON: German Trade Balance (May), EZ Sentix Index (Jul); US Independence Day.
• TUE: RBA Announcement, South Korean CPI, EZ/UK/US Final Services and
  Composite PMI (Jun), US Durable Goods R (May).
• WED: FOMC Minutes. German Industrial Orders (May), EZ Retail Sales (May), US
  ISM Services PMI (Jun).
• THU: ECB Minutes, Australian Trade Balance (May), Swiss Unemployment (Jun),
  Canadian Trade Balance (May), US ADP National Employment (Jun), EIA STEO.
• FRI: US Labour Market Report (Jun), Canadian Labour Market Report (Jun).

NOTE: Previews are listed in day-order

RBA Announcement (Tue):

The RBA is expected to increase rates for a third consecutive meeting
next week with the central bank forecast to deliver another 50bps hike in the
Cash Rate Target to 1.35%. As a reminder, the RBA raised rates by 50bps to
0.85% (exp. 25bps increase) at its meeting last month and noted inflation had
increased significantly, while it is committed to doing what is necessary to
ensure inflation returns to target over time. The Bank added that the Board
expects to take further steps in the process of normalising monetary conditions
over the months ahead, with the size and timing of future interest rate
increases to be guided by incoming data and the assessment of the outlook for
inflation and the labour market. Since that meeting, RBA Governor Lowe has
sounded more hawkish on inflation which he suggested could hit 7% by Christmas
and does not believe it will drop until Q1 next year, while he stated it is
unclear how high rates will need to go, but suggested 2.50% was a reasonable
level. Furthermore, Lowe noted they discussed a 25bps or 50bps hike at the June
meeting and expect to discuss the same options this month as well. This subsequently
saw markets price out the chance of a more aggressive move and supports the
view that the central bank will maintain the current pace of 50bps which
Westpac expects for both July and August, while Goldman Sachs forecasts the RBA
to move by 50bps at each meeting through September.

FOMC Minutes (Wed):

At its June meeting, the Fed lifted rates by 75bps to 1.50-1.75%, and
said it continued to anticipate that ongoing hikes would be appropriate, adding
that it was strongly committed to returning inflation to its 2% objective. A
key statement change saw the line “with appropriate firming in the stance of
monetary policy, the Committee expects inflation to return to its 2% objective
and the labour market to remain strong” removed and replaced with “the Committee
is strongly committed to returning inflation to its 2% objective.” The
statement gave no explicit signal regarding the size of the Fed’s July move,
although officials have been suggesting that it is likely to be a debate
between a 50bps and a 75bps rate hike. Money markets appear to be tilting
towards the latter, even after the May PCE report showed inflationary pressures
continue to cool. The updated economic projections pencil in rates rising to
3.25-3.50% by the end of this year; that implies the possibility of a 75bps
hike in July, followed by a 50bps hike in September, and then 25bps at its
November and December meetings. However, it could also be interpreted as three
50bps rate rises followed by a 25bps move. The forecasts see rates peaking at
3.75-4.00% in 2023, implying a front-loaded hiking cycle with the prospect of a
further two 25bps rate rises next year. The Fed then envisages rates falling
back in 2024. Fed’s Bullard, who votes in 2022, recently said that the
Committee’s playbook may look similar to the 1994 cycle, where aggressive rate
hikes were then followed by rate cuts the next year; the minutes will be looked
at to see if this is a widely held view on the Committee. Elsewhere, the
Committee raised its estimate of the neutral rate marginally to 2.5% from 2.4%,
which still implies that policy will move into restrictive territory by the end
of this year. Accordingly, the FOMC revised down its projections of growth to
1.7% this year vs its 2.8% forecast made in March, and has pencilled in growth
at the same rate next year, before rising in 2024 to the longer-run growth rate
of 1.9%. The projections suggest a soft landing, something Powell said in the
Q&A that he still thinks can be achieved, but did concede that outside
events have made it harder.

US ISM Services PMI (Wed):

The consensus expectation looks for the non-manufacturing ISM headline
to print 55.7 in June from 55.9 in May. However, analysts note difficulties in
using the S&P Global PMI data as a proxy, the services reading for June saw
the headline fall by just shy of 2 points to 51.6, signalling another softening
in the rate of output expansion at service providers. S&P said the pace of
increase was the slowest since January’s Omicron-induced slowdown. The report
noted weaker growth in business activity, driven by a decline in new orders.
The report also said that client demand had dropped for the first time since
July 2020, and at the steepest pace for over two years, while total new sales
were weighed by the quickest decrease in new export orders since December 2020.
Regarding the inflation metrics, average cost burdens increased markedly,
underpinned by soaring supplier, material, fuel, transportation and wage costs.
S&P said the rate of input price inflation was the softest for five months
and eased notably from May, but was much quicker than the series average.
“Similarly, the pace of output charge inflation softened and was the slowest
since March 2021,” and “although firms continued to pass-through hikes in costs
to clients, some mentioned concessions were made to customers.” Notably, the
data revealed that services providers’ backlogs of work fell for the first time
in two years, and that had a knock-on effect on the employment sub-index, which
fell to the lowest level in four months. “Inflationary pressures, hikes in
interest rates and weaker client demand all dampened service provider
expectations for output over the coming year,” S&P said, “sentiment
remained positive, but was at its lowest level since September 2020.”

ECB Minutes (Thu):

As expected, the ECB opted to stand pat on rates with the deposit rate,
main refi and marginal lending rates held at -0.5%, 0% and 0.25% respectively.
On rates, the ECB announced its intention to tighten by 25bps at the July
meeting. Beyond July, policymakers stated they will consider a larger increment
in interest rate hikes if the medium-term inflation outlook persists or
deteriorates. On the balance sheet, as expected, the Governing Council
announced its decision to end net asset purchases under the APP as of July 1st.
Note, the policy statement offered no fresh guidance on how it could deal with
the issue of market fragmentation as it commences its rate hiking cycle. The
2022 inflation outlook was upgraded to 6.8% from 5.1% with 2024 inflation seen
above target at 2.1% vs. prev. view of 1.9%. At the accompanying press
conference, President Lagarde was pressed further on how the Bank intends to
deal with fragmentation, to which she noted that the Bank can utilise existing
tools, such as reinvestments from PEPP and, if necessary, deploy new
instruments. Later in the press conference, Lagarde noted that there is no
specific level of yield spreads that would be a trigger for an
anti-fragmentation policy. When it comes to the decision-making process,
Lagarde stated that policymakers were unanimous in their views. From a more
medium-term perspective, the President was questioned on where the Governing
Council judges the neutral rate to be, however, she remarked that this issue
was deliberately not discussed. As ever, given the time lag between the
announcement and the publication of the accounts, traders will take greater
guidance from recent data points and commentary from officials. Furthermore,
when it comes to the issue of fragmentation, the ECB carried out an ad-hoc
meeting to address the matter and therefore the account will offer little in
the way of insight on that front.

Australian Trade Balance (Thu):

The May trade balance is expected at a surplus of AUD 10.60bln from
April’s AUD 10.495bln. Some desks highlight that over the past 12 months, the
Aussie monthly trade surplus has averaged around AUD 10.5bln. For the month,
both export and imports are expected to have gained. Westpac suggests coal
exports likely led the gains – on both a price and volume basis, whilst
services exports likely rallied on the national border reopening. Imports
likely rose – “This likely reflected both higher volumes, to meet rising
domestic demand, and higher prices, on a lower AUD and the surge in global
energy costs”, Westpac concludes.

US Labour Market Report (Fri):

Analysts expect the rate of job additions will continue to cool in June,
with the consensus looking for 295k payrolls to be added; that would be lower
than May’s 390k, which is lower than recent averages too (3-month average 408k,
6-month average 505k, 12-month average 545k). With Federal Reserve officials
emphasising that their focus will be on bringing inflation down, there is less
focus on the labour market for now, with the Street more focussed on how
aggressive normalisation of monetary policy will hit growth, and subsequently
the jobs market. Analysts see the jobless rate holding at 3.6% in June; the
Fed’s recently updated projections see the jobless rate ending this year at
3.7%, rising to 3.9% next year, and then 4.1% in 2024; combined with that, GDP
is expected to grow just 1.7% this year and next, below the trend rate. These
forecasts clearly acknowledge that the aggressive rate hikes will weigh on
growth and the labour market ahead, but officials have been talking-up the
strength of the economy, noting that the jobs market is strong at the moment.
As has been the case for many months now, traders will be carefully watching
measures of wage growth for signs of how the ‘second round’ effects are faring:
average hourly earnings are expected to rise 0.3% M/M, matching the May rate.
Fed officials have recently been suggesting that the debate in July will be
between 50bps and 75bps, and any upside surprise in the wages data will
embolden calls for the Fed to raise rates by 75bps again on July 27th.
Currently, money markets are assigning an approximately 70% chance that rates
will be lifted by the larger increment, but if this metric were to surprise to
the downside, it could help pricing tilt back into the 50bps bucket.

This article originally appeared on Newsquawk.Try a 14-day trial with Newsquawk and hear breaking trading
news as it happens.

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