Daily Analysis Report 30 June '2022

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EnclaveFX
Jun 30, 2022
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EUR/USD  

As it makes a comeback from the severe loss, it saw during the previous two days. The euro is currently on a minor rise. In anticipation of new growth factors, the EUR/USD is probing the level of 1.0450 for a collapse. Investors are concentrating today on data from Germany related to retail sales in May, unemployment change, and the unemployment rate in June. After a dramatic 5.4 percent decrease in April, analysts are optimistic and forecast a 0.5 percent increase in retail sales. The macroeconomic data from the eurozone and Germany yesterday offered no significant support for the single currency.

Analysts had anticipated a decrease to 4.6 points in the euro area’s industrial confidence index in June, but instead, it jumped from 6.5 to 7.4 points. The Services Sentiment Indicator over the same period improved from 14.1 to 14.8 points, beating market expectations for a drop to 12.5 points. Germany’s June inflation rate increased by 0.1 percent MoM and 7.6 percent YoY, down from 0.9 and 7.9 percent, respectively.

GBP/USD

The British pound is stabilizing close to the regional lows of June 16 and moving in multiple directions. Investors are not in a rush to start new positions as they wait to release revised information on the UK GDP dynamics for Q1 2022. According to earlier projections, the British economy expanded by 8.7 percent YoY and 0.8 percent QoQ. The Nationwide Housing Prices Index and data on Total Business Investment for Q1 2022 will be released later. Yesterday’s disappointing macroeconomic numbers from the US, where the third estimate of GDP showed a contraction in the largest economy in the world by 1.6 percent rather than the earlier estimate of 1.5 percent, added pressure to the holdings of the British pound.

Investors interpreted this as another indicator of a worldwide recession and hurried to sell riskier assets. Additionally, on Wednesday, the Governor of the Bank of England, Andrew Bailey, delivered a lecture at the European Central Bank (ECB) event where he had been invited as a guest. The official clarified that to reduce inflationary pressures, his department does not want to take any actions that might harm economic growth. Meanwhile, he claims that there are already indications of a downturn in the nation’s economic growth.

AUD/USD

After a “bearish” start to trade this week, the Australian dollar is growing rather rapidly. The instrument attempts to reach a level of 0.6900 with the help of upbeat macroeconomic figures. Australia’s Private Sector Credit rose by 0.8 percent in May, matching the figures from the previous month, despite analysts’ expectations for a slowing to 0.6 percent. In annual terms, the index surged from 8.6 percent to 9.0 percent. An increase in the NBS Manufacturing PMI in June from 49.6 to 50.2 points, which was just below market estimates of a rise to 50.5 points, boosted purchasers according to Chinese statistics.

For the same time frame, the non-manufacturing PMI increased from 47.8 to 54.7 points, far above the anticipated 52.5 points. Investors will pay close attention to the following US figures on the dynamics of Personal Income and Spending for May: While spending is anticipated to decline from 0.9 percent to 0.5 percent, income may grow from 0.4 percent to 0.5 percent.

USD/JPY

The US dollar remains close to record highs around 136.60 while trading with mixed dynamics. As investors continue to anticipate additional tightening of monetary policy by the US Federal Reserve, the US dollar continues to exert significant pressure on the holdings of the Japanese yen as a safe-haven asset. In response, the Bank of Japan keeps a “dovish” stance and hasn’t yet reacted to the possibility of a significant increase in inflation. Weak macroeconomic numbers from Japan, where Industrial Production in May showed a substantial loss of 7.2 percent after falling by 1.5 percent a month earlier, with forecasts of a slight decline of only 0.3 percent, put additional pressure on the yen yesterday. At the same time, the indicator’s dynamics in yearly terms improved from -4.9 percent to -2.8 percent, outperforming analysts’ predictions of -5.9 percent. Japan will release data on consumer inflation for June tomorrow.

XAU/USD

Gold prices are marginally falling, remaining close to June 15 lows of 1815.00. The increasing dollar, which is in demand due to mounting concerns about a worldwide economic recession, is exerting pressure on the instrument’s position. The forecast was reduced from -1.5 percent to -1.6 percent the day before, which only heightened the market’s anxiety. The United States announced its third estimate of GDP dynamics for Q1 2022. Additionally, traders evaluated the remarks made by US Federal Reserve Chairman Jerome Powell at the European Central Bank meeting at the same time (ECB). The official claims that although the future of the US economy is still unclear, it can withstand the quick tightening of monetary policy. Recall that the regulator anticipates raising the rate by 50 to 75 basis points in July.