Daily Market Reviews 14 July 2022

profile-image
EnclaveFX
Jul 14, 2022
invoices

EUR/USD  


After attempting an upward corrective the day before, the European currency is trading in a decline once more. The instrument has not yet actively tried to consolidate below the significant psychological support at 1.0000, although it is still close. Optimistic macroeconomic indicators from Europe helped the euro yesterday. Industrial Production increased by 0.8 percent in May after increasing by 0.5 percent the previous month, despite analysts' expectations for a fall to 0.3 percent. Industrial Production increase was 1.6 percent on an annualized basis following a significant drop of 2.5 percent in April against a prediction of 0.3 percent.

Robust macroeconomic statistics helped ease concerns about a European economic recession, which in turn gives the European Central Bank (ECB) more leeway as it prepares to hike interest rates for the first time in a long time in July to slow the sharp rise in consumer inflation.


GBP/USD  


After two days of incredibly unsure attempts at corrective growth, the British pound again displays a slight decline, returning to the "bearish" dynamics. The US dollar, which is still in strong demand on the market as a safe-haven currency, is pressuring the instrument to hit 1.1850 once more for a breakdown as investors worry about both the potential for additional inflation growth and the potential commencement of a recession in some parts of the world. Analysts had predicted an increase from 8.6 percent to 8.8 percent in the US consumer inflation numbers that were announced yesterday, but instead, they showed an annual climb to a new 40-year high of 9.1 percent.

Price growth increased from 1.0 percent to 1.3 percent every month, exceeding market expectations of 1.1 percent. Macroeconomic solid data from the UK helped to bolster the pound. The country's GDP increased by 0.5 percent in May after declining by 0.3 percent the previous month, despite experts' expectations for a static indicator. Analysts' expectations of 0.0 percent MoM and -0.5 percent YoY for industrial production for the same period were significantly outperformed by actual growth of 0.9 percent MoM and 1.4 percent YoY.


AUD/USD  


Building on the corrective momentum established on Tuesday, July 12, when AUD/USD traded at record lows of June 2020, the Australian dollar is exhibiting an erratic rise. Strong macroeconomic figures from Australia and China support the instrument's test of the breakout level of 0.6770. The rising demand for US money prevents a more active "bullish" dynamic. Analysts had predicted a similarly sharp slowdown to 25.0 thousand, but employment change in Australia increased from 60.6 thousand to 88.4 thousand in June. This was primarily because of an increase in part-time employment, which added 35.5 thousand in June after falling by 8.7 thousand the previous month.

The Unemployment Rate decreased from 3.9 percent to 3.5 percent in June, falling below the forecasted decline to only 3.8 percent, while the Participation Rate slightly increased from 66.7 percent to 66.8 percent. Forecasts called for a decrease to 5.9 percent, but the Consumer Inflation Expectation reported by the Melbourne Institute in July was revised from 6.7 percent to 6.3 percent. According to reliable data, the Reserve Bank of Australia (RBA) will likely sustain mild monetary tightening at its subsequent meetings.


USD/JPY  


With the anticipation of more tightening monetary policy by the US Federal Reserve, the US dollar is exhibiting active growth, breaking records and testing the level of 138.35 for a breakout. The US's macroeconomic statistics from yesterday showed that the inflation rate in June rose sharply from 8.6 percent to 9.1 percent, setting a new record for the past 40 years. The US regulator's steps haven't stopped inflation from growing due to the challenging energy market conditions and supply interruptions. Even though the chances of a national economic recession are increasing, the Fed is compelled to keep tightening monetary policy.

Since the Bank of Canada made a similar decision the day before, it is expected that the regulator will hike the interest rate by at least 75 basis points on July 27. However, following the release of inflation statistics, a rise of 100 basis points is more likely. Macroeconomic data, in turn, put pressure on the yen today: Industrial Production contracted by 7.5% MoM and 4.7% YoY, which was much worse than the predicted decline of 7.25% MoM and 2.85% YoY.

XAU/USD  

After attempting to gain the day before, gold prices show a modest dip. The release of June's inflation numbers has caused quotes for XAU/USD to decline again against a strengthening dollar and predictions that the US Federal Reserve would continue to tighten monetary policy. Although economists had predicted a correction to 8.8 percent, the Consumer Price Index hit new highs over the past 40 years at roughly 9.1 percent. Monthly inflation also increased from 1.0 percent to 1.3 percent despite Fed interventions.

The Consumer Price Index, which excludes food and energy, grew slightly from June to July from 0.6% to 0.7%, and in yearly terms, it even declined from 6.0% to 5.9%. The market players' expectations for a quicker tightening of monetary policy by the regulator were increased by strong inflation figures. Nearly all experts agree that the rate will rise by 75 basis points at the July 27 meeting, but there is now a good chance that the value will be corrected by 100 basis points all at once.