EURUSD dips after ECB signals July hike

“You can’t make anything viral, but you can make something good.” — Peter Shankman 

HEADLINES

• Dollar gains on euro following ECB meeting 
• Gold subdued on firm yields with U.S. inflation in focus
• Oil slips on China lockdowns but stays near three-month highs
• Wall St falls as growth stocks struggle with inflation reading in focus
• Alibaba shares drop 8% after Jack Ma’s Ant Group and regulator squash talk of revived IPO
• EUR/USD heading towards parity in 12 months – Danske Bank
• AUDUSD Near Term: Downside favored

 

 

FOREX

 

 

CURRENCIES

 

 

Dollar gains on euro following ECB meeting 

 

 

The dollar on Thursday gained on the euro after the European Central Bank indicated it will hike euro zone interest rates in July for the first time in over a decade. 

The euro fell 0.51% to at $1.0658, while the dollar index edged 0.34% higher to 102.89.

The Japanese currency has been weighed down by rising interest rates around the world at a time when the Bank of Japan remains wedded to keeping policy highly stimulatory. Japan’s shrinking current account surplus is also weighing.

 

 

 

COMMODITIES

 

 

Gold subdued on firm yields with U.S. inflation in focus 

 

 

Gold inched lower on Thursday pressured by elevated U.S. Treasury yields as the focus turned to U.S. inflation data for the Federal Reserve’s interest rate hike plan after the European Central Bank signaled a July increase. 

Spot gold was down 0.28% at $1,847.99 per ounce, little changed after the ECB decision. U.S. gold futures eased 0.36% to $1,849.9.

 

 

ENERGY

 

 

Oil slips on China lockdowns but stays near three-month highs 

 

 

Oil prices dipped on Thursday but still hovered near three-month highs after parts of Shanghai imposed new COVID-19 lockdown measures although China's stronger-than-expected exports in May offered a boost to the demand outlook. 

Brent crude futures for August fell 44 cents to $123.17 a barrel as of 12:11 p.m. EDT (1611 GMT), while U.S. West Texas Intermediate crude for July lost 62 cents, or 0.5%, to $121.26 a barrel.

 

 

STOCKS

 

 

Wall St falls as growth stocks struggle with inflation reading in focus 

 

 

Wall Street's main indexes fell in choppy trading on Thursday, as growth and bank stocks slipped amid weaker risk appetite ahead of a closely watched inflation report this week. 

Apple Inc (AAPL.O) and Amazon.com (AMZN.O) declined 1%, dragging the S&P 500 and the Nasdaq indexes lower. Bank of America (BAC.N) tumbled 2.5%, while the broader banks index (.SPXBK) shed 1.7%.

 

 

Alibaba shares drop 8% after Jack Ma’s Ant Group and regulator squash talk of revived IPO

 

 

Alibaba shares dropped 8% on Thursday after financial affiliate Ant Group said it currently has no plans to revive an IPO, and a key regulator said it had not conducted an evaluation on a potential listing. 

The tanking of the $35 billion Ant Group IPO in November 2020 marked the beginning of an intense 16 months of regulatory tightening from Beijing that has wiped billions of dollars of value from China’s domestic technology giants.

 

 

ANALYSIS

 

 

EUR/USD heading towards parity in 12 months – Danske Bank 

 

 

“For EUR/USD, ECB is provided some well-sought after clarity as to the entire likely policy path in to and including Q4. Further, this guidance appear quite in line with the market’s view. We are seeing a mild widening of credit spreads (higher Italian rates vs Germany) and during the press conference, and EUR/USD unwound some of the initial strength – likely due to the credit/risk aversion channel. This is well in line with the observation that FX strength upon hawkish central banks has faded rather fast and we have recently seen that in SEK, AUD and Eastern Europe. Also, EUR strength on ECB guidance has faded multiple events in the last 3-6 months.”

“In our view, this ECB meeting confirms our view that rate hikes are a global phenomenon intended to make markets rotate towards less risky positions and a lower EUR/USD spot is part of such a rotation. For Europe, widening spreads is also crucial to why EUR/USD heads south as we price in higher rates. Looking ahead, we continue to see EUR/USD towards 1.00 in 12m.” 

 

 

CHART

 

 

AUDUSD Near Term: Downside favored

 

 

Technical View: Short position below 0.723. Target 0.71. Conversely, break above 0.723, to open 0.729.

 

 

Comments: The pair breaks below support.

 

 

Source: Trading Central 

 

 

CALENDAR

 

 

*Times in GMT

 

 

Source: FX Street Economic Calendar

Footnotes
https://www.cnbc.com/2022/06/09/forex-markets-euro-japanese-yen-european-central-bank.html
https://www.cnbc.com/2022/06/09/gold-markets-us-treasury-yields-federal-reserve.html
https://www.reuters.com/markets/commodities/oil-hovers-near-13-week-high-robust-us-demand-china-optimism-2022-06-09/
https://www.reuters.com/markets/europe/futures-rebound-tesla-other-growth-stocks-gain-2022-06-09/
https://www.cnbc.com/2022/06/09/alibaba-shares-drop-after-jack-mas-ant-group-says-no-plan-for-ipo.html
https://www.fxstreet.com/news/eur-usd-heading-towards-parity-in-12-months-danske-bank-202206091608