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Nasdaq rises on positive earnings signals as inflation concerns loom

 

 

“If you really look closely, most overnight successes took a long time.”— Steve Jobs 

 

HEADLINES

 

  • Sterling shrugs off UK inflation surge
  • Gold edges down as dollar holds ground
  • Oil slips on lackluster U.S. summer gasoline demand
  • Nasdaq rises on positive earnings signals as inflation concerns loom
  • Coinbase jumps 10% after saying it has no exposure to bankrupt crypto firms
  • EUR/USD likely to revisit levels back below parity again – MUFG
  • USDJPY Near Term: Downside favored

 

 

Sterling shrugs off UK inflation surge

 

Sterling steadied against the U.S. dollar and euro on Wednesday after data showed British inflation climbed to its highest rate in 40 years, but only slightly above forecast.

The inflation data bolstered bets that the Bank of England will opt to raise interest rates by 50 basis points (bps) next month, but moves for sterling were limited because a 50 bps increase had been priced in, traders said.

Sterling edged 0.1% higher against the euro at 85.12 pence by 1504 GMT, having slipped in earlier trade to its lowest level against the single currency since July 7.

 

 

COMMODITIES

 

Gold edges down as dollar holds ground

 

Gold slipped into a tight range on Wednesday as a steady dollar countered limited support for bullion from expectations that the U.S. Federal Reserve may not resort to a 100-basis-point interest rate hike next week.

Rising interest rates increase the opportunity cost of holding gold, which pays no interest.

The dollar edged 0.1% higher, limiting gold’s appeal among overseas buyers.

Gold had a slightly positive start this week as market expectations of a full percentage point rate hike by the Fed dimmed. However, lately the precious metal has failed to attract many safe-haven flows as investors opted for the dollar.

 

 

ENERGY

 

Oil slips on lackluster U.S. summer gasoline demand

 

Oil prices slipped on Wednesday, after U.S. government data showed lower gasoline demand during the peak summer driving season and as interest rate hikes by central banks to fight inflation fed fears the economy could slow, cutting energy demand.

However, prices pared losses during the session after TC Energy said that the Keystone pipeline, one of Canada's major oil export arteries, was operating at reduced rates for a third day on Wednesday. Repairs continued on a third-party power facility in South Dakota, prompting concerns about tighter supplies.

The more active September WTI contract was at $100.20 a barrel, down 54 cents.

 

 

STOCKS

 

Nasdaq rises on positive earnings signals as inflation concerns loom

 

The tech-heavy Nasdaq climbed over 1% on Wednesday as investors digest the latest earnings as positive signals of the economy, albeit rising concerns on inflation and a tightening Fed.

The S&P 500 edged up 0.39% while the Dow Jones Industrial Average slipped 0.12%.

Netflix Inc's (NFLX.O) shares jumped 6% after the company predicted it would return to customer growth during the third quarter, while posting a smaller-than-expected 1 million drop in subscribers in the second quarter.

 

Coinbase jumps 10% after saying it has no exposure to bankrupt crypto firms

 

Coinbase said it had no counterparty exposure to several collapsed crypto firms, seeking to allay fears about the impact of a liquidity crisis in the industry on its business.

Coinbase “had no financing exposure” to Celsius, Three Arrows Capital and Voyager Digital, the company said in a blog post Wednesday. Each firm filed for bankruptcy protection after a plunge in digital token prices set off a cascade of liquidations in highly leveraged positions.

Shares of the company climbed 10% following the statement.

 

 

ANALYSIS

 

EUR/USD likely to revisit levels back below parity again – MUFG

 

“While the US economy looks to be slowing as rate hikes begin to impact sentiment in housing activity, the Fed looks set to hike by 75bps next week which will provide support for the dollar. Only when the FOMC clearly signals a change in policy approach by pausing its tightening cycle will the dollar turn weaker.”

“The US rate market is still expecting more front-loaded Fed tightening. The Fed is now expected to deliver two more 75bps hikes in July and September before slowing the pace of hikes in November and lifting the policy rate to a peak of 3.50% by year end.”

“The main upside risk to our bearish EUR/USD bias could be triggered by a paring back of energy supply concerns in Europe. The EUR would receive a lift if natural gas supply from Russia returns to more normal levels after the NordStream 1 pipeline maintenance period comes to an end. The EUR could be boosted as well by more decisive policy action from the ECB. A combination of a larger 50bps hike this month and convincing plans to keep a lid on fragmentation risk would create a more supportive environment for the EUR especially if snap elections in Italy are avoided as well.”

 

 

CHART

 

USDJPY Near Term: Downside favored

 

Technical View: Short position below 138.4. Target 137.8. Conversely, break above 138.4, to open 138.6.

Comments: The pair remains under pressure. Further weakness favored.

 

 

Source: Trading Central 

 

 

CALENDAR

 

*Times in GMT

 

 

Source: FX Street Economic Calendar


 

SOURCES

https://www.reuters.com/markets/europe/sterling-stabilises-vs-dollar-euro-uk-inflation-surges-2022-07-20/
https://www.reuters.com/article/global-precious/precious-gold-prices-dip-as-dollar-holds-ground-idUSL4N2Z12QJ
https://www.reuters.com/business/energy/oil-falls-inflation-concerns-anticipated-stock-builds-2022-07-20/
https://www.reuters.com/markets/europe/futures-slip-after-strong-gains-wall-street-2022-07-20/
https://www.cnbc.com/2022/07/20/coinbase-says-has-no-exposure-to-collapsed-crypto-firms-celsius-3ac.html
https://www.fxstreet.com/news/eur-usd-likely-to-revisit-levels-back-below-parity-again-mufg-202207201648