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Oil prices up nearly $3/bbl as chances of OPEC+ supply boost dim

“There is no substitute for hard work.” — Thomas Edison 

 

 

HEADLINES

 

 

  • Dollar snares U.S. firms in $4 trln endurance test
  • Gold steadies off 3-week high as U.S. inflation data buoys dollar
  • Oil prices up nearly $3/bbl as chances of OPEC+ supply boost dim
  • Nasdaq, S&P 500 rise on upbeat forecasts from Apple, Amazon
  • Bitcoin hits 6-week high topping $24,000 in a post-Fed rally
  • USD/JPY: Capitulation looks overdone – TD Securities
  • USDJPY Near Term: Upside favored

 

 

Dollar snares U.S. firms in $4 trln endurance test

 

 

The strong dollar is becoming a test of nerves for global companies. From drugmaker Pfizer (PFE.N) to iPhone peddler Apple (AAPL.O) and crafty online marketplace Etsy (ETSY.O), executives say the U.S. currency’s rise to levels not seen in nearly 20 years is cutting into their profit. Some dismal earnings could lie ahead for firms that sell U.S. goods overseas. But weigh up the pros and cons, and the Teflon dollar is still in America’s interest.

The dollar has strengthened more than 15% in a year against an index that includes the yen, pound, Canadian dollar, euro, Swiss franc and Swedish crown – the fastest rate of increase since 2015. For one, the Federal Reserve’s aggressive interest rate hikes, including Wednesday’s 75-basis-point increase, have made holding dollar investments more appealing. And when investors fear global disease or war, as they do now, they tend to seek deep, liquid markets. For those, the United States remains nonpareil.

 

 

COMMODITIES

 

 

Gold steadies off 3-week high as U.S. inflation data buoys dollar

 

 

Gold steadied off a three-weak peak paring some gains as the dollar and yields ticked up, while investors gauged the fallout of another jump in U.S. inflation that could give the Federal Reserve more ammunition to aggressively hike rates.

Spot gold inched up 0.1% to $1,758 per ounce by 10:39 ET (1439 GMT), having earlier hit a peak since July 6 at $1,767.79.

U.S. gold futures rose 0.3% to $1,774.50 per ounce.

Higher rates increase the opportunity cost of holding non-yielding gold while boosting the dollar.

 

 

ENERGY

 

 

Oil prices up nearly $3/bbl as chances of OPEC+ supply boost dim

 

 

Oil prices rose nearly $3 a barrel on Friday as attention turned to next week's OPEC+ meeting and dimming expectations that the producer group will boost supply.

Brent crude futures for September settlement, due to expire on Friday, gained $2.79, or 2.6%, to trade at $109.93 a barrel by 12:10 p.m. EDT (1710 GMT) after touching their highest since July 5. The more active October contract was up $2.25, or 2.2%,at $104.11.

U.S. West Texas Intermediate (WTI) crude futures rose $2.79, or 3%, to $99.21 a barrel.

 

 

STOCKS

 

 

Nasdaq, S&P 500 rise on upbeat forecasts from Apple, Amazon

 

 

The Nasdaq and the S&P 500 indexes rose on Friday and were on track for their biggest monthly gain in nearly 20 months, after upbeat earnings updates from Apple and Amazon and on hopes of a less aggressive monetary policy.

Mega-cap companies have largely fared better this reporting season and are predicting less impact from the current economic turmoil, allaying investor fears that a potential recession could dent their earnings power.

By early afternoon, Apple Inc (AAPL.O) shares gained 2.9% after the company said parts shortages were easing and that demand for iPhones was unceasing despite consumers tightening other spending.

 

 

Bitcoin hits 6-week high topping $24,000 in a post-Fed rally

 

 

Bitcoin hovered around $24,000 on Friday, hitting a 6-week high as it continues to follow stock markets higher.

The world’s largest digital currency reached $24,412 on 2:30 a.m. ET on Friday, according to CoinDesk data, its highest level in more than six weeks. Bitcoin has since pared some of those gains and sat just above $24,000 in midday trading.

Bitcoin’s rally began after the Federal Reserve hiked interest rates on Wednesday, but signaled that the pace of such rises could slow. This sparked a rally in U.S. equities.

 

 

ANALYSIS

 

 

USD/JPY: Capitulation looks overdone – TD Securities

 

 

“While we think the USD is on course for a tactical pause that should benefit CHF and JPY, the capitulation in USDJPY looks overdone especially given our expectations for upcoming event risks. A stronger than expected ECI print suggests that the market may be premature in expecting the Fed to pivot on policy. We think the market is still underpricing the Fed's terminal rate.”

“The broad USD is also strongly correlated US data surprises and the July payrolls report is likely to fairly constructive. We are also concerned that the upcoming parade of Fed speak will lean hawkish and pushback against a premature pivot. Broadly speaking, we see 135 as an anchor for the pair relative rate spreads.”

 

 

CHART

 

 

USDJPY Near Term: Upside favored

 

 

Technical View: Long position above 133.1. Target 134.8. Conversely, break below 133.1, to open 132.5.

Comments: The pair is expected to resume advance after correction.

Source: Trading Central 

 

CALENDAR

 

 

*Times in GMT

Source: FX Street Economic Calendar

Foodnotes

https://www.reuters.com/breakingviews/dollar-snares-us-firms-4-trln-endurance-test-2022-07-29/
https://www.reuters.com/article/global-precious/precious-gold-bounces-back-as-dollar-retreats-idUSL4N2ZA381
https://www.reuters.com/business/energy/oil-prices-rise-tight-supply-attention-turns-opec-meeting-2022-07-29/
https://www.reuters.com/markets/europe/nasdaq-futures-surge-apple-amazon-hold-out-against-weak-consumer-spending-2022-07-29/
https://www.cnbc.com/2022/07/29/bitcoin-btc-price-rises-following-stocks-higher-in-a-post-fed-rally-.html
https://www.fxstreet.com/news/usd-jpy-capitulation-looks-overdone-td-securities-202207291426

 

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