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The US dollar extended losses after breaking a long-term ascending channel base yesterday. The British pound rallied on yet another stronger than expected wages growth data released yesterday morning. The USDJPY slipped below 140 and the USDCAD is testing the 1.32 support.
The US inflation data will determine whether the US dollar should further depreciate or is it time for correction. The consumer price index in the US is expected to have fallen to 3.1% from 4% printed a month earlier. But unfortunately, it won’t be enough to prevent the Fed from further rate hikes, because the further fall in...

The week started on a cautious note as European and US stocks eked out small gains, but appetite was limited appetite on news that the new capital requirements for the US banks would be tougher.
The good news is that big banks like JP Morgan and Citi didn’t react aggressively to the news, and even more reassuring news is that the smaller, regional bank stocks tempered the news quite well as well. Pacwest for example lost only around 1% and Invesco’s KBW index even closed the session slightly higher.
Other than that, it was a day of digesting and scaling...

Asia began the trading week digesting the news of a softer-than-expected NFP read, faster-than-expected wages growth in the US, combined with deflation in Chinese consumer and producer prices.
Due Wednesday, US inflation is expected to have fallen from 4% to around 3% in June, with a possibly uptick in the monthly data. But core inflation could prove stickier at around the 5% mark. In all cases, softening, and ideally softer-than-expected inflation figures carry the potential of pushing the Fed hawks back. That could give quick support to the US stocks which ended the first week of July, and the first...

Minutes from the Federal Reserve’s (Fed) latest policy meeting were more hawkish than expected. The minutes revealed that some officials preferred another 25bp hike right away instead of a pause. Almost all of them said that additional hiking would likely be appropriate, and the forecasts showed that they also expect mild recession.
The minutes came to confirm how serious the Fed is in further tightening monetary conditions, and boosted the Fed hike expectations. The US 2-year yield came very close to 5%, the stocks fell, but very slightly. The S&P500 closed the session just 0.20% lower, while Nasdaq 100 gave...

European markets were mostly flat; the Stoxx600 remained close to its 50-DMA, while the FTSE 100 remained offered near its 200-DMA, near the 7544 level. The FTSE has been one of the biggest laggards of the year, as capital flew into the tech stocks but a rotation from tech to value could throw a floor under the FTSE100’s selloff.
The barrel of oil remains sold near the 50-DMA as OPEC meeting with industry heads is due today. Everything that involves OPEC is an upside risk to oil prices.
Also today, the Federal Reserve (Fed) will release the minutes of its...

Saudi Arabia and Russia couldn’t wait the next OPEC meeting to announce further production cuts. Saudi announced that it will extend the 1mbpd cut into August – and maybe further – while Russia said it will reduce its production by half a million.
China imposed restrictions on exports of two chipmaking metals, gallium and germanium, that are used in EVs, defense and displays.
Geopolitical tensions barely boosted gold, or weighed on stock valuations, though the US 2-year yield flirted with the 5% mark.
Elsewhere, the Reserve Bank of Australia (RBA) kept rates unchanged at today’s monetary policy meeting, a no...

The first half of the year ends on a positive note for equities and not so much for the bonds. This is the exact opposite of what was predicted. The S&P500 hit a fresh year high at the last trading day of the first half and gained more than 17% so far this year, while Nasdaq 100 soared more than 40%! Apple hit $194 per share, and closed last week with a valuation above $3 trillion.
Of course, this incredible performance makes many investors wonder whether the equity rally could continue in the second half.
This week, US jobs data,...

Economic data released in the US yesterday further fueled the hawkish Federal Reserve (Fed) bets. The US 2-year yield jumped more than 3% to 4.90% for the first time since the mini banking crisis. The probability of a 25bp hike from the Fed in the July meeting jumped to 87%, while the pricing in the market suggests that the Fed’s two rate hikes are now likelier than not.
And perhaps because the aggressive Fed tightening doesn’t impact economic strength as badly ass expected, stock investors saw no urgence in selling their stocks on rising hawkish Fed expectations.
Yet, a further...

US and European stocks were up on Wednesday. The US chipmakers dampened appetite across the Atlantic Ocean on news that the Biden Administration will bring more restrictions to the US chipmakers’ exports toward China, but Nasdaq still eked out gains.
Elsewhere, the major central bankers’ speeches were the same background music. The Federal Reserve’s (Fed) Powell, the Bank of England’s (BoE) Bailey, and the European Central Bank’s (ECB) Lagarde agreed that their fight against inflation wasn’t done yet, and that more rate hikes are on the pipeline, especially now that the US banks passed the Fed’s stress test. In Japan,...