The NFP report was slightly disappointing overall (372k June payroll gain & -74k in downward revisions). USD & Yields spiked, with USDIndex 107.59. Fed funds futures are dropping as the jobs report gives no reason for the FOMC to slow its policy trajectory, keeping a 75 bp hike at the July 26-27 FOMC intact and 50 bp move at the September 20-21 meeting. Stocks remain under pressure. Asian stocks struggled further overnight, with China bourses once again hit by lockdown concerns. Chinese CPI hotter at 2.5% vs 2.1%, but PPI cooler 6.15 vs 6.4%. COT report shows long positions on USD were reduced.
China discovered its first case of a highly transmissible Omicron subvariant in Shanghai and that new cases jumped to 63 in the country’s largest city from 52 a day earlier.
- USDIndex is heading for a new 20 year high – eased a bit at 107.23.
- Yields: The 2-year rate is up over 3.119%, 3-year at 3.165% & 10-year higher at 3.095%.
- Stocks : USA30 was down -0.15%, while the USA500 was off -0.08%. The USA100 rose 0.12%. In Europe, the picture is not much better and GER40 and UK100 futures are down -1.4% and -1.0%. Twitter fell 5% (with more to come) after MUSK withdrew the $44bln offer. The market mood will be tested by earnings from JPMorgan and Morgan Stanley on Thursday, with Citigroup and Wells Fargo the day after.
- Oil prices fell slightly today reversing some gains amid lockdown fear in China, i.e. concerns about tight supply. USOIL at $102.96 – New mass COVID testing in China potentially hitting demand.
- Gold steady for a 3rd day at $1,732-$1,750.
- FX Markets: USDJPY at 137.26 – 24-year high. Japan’s ruling conservative coalition’s strong election showing indicated no change to lose monetary policies.
Today – Fed’s Williams speech.
Biggest FX Mover @ (06:30 GMT) EURUSD (–0.62%) down to 1.0105. MAs aligning lower, MACD histogram negative & declining, RSI 31, H1 ATR 0.0014, Daily ATR 0.01032.
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Andria Pichidi
Market Analyst
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