Market Drivers – US Session – July 18

EUR/USD was down in late New York trade but overall little changed after failing to breakout of last week’s highs again although hitting 1.12750, the highest since Feb. 2022 although failed to hold bullish above the 61.8% Fibo of the 2021-22 collapse at 1.1271.

USD/JPY  was higher after Ueda dashed hopes the BoJ would raise its JGB yield cap next Friday. Traders await Japan’s CPI on Thursday, although Ueda’s stance is more key. the pair is now supported and eyes a bullish correction into the sell-off.

The Pound was pressured in what has been considered a highly overbought market and fell 0.25% vs. the dollar while UK gilt yields were falling. Traders will be looking to Wednesday’s UK core CPI which will be key with respect to the Bank of England, BoE, hiking by either 25bp or 50bp at August’s meeting. GBP/USD is testing below 1.3050 and correcting into the daily trend’s in-the-money longs.

BTC/USD, was down $136.88 or 0.46% to $29794.96 in its worst three-day stretch since the three days ending July 7, 2023 when it fell 1.78%. It is down 1.74% over this three-day period.

After the United States reported that retail sales increased less than anticipated last month, gold prices increased to a six-week high. The strong increase in crude oil and petrol prices was fueled by Alpha BBL’s forecast that the weekly EIA report for the week of July 14 will show a decrease of -3.3 million barrels (bbl) in crude supply at Cushing, the delivery point for WTI futures. WTI surged, reaching a high of $75.92.

Economic Data

Tuesday saw a recovery in the US Dollar versus a basket of currencies from a 15-month low after core retail sales increased significantly in June. Core sales held up well in June, rising 0.6%. Additionally, May’s data was significantly revised upwards to reflect a core Retail Sales increase of 0.3% rather than the previously reported 0.2%. While 2-year bund yields fell 9.4 bps, two-year Treasury yields turned around a 9 bps down to a 2 bps rise.

What to watch on Wednesday?

The early New Zealand CPI data will be issued immediately following the rollover, in thin market conditions and with inconsistent spreads, making it a difficult event to trade. This data will be watched closely during the Asian session.

New Zealand’s quarterly Consumer Price Index (CPI) publication is still of great importance because the Reserve Bank of New Zealand’s (RBNZ) inflation objective is close to the midpoint of 2%. Consumer pricing trends frequently have an impact on RBNZ’s decision to set interest rates, which has a significant impact on the value of the New Zealand dollar. If inflation picks up speed, the RBNZ may tighten rates more quickly, and vice versa. Actual results exceeding expectations makes NZD bullish.

Also Read:

Gold prices climb to six-week high amid rate hike speculations

USD/CHF retreats post-US Retail Sales data

WTI back above $75.00 post-US Retail Sales data

What could investors expect from Q2 earnings season?

US dollar stays resilient as investors digest latest US data