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The U.S. dollar traded overall mostly unchanged against other major currencies as seen in the performance of the USDX. A reversal was seen in some emerging market currency pairs with the USD/ZAR, USD/MXN and USD/CNH trading lower, while at the same time a strong upwards momentum could be observed in the USD/INR market.
As many analysts have expected, the Turkish consumer prices index (CPI) further increased in July, with the year-on-year price growth amounting to 79.6%, while the producer price index (PPI) increased by whooping 114.6% y/y in July. Despite these developments the USD/TRY rate remained almost unchanged, trading mostly around or below 18.0.
Precious metals like gold, silver and platinum continued slowly to recover after the drop from Tuesday, while palladium prices remained depressed down by more than five per cent compared to the closing rate of last week.
Stock market indices like the US 500, Europe 50 and Japan 225 (Yen) traded for the first time this week clearly higher on Wednesday, while the China A50 index a new eight weeks low.
On Thursday in the U.S. weekly jobless claims numbers will be published. Also trade balance data for the U.S. and Canada will be released.
The EUR/USD rate traded lower in the morning hours on Wednesday, though at the end of the day the pair remained almost unchanged just above the 1.015-mark.
Fundamentals from the eurozone were a bit mixed with the German trade balance significantly improving in June to a surplus of €6.4 billion, driving by a strong increase in experts. PMI numbers for Germany might have been slightly better than anticipated with the composite PMI improving from 48.0 to 48.1 and the services PMI rising from 49.2 to 49.7, but in some other regions of Europe sentiment was a bit better such as in France where the services PMI improved to 53.2.
More potentially important fundamentals for the eurozone can be expected by Friday when Germany, France and Italy publish their respective industrial production data for June.
The pound sterling (GBP) traded almost unchanged on Wednesday in line with the trend among major currencies with the USDX index also remaining mostly unchanged towards the end of the day. While some European countries’ PMI figures released on Wednesday were better then anticipated, the UK composite PMI and service PMI both declined to 52.1 and 52.6 respectively. Though overall these results are still better than service PMI readings from Germany and Italy as both are now below the 50-threshold, indicating overall rather negative expectations from purchase managers.
The Bank of England (BoE) is set to announce its monetary policy decision on Thursday. Given the fact that analysts expect the central bank now to hike by 50 basis points towards a rate of 1.75%, this would be the steepest hike in 27 years if the BoE goes through with this. Consistently high rates of inflation, with the last reading amounting to 9.4% (target is around two per cent) is seen as a key driver for central banks around the world to tighten monetary policies while a tight job market (UK unemployment rate in May declined to 3.8%) makes such policies seem feasible for the time being.
Oil prices were once again subject to significant intraday volatility with the daily price range of WTI crude oil CFDs amounting to 6.8% on Wednesday. While prices were initially moving higher on the OPEC+ decision to raise outputs in September by only a hundred thousand barrels per day explaining the move also with a lack of spare capacity, prices strongly declined in the following hours, especially after the weekly data from the Energy Information Administration (EIA) was published.
EIA statistics showed an unexpected increase in crude oil inventories, amounting to 4.5 million barrels over the past reporting week. This might have been a significant development for some traders, especially as the statistics published on Tuesday by the American Petroleum Institute (API) indicated a build in crude oil stockpiles amounting to almost 2.2 million barrels.
After a sluggish performance at the beginning of the week major U.S. stock market indices like the US 500 and especially the US Tech 100 broke out higher with the latter reaching even a new three months high. Indices were trading already gradually higher in the morning hours and later on during the regular trading session accelerated on the upwards momentum. Fundamental data like factory orders for June and the ISM Non-Manufacturing index were both better than expected. While analysts expected both indicators to decline the factory orders statistic improved from 1.6% m/m growth to 2.0% m/m growth, while the ISM Non-Manufacturing index rose from 55.3 to 56.7.
CVS Health (+6.54%) opened significantly higher after exceeding expectations for its earnings both for its top and bottom line with especially the revenue significantly outperforming at $80.64 billion and same-store sales improved by eight per cent compared to the previous year, while investors expected almost a flat growth.
Moderna (+15.82%) also was good for a positive earnings surprise with the stock being by far the best-performing component of both the S&P 500 and NASDAQ Composite Index with the company’s earnings at $5.24 per share (adjusted) and revenue at $4.7 billion exceeding expectations by a double-digit percentage though the company also had to announce a write down amounting to almost half a billion dollars for expiring vaccines.
On Thursday companies including ConocoPhillips, Paramount Global, Playtika, Alibaba, Eli Lilly & Co, Kellogg, AMC Entertainment, Cloudflare, Carvana, Virgin Galactic, Lyft, Atlassian, Universal Display, DoorDash, Dropbox, Twilio, Chegg, Beyond Meat, Expedia and others are publishing their respective quarterly results.
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