July 23 Market Update - Dollar struggles, European FX gain ahead of PMIs

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July 23 Market Update – Dollar struggles, European FX gain ahead of PMIs

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The dollar is recovering from the Asian session dip as the safe-havens continue the recovery from Wednesday’s sell-off. Overall, the week has been mixed.

Equities

Equities in the US are on the back of the third consecutive profitable day – recovering sharply from Monday’s massive sell-off when delta covid cases and deaths shocked the market. However, the recovery has been swift, although the latest developments haven’t disclosed significant positivity from the covid front. The market mood seems to be basking on the unending support the banks and governments are ready to provide if cases turn even worse. Also, US equities have been largely supported by the tech company earnings.

Dollar

After rejecting 93, the dollar index has been downbeat since Wednesday as the market snubbed the Covid impact. However, it bounced off 92.5 on Thursday and is now on course to retest 93 as pre-London hours eliminated the minor dips of the late Thursday NY and Friday Asian sessions driven by disappointing jobless claims data.

FX

The ECB dragged the Euro down on Thursday with series of dovish outlooks. Meanwhile, the sterling has been sideways while the Swissy tries to accumulate fresh rallies after falling for two days.
Save-haven Yen resumed the sell-off on Thursday. However, the momentum in the Asian session was very low as Japanese banks are closed today to observe Health-Sports Day.
High-beta AUD is down pre-London after the PMI figures missed estimates. NZD and CAD, on the other hand, remain firm as the market closes the week on the risk-on sentiment.

Commodities

Gold continues to struggle and trades majorly within the 1793 and 1808 range for most of Thursday. 1800 remains attractive to sellers as rising yield could force a break below the key support again.
On the other hand, the Oil market continues to recover from the July sell-off. WTI trades close to $72 after gaining over 2% on Thursday.

Cryptos

Bitcoin and other cryptos haven’t relented on the current recovery. Bitcoin hit above $33,000. Minor correction might happen today before the next surge. The premier crypto is still stuck in the almost 3-month range after the sell-off in the large part of April and May. So far, the month is still red (-6% at the time of writing). If a break above $35,000 doesn’t happen by the end of the next week, Bitcoin will have declined for the 4th consecutive month – ist time since the end of the 2018-19 bearish phase.

Today’s big event

Retail Sales – UK and Canada

Markit PMIs – US, UK and Eurozone

Today’s Forecast

The dollar index could hit 93 again today before the next dip. We will have to see how fast that happens. However, Yen might be uneventful today as a result of the holidays.
Meanwhile, European currencies (EUR, GBP & CHF) are expected to fight back especially if the Markit PMIs are good. While CAD could rally further as oil prices mount post higher figures, Aussie and NZD could falter off their key index resistance levels. Pairing strong and weak currencies is a good way of picking a watchlist.

Disclaimer: This communication is for informational purposes only and should not be viewed as any form of recommendation as to a particular course of action or as investment advice. It is not intended as an offer or solicitation for the purchase or sale of any financial instrument or as an official confirmation of any transaction. This communication has been prepared based upon information, including market prices, data, and other information, believed to be reliable; however, TigerWit does not warrant its completeness or accuracy. Trading CFDs involve risk and can result in loss of capital.

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