Europe Roundup: Sterling retreats as UK inflation hits new 40-year high, European shares fall,Gold extends fall, Oil slumps by around $5-June 22nd,2022

Posted at 22 June 2022 / Categories Market Roundups

Market Roundup

•UK May CPI (MoM) 0.7%, 0.6%  forecast, 2.5% previous

•UK May PPI Output (MoM)  1.6%, 1.5% forecast, 2.2% previous

•UK May Core CPI MoM (MoM)  0.5%,0.6% forecast, 0.7% previous

•UK May CPI (YoY)  9.1%, 9.1%  forecast, 9.0% previous

•UK May RPI (YoY) 11.7%, 11.4% forecast, 11.1% previous

•UK May PPI Input (MoM) 2.1%, 1.9% forecast, 1.1% previous

•UK May PPI Input (YoY) 22.1%, 19.4%forecast, 18.6% previous

•UK May Core PPI Output (YoY)  14.8% forecast, 13.0% previous

Looking Ahead Economic Data(GMT)

• 12:30 Canada May Core CPI (MoM)  0.4% forecast, 0.7% previous

• 12:30 Canada May Core CPI (YoY)  5.9% forecast,5.7% previous

• 12:30 Canada May CPI (YoY ) 7.4% forecast, 6.8% previous

• 12:30 Canada May CPI (MoM) 1.0% forecast, 0.6% previous

• 14:00 EU Jun Consumer Confidence  -20.5 forecast, -21.1 previous

Looking Ahead - Events, Other Releases (GMT)

•12:30 EU German Buba Mauderer Speaks

•13:00   Swiss SNB Chairman Thomas Jordan speaks

•13:30 US  Fed Chair Powell Testifies     

•14:40   Canada BoC Senior Deputy Governor Rogers Speaks

•15:30 US  FOMC Member Harker Speaks           

•17:30 US FOMC Member Barkin Speaks


EUR/USD: The euro dipped on Wednesday as investors turned to the safe haven dollar as part of a move away from riskier assets which also saw a stock market rally fizzle out, and after data showed British consumer price inflation hit a new 40-year high. With investors turning nervous again about global growth prospects, the U.S. dollar gained ground on most peers. ECB Vice President Luis de Guindos said on Wednesday the tool to combat rising government debt yields in some euro zone countries should not interfere with the bank’s aim to control inflation. Investors awaited the start of U.S. Federal Reserve Chair Jerome Powell's two-day testimony to Congress, with investors looking for further clues on whether another 75 basis point rate hike is on the cards at the Fed's July meeting. Immediate resistance can be seen at 1.0574(38.2%fib),an upside break can trigger rise towards 1.0600(June 16th high).On the downside, immediate support is seen at 1.0471(23.6%fib), a break below could take the pair towards 1.0376(Lower BB).

GBP/USD: The British pound pulled back on Wednesday after data showing UK consumer inflation hit new 40-year high raised fresh worries over an economic slowdown, just as the Bank of England looks set for more interest rate hikes in the coming months. The figure was in line with market expectations and following its release money markets continued to fully price in a 25 basis point (bps) BoE rate hike in August. Sterling fell against a stronger U.S. dollar but came off near one-week lows hit shortly after the data. By 0927 GMT it was down 0.3% at $1.2255 following two days of gains. Immediate resistance can be seen at 1.2295(50%fib),an upside break can trigger rise towards 1.2405 (61.8%fib).On the downside, immediate support is seen at 1.2180(38.2%fib), a break below could take the pair towards 1.2051(23.6%fib).

 USD/CHF: The dollar initially gained against the Swiss franc on Wednesday but gave up ground as investors rushed into safe-haven assets as risk appetite dropped on persistent worries about the economic outlook. Investors will focus on Federal Reserve Chair Jerome Powell’s testimony before the Senate Banking Committee later in US session. The U.S. central bank is poised to deliver another bigger-than-usual rate hike in July as it seeks to tame inflation at more than three times its 2% goal. Powell is due to start his testimony to Congress on Wednesday with investors looking for further clues about whether another 75-basis-point rate hike is on the cards in July. Immediate resistance can be seen at 0.9683 (5DMA), an upside break can trigger rise towards 0.9759(38.2%fib).On the downside, immediate support is seen at 0.9640 (50%fib), a break below could take the pair towards 0.9495(61.8%fib).

 USD/JPY: The dollar dipped against Japanese yen on Wednesday after some BOJ members warned of damage from excess FX moves. Some Bank of Japan board members were concerned that excessive currency volatility could disrupt corporate business plans, minutes of the bank's April meeting showed, highlighting the challenge for policymakers from the yen's sharp declines.But many board members stressed the need to maintain the BOJ's massive stimulus programme to support a still-fragile economy, the minutes released on Wednesday showed, a sign they saw no need to tweak Japan's ultra-low interest rates to stem the yen's slide. Strong resistance can be seen at 136.64 (23.6%fib), an upside break can trigger rise towards 138.08(Higher BB).On the downside, immediate support is seen at 135.15(5DMA), a break below could take the pair towards 134.09(38.2%fib).

Equities Recap

European stocks fell sharply on Wednesday as inflation and interest-rate worries returned to haunt investors.

At (GMT 10:52 ),UK's benchmark FTSE 100 was last trading down at 1.30 percent, Germany's Dax was down by 1.96  percent, France’s CAC was down by 1.67   percent.

Commodities Recap

Gold prices fell for a fourth consecutive session on Wednesday, as the dollar ticked up and investors looked for more cues on monetary policy strategy when Fed Chair Jerome Powell sits down in front of Congress later in the day.

Spot gold fell 0.5% to $1,823.61 per ounce by 0859 GMT, while U.S. gold futures dropped 0.7% to $1,825.70.

 Oil prices tumbled on Wednesday amid a push by U.S. President Joe Biden to cut taxes on fuel to cut costs for drivers amid aggravated relations between the White House and the U.S. oil industry.

Brent crude futures were down $4.65, or 4.1%, at $110.00 a barrel while U.S. West Texas Intermediate (WTI) futures fell $5.08, or 4.6%, to $104.44by 0918 GMT.

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