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One of the major indices spikes after upbeat NFP

 

Monday, July 11, 2022

The news shaping the markets today

Russia’s rockets hit an apartment block in Ukraine’s eastern Donetsk region, killing at least 15 people. Around two dozen people are reportedly trapped in the five-story apartment. The news sent the safe-haven US dollar index higher this morning.


Irish BNP Paribas Real Estate Construction PMI fell to 46.4 in June, from 51.5 in the previous month. This being the first decline in construction activity since April exerted pressure on the EUR/USD forex pair.


Japan’s private-sector machinery orders fell 5.6% in May, recording their first decline in three months, which sent the JPY/USD pair lower in forex trading this morning.


China’s annual inflation rate accelerated to 2.5% in June, from 2.1% a month ago. This being the highest reading since July 2020 exerted pressure on the CNY/USD forex pair.


New Zealand’s electronic card transactions increased 1.9% year-over-year to NZ$6,043 million in June, following 0.7% growth a month ago. However, the NZD/USD pair declined in forex trading this morning.

 

What’s happening: US stocks closed mixed on Friday following the release of nonfarm payrolls (NFP) data.

What happened: The US economy added higher-than-expected jobs for June, increasing speculations of faster rate hikes by the Federal Reserve.

One of the major indices closed higher on Friday, recording gains for five consecutive sessions for the first time this year.

Why it matters: The US Bureau of Labor Statistics said nonfarm payrolls climbed 372,000 in June, following 384,000 additions in May. The latest figure came in much better than the consensus estimate of 250,000 job additions, indicating that the US labour market is continuing its strong run.

Average hourly earnings rose by 10 cents, or 0.3%, to $32.08 in June, in-line with market expectations. The unemployment rate was unchanged at 3.6%, remaining at the lowest level since February 2020.

With the strong jobs report being a positive indication for the US economy, several experts said it would allow the Fed to increase rates more aggressively in a bid to combat soaring inflation.

US Treasury yields increased following the data, with the 10-year yield climbing above the 3% level. Healthcare stocks were among the top performers on Friday. Some of the growth sectors, including consumer discretionary stocks, came under slight pressure, while homebuilders stocks provided support to the overall market.

Shares of Tesla gained around 2.5% on Friday after the electric vehicle maker reported sales of 78,906 China-made vehicles in June, representing a 138% year-over-year surge. Big tech stocks including Apple and Alphabet also closed slightly higher. However, Twitter’s shares fell around 5% following reports of Elon Musk looking to back out of his takeover of the social media company.

The Nasdaq 100 rose 0.12% to close at 11,635.31 on Friday, representing the fifth straight session of gains, for the first time in 2022.

The Dow Jones index shed 46.40 points, or 0.15%, to settle at 31,338.15, while the S&P 500 slipped 0.08% to 3,899.38. The 30-stock index recorded a weekly gain despite closing in the red on Friday.

What to watch: Investors await the second-quarter earnings season, with major banks due to report their results this week. The consumer price index for June, scheduled for release on Wednesday, will also remain in focus.

The markets today

Bitcoin will be in focus today after recording gains last week

Context: Bitcoin recorded gains last week, moving above the $22,000 resistance level.

Details: The price of the world’s biggest and best-known cryptocurrency recovered slightly last week, with experts saying Bitcoin had reached a bottom and an overall improvement in investor risk appetite.

Although investors had been concerned about the US Federal Reserve’s commitment to tighten its monetary policy, they reacted positively to minutes from the latest Federal Open Market Committee meeting released late Wednesday.

Market sentiment was also lifted by better-than-expected nonfarm payroll data released on Friday.

Bitcoin surged around 13% over the seven-day trading week starting Sunday. The price jumped past the $22,400 level, moving higher from a low of around $17,000 during June. However, the cryptocurrency is still down around 70% from its all-time high of $68,982.20 hit in November last year.

Bitcoin hovered around the $22,000 level on Friday, up around 23% from this year’s low of $17,592.78 recorded on June 18. Ethereum, the world’s second-largest cryptocurrency, also recorded gains last week.

What to watch: Investors will look out for Bitcoin’s next resistance level of $23,000. If the price moves above that level, it is expected to surge quickly to $28,000.

Other Markets: European trading indices closed higher on Friday, with the FTSE 100, DAX 40, CAC 40 and STOXX Europe 600 up by 0.10%, 1.34%, 0.44% and 0.51%, respectively.

Support & resistances for today

Technical Levels News Sentiment
EUR/USD – 1.0143 and 1.0152 Positive
AUD/USD – 0.6821 and 0.6836 Positive
WTI Crude Oil – 103.18 and 104.53 Negative
Dow Jones – 31286.25 and 31401.69 Negative
Nikkei 225 – 26867.84 and 27008.34 Negative

Market snapshot

Futures at 0400 (GMT)
EUR/USD (1.0142, -0.45%) Dow ($31,171, -0.44%) Brent ($106.29, -0.7%)
GBP/USD (1.1984, -0.42%) S&P500 ($3,879, -0.56%) WTI ($103.84, -0.9%)
USD/JPY (137.13, 0.76%) Nasdaq ($12,068, -0.70%) Gold ($1,738, -0.3%)

What else to watch today

Japan’s machine tool orders, Italy’s retail sales, Turkey’s total motor vehicles production, Russia’s current account, China’s new yuan loans, outstanding yuan loan growth, total social financing and money supply M2, as well as Central Bank of Brazil’s focus market readout.


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