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The markets wobbled early European session with investors cautious ahead of the ECB policy meeting. Political chaos in Italy weighs market sentiment as Italian PM Marion Draghi resigns. Investors are closely watching ECB’s guidance between a 25bps and 50bps hike amid inflation skyrocketing to 8.6% in June. Russia’s Nord Stream gas supplies resumed trading today.
EURJPY rallied by +0.38% early in the European session ahead of ECB’s interest rate meeting. The markets are pricing in more than 25bps at the meeting today as the Euro-Area battles soaring inflation. Moreso, BoJ governor Kuroda maintained an ultra-loose policy giving a boost to EURJPY bids. The pair bounced off a 140.70 level and bulls are targeting the 142.00 psychological resistance. A break above that high could reinforce the bullish outlook towards the 144.00 resistance.
GBPNZD soared by +0.37% bouncing from a 14-week low as the negative New Zealand trade balance gives bulls a lift. The NZD trade balance Y/Y for June dropped from -9.560M to -10.510M indicating a slump in exports as the Chinese lockdown slows commodity demand. The pound remains resilient as inflation jumped to 9.4% from a previous reading of 9.1% in June.
Bulls retracted from 1.91500 support and upside gains are capped by the 1.9300 psychological barrier. A failure to hold above the near-term support could invalidate the bullish retracement to the upside and the target will be at the 1.9000 level. Investors shift their focus to UK retail sales due for release early Friday morning.
USDCAD rose by +0.28% on a weaker Canadian dollar. The Canadian annual inflation rate released on Wednesday dropped to 8.1% against 8.4% surveyed in June. A plunge in crude oil prices continues to underpin the Canadian dollar’s strength. The USDCAD rallied from the 1.28500 near-term support and upside gains are capped by the 1.3000 psychological barrier. Traders should pay close attention to US initial Jobless Claims, Philadelphia Fed Manufacturing Index (July) and Canada’s New Housing Price Index data due for release in the New York session.
European stocks wobbled as investors pay close attention to the ECB rate lift-off. FTSE100 slipped by -0.10% as bulls failed to hold gains above the 7300 level. The next critical level to watch out for is the 7200 support and a break below that level could cause selling pressure towards the 7000 psychological level.
DAX extended losses by -0.35% after bulls failed to break above the 13400 level. A break below 13000 psychological support could turn the outlook to bearish and the next critical target is at the 12800 level. CAC40 rallied by +1.20% as bulls managed to hold above the 6120 level. Upside gains are capped by the 6250 and 6400 levels.
US stock equities rallied as Tech earnings boosted optimism in the near term. Nasdaq100 futures soared by +0.44% and bulls may extend targets towards the 12800 if 12500 near-term resistance is challenged.
S&P500 futures added gains by +0.10% breaking above the 3950 near-term resistance. Upside gains are capped by the 4000 and 4100 psychological resistances. DJIA index was slightly down by -0.16% from 32000 near-term resistance. Critical levels to watch out for are the 31500 support and 32800 resistance.
Crude oil futures suffered selling pressure as 40% of Russian oil and gas supplies resumes amidst weakening demand. USWTI futures plunged by -4.81% to 94.16 a barrel and a break below that support could reinforce selling pressure towards the 90.00 level. Brent lost -3.93% and the next critical level is 100.00 psychological support.
