There was a broad market sell-off on Thursday as US inflation data renewed global monetary policy tightening. The Dollar extended gains as investors are now pricing in 100bps for the July meeting. FED members indicate serious concerns over June inflation. The EU continues to face an economic storm over gas supplies. Investors will pay attention to the US bank earnings reports and Initial Jobless Claims later today.
USDJPY rallied by +1.25% early Thursday as US CPI data beats expectations. The US CPI data surged to 9.1% for June against the 8.8% surveyed. The rise in inflation echoed further tightening by the Fed at the July policy meeting. Bulls broke above a 137.80 level and the pair soared towards a 139.80 level which coincides with a September 1998 high. The BoJ ultra-loose policy continues to fuel USDJPY buyers in the near term.
AUDCAD soared by +0.70% post-Australia’s positive employment data. The AUD employment change rose to 88.4K against a 30.0K expected in June promoting bids on the pair. The Unemployment rate dropped from a previous reading of 3.9% to 3.5%. The Canadian dollar was weighed down by weakening demand for crude oil. The pair bounced off a 0.8750 support coinciding with a 2-year low and gains are capped by 0.8875, a 2-week high.
European stocks markets extended losses on Thursday as the US inflation report reinforces global central banks’ monetary tightening, weighing down global economic growth. FTSE100 dropped by -0.84% towards the 7100 near-term support. A breach of that level could cause further selling pressure towards 7000, a 4-months low.
DAX slumped by -0.62%, a second session loss as oil stocks weighed down the index. A breach below the 12600 level could reinforce the bearish outlook and bearish targets will be at the 12400 level, a 20-months low. CAC40 plunged by -0.86% despite the index being trapped in a range between the 6050 resistance and 5900 support. A break below the near-term support could extend bearish targets at the 5755.00 level.
US stock futures dropped sharply ahead of US banks’ earning season amid rate hike worries. JP Morgan and Morgan Stanley are going to release Q2 earnings reports. S&P 500 futures dropped by -1.02% towards the 3750 level and a break below that near-term support could open the way for the 3645 level, a 19-months low. Upside gains are capped by the 3800 psychological barriers.
Nasdaq 100 futures edged lower by -0.63% as Tech stocks face major economic headwinds. The index is trading above 11600 support and a break below that support could renew selling pressure towards the 11000 psychological level. Dow Jones Industrial index opened lower by -0.74% ahead of US PPI data. The bears are currently targeting the 30400 level, 3-week support. Upside gains are capped by the 31000 psychological barriers. The next critical resistance is at 30000, 2022 lows.
In commodities, crude oil experienced a massive sell-off as a rise in Crude Oil Inventories indicates weaker demand in the near term. USWTI crude oil futures dropped by -2.52% from the 97.00 resistance level. Bears are sitting at 93.50 a 4-month low and could extend targets towards the 85.00 level. Brent shaded off gains by -2.02% towards the 97.00 level. Critical areas to watch out for are the 100 resistance and 90.00 level.
Gold lost by -1.20% as Fed tightening sentiments weighed down the yellow metal. Bears could target the 1680 level if 1700 psychological support fails to hold. Upside gains are capped by the 1750 level.
