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INFLATION

4 Global Market Updates- 13 July, 2022

In this article, we have covered the highlights of global market news about the EUR/GBP, CNYGold price in US Inflation, and US Dollar Index.
EUR/GBP breaks below 200-DMA support and falls to a two-month low at 0.8400.

During the first part of trading on Wednesday, the EUR/GBP cross saw some selling and fell under the crucial 200-day SMA support. The ensuing decline pushed spot prices to a low of over two months, in the range of 0.8410-0.8405 in the early European session.

Investors are still worried that Europe’s energy problem would cause the country’s economy to contract more quickly. Due to the recent steep increase in borrowing rates for more indebted nations brought on by the European Central Bank’s tightening strategy, the Eurozone is also a danger of further fragmenting. This put considerable downward pressure on the EUR/GBP cross since it was considered a major contributor to the shared currency’s relative underperformance.

China’s June trade balance: Surplus continues growing as exports rocket

In Yuan terms, China’s June trade balance came in at CNY650.11 billion compared to CNY455.04 predicted and CNY502.89 billion previous.

Last month, exports increased by 22% vs a projected 11.7% increase and a 15.3% increase the month before. In contrast to the previous quarter, imports increased by 4.8%.

As exports exceeded estimates, China’s trade surplus in USD increased more than anticipated.

Trade Balance came up at +97.94 vs +75.7 predicted and +78.76 before.

Exports (YoY): 17.9% vs. +12% expected and +16.9% before.
Imports (YoY): 1% against +2.0% experience and 4.1% last.

Gold price holds at $1,725 as a sinking wedge, US inflation teases bulls at an annual low

As we approach Wednesday’s European session, the price of gold (XAUUSD) has decreased to $1,725. By doing this, the precious metal maintains its position inside of a weekly falling wedge bullish chart pattern and fades the early-day recovery from the annual low. However, a comeback in the US Dollar Index and the negative performance of the Eurostoxx 50 Futures might also be contributing factors to the depreciation of XAUUSD (DXY). However, ahead of the release of the US Consumer Price Index (CPI) for June, gold dealers are put to the test by conflicting worries about China’s covid circumstances and economic development as well as inflation fears.

Due to traders’ continued caution ahead of the crucial US inflation, particularly in light of the record-high one-year US inflation forecast and aggressive Fed bets, gold is still trendless. The IMF’s latest modification of economic estimates in a negative direction, which primarily factored in a 75 basis point increase from the Fed, also emphasizes the significance of the US CPI.

The US Dollar Index is back over 108.00 ahead of CPI.

The index has resumed its upward momentum after Tuesday’s unsuccessful session, refocusing on Tuesday’s cycle highs in the upper 108.00s amid fluctuating risk appetite patterns and in advance of the crucial publication of US inflation data as measured by the CPI.

INFLATION

Between now and the US CPI, market players are becoming more cautious, as seen by the little decline in US rates seen in the US money markets.

The dispute over the Fed’s intentions to tighten monetary policy, recession fears and inflation worries are all anticipated to continue to drive price movement in the international markets for the foreseeable future.

On Tuesday, the index increased and achieved fresh cycle highs over 108.00. But it’s important to keep in mind that the recent steep increase in the dollar is mostly a reaction to the rapid depreciation of the euro.

The Fed’s divergence from most of its G10 counterparts, particularly the ECB, together with episodes of geopolitical effervescence and the return of investor risk aversion are anticipated to provide further support for the dollar. On the other hand, market speculation over a probable US recession may momentarily impede the dollar’s upward momentum.

Please click here for the News Updates from July 12, 2022.

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