4 Global Market Updates- 14 July, 2022

In this article, we have covered the highlights of global market news about the Euro, Dollar, Japan’s Yen and Natural Gas.
The Euro has reached parity; its destiny now rests on energy markets.

The Euro is headed for one of its worst years ever after falling below $1 for the first time in 20 years, particularly if the EU enters a protracted economic crisis as a result of the oil price shock brought on by the war in Ukraine.

For days, the Euro and the dollar were on the verge of parity; on Wednesday, it finally crossed that line. Its year-to-date decline of 11.8 percent is roughly equal to the losses seen in 2015, the year the European Central Bank enacted a significant stimulus.

Analysts believe that Wednesday’s action may pave the way for a slide towards $0.96, with some anticipating a drop to $0.90 if the gas supply is much more interrupted.

The actions placed the ECB in a tough position. To battle inflation, which is now running at a record high of 8.6 percent, it is anticipated to hike interest rates next week for the first time since 2011.

Currency weakness makes the inflation issue worse. However, the ECB is unable to undertake forceful policy tightening out of concern that it may halt economic growth.

Olivier Konzeoue, director of the currency team at asset management UBP, noted the implications of the oil crisis for Europe’s economy and stated, “We see an opportunity for a raise to $0.97 and maybe even $0.95.
“We know it’s all about Russia,” he said.

Dollar Up on Interest Rate Increase Bets

The dollar increased on Thursday morning in Asia as anticipation of more monetary tightening from the U.S. Federal Reserve was fueled by the country’s scorching inflation figures.

Fueled by a combination of flows into haven assets amid rising recessionary worries and prospects for a quicker Federal Reserve policy tightening.

By 1:34 AM ET, the U.S. Dollar Index, which measures the value of the dollar against a basket of six other currencies, was up 0.43 percent at 108.42. (5:34 AM GMT).

A 0.69 percent increase brought the USD/JPY pair to 138.37.
The AUD/USD pair increased 0.6% to 0.6764, while the NZD/USD pair decreased 0.9% to 0.6126.

The GBP/USD pair dropped 0.26 percent to 1.1859 while the USD/CNY pair moved up 0.15 percent to 6.7287.

The Consumer Price Index (CPI) for the United States increased to a four-decade high of 9.1 percent in June. Investing.com forecast a value of 8.8% but 8.6% was seen in May. Investors debated whether the figure of 9.1 percent represents the high.

The basic conclusion is that U.S. inflation momentum is increasing, according to Kristina Clifton, an economist at Commonwealth Bank of Australia (OTC: CMWAY), in a note.

The government of Japan is constantly monitoring FX with BOJ after seeing strong Yen declines.

According to Chief Cabinet Secretary Hirokazu Matsuno on Thursday, the Japanese government is worried about the recent steep drops in the value of the yen and will closely coordinate with the Bank of Japan to monitor the currency market with even greater urgency.

The senior government spokesman for Japan, Matsuno, reiterated remarks made previously by several influential officials when he stated, “We are worried about the yen’s fast falls observed in the foreign currency market recently.”

Regarding currency interventions, he made no remarks.
In addition, Matsuno said that Japan will continue to watch the effects of US monetary policy adjustments and inflation trends on the Japanese and global economies during a routine press conference.

Matsuno was responding to a reporter’s query regarding the yen’s drop on Thursday morning to 138 yen per U.S. dollar levels for the first time since September 1998, following the U.S. annual consumer prices posting the largest increase in more than four decades, which sparked concerns the Federal Reserve may hike interest rates even more aggressively than previously anticipated.

At its next meeting on July 20-21, the Bank of Japan is anticipated to retain its ultra-low interest rates, reflecting a widening divergence with a worldwide wave of rate-hiking central banks that has spurred the decline of the yen.

Natural Gas Futures: The first point of resistance appears at around $7.00

On Wednesday, natural gas prices showed respectable increases despite increased open interest, which seems to favor the continuation of the rally. The little increase in volume may, however, delay the bounce’s momentum or encourage some consolidation shortly. A recent high at the $7.00 per MMBtu level seems to have temporarily stopped the upswing from continuing.

Please click here for the News Updates from July 13, 2022.