During the Asian session, Westpac Consumer Confidence and Australian National Bank Business Confidence will be released in Australia. Later in Europe, the highlight will be the UK jobs report. Market participants will also position themselves ahead of a busy Wednesday that includes decisions from the New Zealand and Canadian central banks, and the US CPI.
Here’s what to know on Tuesday, July 11:
Wall Street ended in positive territory after a cautious opening after inflation data from China pointed to weaker demand. The Dow Jones gained 0.62% and the Nasdaq rose 0.18%. Crude oil prices fell less than 1%, while Gold ended flat around $1,925/oz. Investors will begin to digest the second quarter earnings season.
China reported lower-than-expected inflation data, with a flat Consumer Price Index (CPI) in June, against expectations for a 0.2% increase. The Producer Price Index (IPP) fell to -5.4% year-on-year, below the -5% expected. The deflationary evidence keeps the door open for more stimuli, not only monetary but also including fiscal measures.
The dollar weakened during the American session, affected by data reflecting lower inflation expectations and lower US Treasury yields. The 10-year bond yield dropped from 4.07% to 4.00%. Market Participants await the key US Consumer Price Index figure to be released on Wednesday which will be critical ahead of the July 25-26 FOMC meeting.
On Friday, non-farm payrolls weighed on the Dollar Index (DXY), which continued to fall on Monday. It fell for the third day in a row, below 102.00, recording the lowest daily close in a month.
The Japanese yen outperformed, boosted by the bond recovery and awaiting US inflation data. He USD/JPY continued to consolidate after failing to break above 145.00 and fell below 141.50, consolidating well below the 20-day SMA for the first time since April.
The EUR/USD pair it broke above 1.1000 and momentum remains positive, supported by a weaker US dollar. The German ZEW survey will be released on Tuesday, as well as the final reading of the German CPI for June, which should bring no surprises from the preliminary reading.
GBP/USD reached the highest levels since April 2022, above 1.2850. Bank of England (BoE) Governor Andrew Bailey said they had to “see the job through to the end” when it comes to inflation. UK jobs will be reported on Tuesday. EUR/GBP rallied to near 0.8600 and then pulled back to 0.8550.
USD/CAD briefly traded above 1.3300 and then pulled back to finish flat around 1.3280. On Wednesday, the Bank of Canada will announce its interest rate decision, with expectations for a rate hike after Friday’s labor market data beat expectations.
Bank of Canada analysts:
The Bank of Canada put the public on notice last month when it ended its short two-meeting hiatus to restart the tightening cycle. Absent a significant deterioration in economic data over the past five weeks, we expect the Bank to raise its overnight target again by 25 basis points to 5% on Wednesday.
The AUD/USD pair ended flat and remained sideways, unable to break above 0.6700 and supported by the 0.6600 area. Australian consumer confidence data will be released on Tuesday. Reserve Bank of Australia Governor Philip Lowe will deliver a speech on Wednesday.
The NZD/USD pair It rallied a bit on Monday but failed again to break above 0.6220, which is the key short-term resistance area. The Reserve Bank of New Zealand will announce its decision on Wednesday.
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Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
