This is what you need to know to trade today Monday July 25:
Risk aversion flows into the start of the week on Monday as investors remain cautious amid lingering fears of a likely global recession. Traders prefer to stay on the defensive as the Fed is set to raise interest rates by 75 basis points on Wednesday in its strong response to fighting inflation. US Treasury Secretary Janet Yellen warned over the weekend of a slowdown in the US economy, but she said a recession is not inevitable.
Concerns about the economic slowdown intensified after preliminary S&P Global business PMIs for the Eurozone and Germany posted a contraction in July. The US services PMI fell into contraction territory for the first time since June 2020.
China stepped up mass coronavirus testing in Shanghai and Tianjin, underscoring the risk that further outbreaks could trigger costly new lockdowns. A record number of Australians affected by covid are in hospital as Omicron soars, undermining investor confidence.
Meanwhile, China has issued harsh private warnings to the Biden administration about a possible trip to Taiwan in August by US House Speaker Nancy Pelosi, the Financial Times (FT) reported on Saturday. Citing sources, Reuters noted that Beijing plans to create a real estate fund worth up to $44 billion, despite concerns over Evergrande’s restructuring.
Amid a series of disappointing news in Asia, regional stock indices fall, partly following Friday’s sell-off on Wall Street. US S&P 500 futures are down 0.22% on the day, reflecting the gloomy mood. Investors are also wary of gains by American tech titans: Google’s Alphabet Inc. and tech titan Apple Inc.
Within the G10 currencies, the US dollar is staging a modest rally from two-week lows amid safe-haven flows.
The pair EUR/USD is trading lower near 1.0200, having stalled the rebound. ECB President Christine Lagarde declared early on Saturday that “we will continue to raise rates for as long as it takes to bring inflation down to our medium-term target,” while ECB hawk Robert Holzmann noted that “We’ll see in the fall what the economic situation is. Then we can probably decide whether to go up another 0.5% or less.” Monday’s German IFO survey will shed more light on the eurozone’s economic outlook.
The GBP/USD it is falling towards 1.1950, unable to find acceptance above 1.2000 once again. Political uncertainty in the UK offsets expectations of a 50 basis point BOE rate hike in August. UK Prime Ministerial candidate Liz Truss laid out her investment plans, while the other candidate, Rishi Sunak, said on Friday that he would put the government in crisis from “day one” of taking office. of the.
The USD/JPY regains ground above 136.00 as US Treasury yields stabilize, halting their sell-off last week. The pair ignores the news that the Bank of Japan (BOJ) is reshuffling its board of directors to bring in two new hardliners.
The Prayed has stalled its recovery, consolidating around $1,730, with all eyes on US headline data and next week’s Fed event.
The Bitcoin returns below the $22,000 mark amid pre-Fed anxiety, while Ethereum attacks $1,500, shedding almost 4.50% on the day.
Source: Fx Street
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