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Sterling enjoys a small lift as Boris Johnson quits

 

“The road to success and the road to failure are almost exactly the same.” — Colin R. Davis 

 

 

HEADLINES

 

 

  • Sterling enjoys a small lift as Boris Johnson quits
  •  Gold attempts rebound as dollar stalls ascent
  • Oil up $5 as tight supply outweighs recession fears
  • Wall Street rises as traders temper bets on aggressive rate hikes
  • Euro continues to slide toward dollar parity — and could fall even further
  • USD/ZAR: Potential for upside to 17.7836 – Credit Suisse
  • EURUSD Short Term: Downside favored

 

Sterling enjoys a small lift as Boris Johnson quits 

 

 

Sterling held on to its gains on Thursday after Boris Johnson said he was quitting as prime minister following a rush of ministerial resignations and calls for him to go.

The gains versus the dollar and the euro began after media reports of his imminent resignation earlier in the day. But the moves were small, with Johnson's departure already seen as almost a certainty and largely priced in by markets.

UK assets have largely reacted calmly to Johnson'sdeclining fortunes this week, with the deteriorating global economic backdrop viewed as far more important even if some immediate political uncertainty has been removed.

 

 

COMMODITIES

 

 

Gold attempts rebound as dollar stalls ascent 

 

 

Gold rose on Thursday as a pause in the dollar’s rally encouraged some investors to snap up bargains after two sessions of heavy losses that sent prices to a nine-month low.

Spot gold was up 0.5% at $1,747.7 per ounce. U.S. gold futures rose 0.6% to $1,747.20.

Gold has shed more than $300 since the Fed began raising interest rates in March to tame unruly inflation, increasing the opportunity cost of holding non-yielding bullion.

Spot silver rose 1.2% to $19.40 per ounce, platinum jumped 2.1% to $874.20 and palladium climbed 5.1% to $2,002.42.

 

 

ENERGY

 

 

Oil up $5 as tight supply outweighs recession fears 

 

 

Oil prices surged on Thursday, rebounding from steep losses the previous two sessions, as investors returned their focus to tight supply despite nagging fears of a potential global recession.

Trade was volatile. At session lows, prices were down about $2.

Oil prices have dropped in the past few weeks as investors worried that a sharp economic slowdown could slam demand for commodities.

 

STOCKS

 

 

Wall Street rises as traders temper bets on aggressive rate hikes 

 

 

Wall Street's main indexes rose on Thursday on expectations the U.S. Federal Reserve would ease the aggressive pace of interest rate hikes later this year amid growing concerns of a recession.

U.S. stock markets have stabilized in July after a brutal sell-off in the first half against the backdrop of a surge in inflation, the Ukraine conflict and the Fed's pivot away from easy-money policy.

The benchmark S&P 500 index (.SPX) has risen 2.8% so far this month, including session gains, after recording its steepest first-half percentage drop since 1970.

 

 

Euro continues to slide toward dollar parity — and could fall even further 

 

 

The euro dropped below $1.02 this week, continuing its slide to new 20-year lows and potential parity with the U.S. dollar.

The euro traded as low as $1.0165 on Wednesday afternoon in Europe, before recovering slightly to hover just above the $1.02 mark Thursday morning.

The common currency of the euro zone has been in consistent decline as fears of a recession there intensify on the back of rising uncertainty about energy supply to the bloc, with Russia threatening to further reduce gas supplies to Germany and the broader continent.

 

ANALYSIS

 

 

USD/ZAR: Potential for upside to 17.7836 – Credit Suisse 

“With the uptrend from Q2 of 2021 now reaffirmed and with our bullish outlook for the DXY index in mind, we look for the strength to continue to the 61.8% retracement at 17.0709/2617 initially, with a break here looking to extend the upside to the high of August 2020 at 17.7836.”

“Note that the Credit Suisse House View is currently neutral on USD/ZAR on a three-six month horizon.” 

 

 

CHART

 

 

EURUSD Short Term: Downside favored

Technical View: Short position below 1.024. Target 1.014. Conversely, break above 1.024, to open 1.029.

Comments: The pair remains under pressure. Further weakness favored.

Source: Trading Central 

 

 

CALENDAR

*Times in GMT

Source: FX Street Economic Calendar


Footnotes
https://www.reuters.com/markets/currencies/sterling-gains-days-high-after-reports-pm-johnson-will-step-down-2022-07-07/
https://www.cnbc.com/2022/07/07/gold-interest-rates-growth-bond-yields-inflation.html
https://www.reuters.com/markets/europe/oil-prices-extend-drop-recession-fears-cloud-global-demand-outlook-2022-07-07/
https://www.reuters.com/markets/europe/futures-edge-higher-investors-assess-interest-rate-outlook-2022-07-07/
https://www.cnbc.com/2022/07/07/euro-continues-to-slide-toward-dollar-parity-and-could-fall-even-further.html
https://www.fxstreet.com/news/usd-zar-potential-for-upside-to-177836-credit-suisse-202207070653
 

 

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