Oil prices extended gains; Stocks lost the gains, and DXY returns from a 10-days low!
US Dollar started to recover some of its losses after a few days of the downtrend. Last week and after increasing US inflation towards 9.1%, market participants started pricing on a 100 bps rate hike for the next FED meeting, which FOMC members have denied. During the weekend and after several Fed officials supported a 75 basis point hike instead of 100 basis points, USD Index fell to a 10-day low of 106.87 overnight before rebounding slightly to 107.50.
On the commodity market, Oil prices are affected by the USD rate and geopolitical news and event. While severe heat waves around the globe, especially in Europe, increased the Electricity and either kind of energy demand, the US failed to convince Saudi Arabia and some other Arabic Nations to increase oil production. On top of that, the main gas pipeline to Europe, Nord Stream 1, is currently undergoing repairs and is expected to be completed by July 21. As for whether Russia will resume the supply of natural gas to Europe on the same day, we have yet to find out. Oil gained towards $100 after this news and events.
On the stock markets, data and sentiments are mixed. Earnings are much weaker than the previous quarter so far. However, some companies had significant advances in EPS and Revenue shares. In these earnings reports, companies' outlook and expectations also will be critical to see how seriously they are looking at the future and possible recession. For example, Apple (NASDAQ: AAPL) told us it plans to slow hiring and spending growth next year, and we had precisely the same warns from Goldman Sachs Group Inc (NYSE: GS), as a 48% slump reported in quarterly profit. These outlooks and comments pushed Wall Street to close lower overnight, even if in the early future trades on Tuesday, they had some gains.
These doubts and concerns should continue until we have the results of the ECB and BoJ meetings on Thursday and the FOMC policy meeting next week.
On the other markets, while the US benchmark ten-year yield at 2.974% is lowering with USVIX again back above the 27 areas, US two-year yield also slowly decreased to 3.16%.
Gold, around 1.700 USD, has found strong support and now waiting for more market updates. Positive and negative sentiment in the stock markets will have the opposite effect on the gold market.
