Big Week for Markets

Asia-Pacific stocks were mostly down this morning. Here’s why;

Data released earlier showed

• China’s factory-gate inflation reported its slowest pace in 14 months in May.
• The producer price index rose 6.4% year-on-year in May, compared to its April record of 8.0%. The slowdown could be led by weak demand for steel, aluminum, and other industrial commodities due to China’s lockdowns that caused supply and production disruptions.
• The ECB said on Thursday that it will prepare a quarter-point interest rate hike next month (July) leading to a bigger hike in the fall if inflation stayed elevated.
• U.S. Treasury yields jumped higher on the back of hawkish signals from the ECB, which prompted a selloff in the Euro-zone bond area.
• Weekly jobless claims hit 229K the highest level since the beginning of 2022.

Equities

Choppy week for Equities

• Wall Street saw sharp declines overnight, mostly led by Mega-cap growth stocks with Amazon losing 4.2% placing extra pressure on major indices.
• Tech and communication services had the biggest declines, while the energy sector led broad gains.

FX

The Euro in-focus!

• The EUR/USD fell 0.23% to $1.0611 after a volatile ECB session in addition to lower economic data from Germany this week that showed a slowdown in industrial production in addition to a soft reading of factory orders too.
• The RSI is bearish showing downside momentum.
• Technically, the next support is 1.053 on the daily frame, followed by 1.0473. While Resistance pivots are at 1.0654 followed by 1.0786, as shown on the chart below.

• In context, the U.S. dollar, was higher at $103.1 up by 0.94% this week. Marking the greenback's biggest percentage gain since the last week of April.

Commodities

Oil on track for monthly gains!

• Oil was heading for its seventh weekly gain until the streak gets slashed by anxious investors and global economic contractions again take the spotlight ahead of inflation data.
• Brent dropped to $121 after hitting $123.29 earlier this week and WTI dropped to levels of $119.
• Oil supported by Ukraine, and Russian war supply disruptions has made huge gains since the start of the war, while big banks have boosted forecasts for the black commodity, leading way for oil prices to continue on surging till 2023.
• In addition to OPEC's latest warning of members maxing out their crude production, driving oil prices even higher on tighter supplies.