Nasdaq => The index steadies at the 2022 low
Natural Gas => The tumbles 16%
EUR/AUD => The pair falls from a 3-week high
Nasdaq looks to the Fed
The Nasdaq has had a volatile week, falling over 4.5% so far this week.
The tech-heavy index fell sharply at the start of the week after the markets started pricing in a 75 basis point rate hike from the Fed, following hotter-than-expected consumer price inflation. The prospect of a more hawkish Fed potentially tipping the US economy into recession hit risk sentiment and demand for US stocks hard. Yesterday PPI inflation showed a slight cooling in prices which buoyed stocks. Today’s it all about the Fed.
The Fed is expected to hike rates by 50, if not 75 basis points. The market will also be keen to see what the Fed plans for later in the third quarter. More outsized hikes could raise recession fears and pull stocks lower. Ahead of the Fed rate decision, US retail sales are expected to show that the US consumer continues to spend, despite surging inflation.
|US PPI YoY May
US retail sales MoM May
|Actual: 10.8% (0.1%)
Expected: 0.2% (0.7%)
Where next for Nasdaq?
The Nasdaq failed to retake resistance at 12940 and rebounded lower, taking out the 20 sma and several key supports.
The RSI is supportive of more downside while it stays above 30 and oversold territory. The Nasdaq trades at 2022 lows, with 10960, the October 2020 low, in focus. On the upside, resistance can be seen at 11500, the May 19 low, ahead of 11660, the May 12 low, with a break above here exposing 12260.
Natural Gas (US) tumbled 16% yesterday. Here’s why.
Natural gas plunged 16% yesterday, falling to a monthly low after Texas-based exporter Freeport warned that it would take around three months for its facility to be partially operational after a plant explosion last week.
This is considerably longer than the few weeks which was initially proposed. Essentially this means that natural gas, which usually is exported, will remain within the US market, oversupplying the domestic market and bringing the price lower.
Meanwhile, Asia and Europe will see a tightening gas market and rising prices. Today the price has edged 1.4% higher but holds onto the vast majority of losses.
EUR/AUD falls after upbeat China data
EUR/AUD rose 0.9% in the previous session after strong German data boosted the euro, and risk aversion hit demand for the AUD.
German inflation was upwardly revised, and the closely watched German ZEW survey revealed that investor sentiment improved for a fourth straight month, despite numerous risks remaining. Financial experts in the eurozone’s largest economy were less pessimistic about the outlook for the economy in June, even though the effects of sanctions on Moscow are still being felt. Meanwhile, the risk-sensitive AUD was out of favour as risk-off dominated trade.
Today the pair is falling after upbeat Chinese data overnight, which saw industrial production rebound and retail sales beat forecasts. Attention now turns to eurozone industrial production figures.
|Ger ZEW economic sentiment
China industrial output YoY
|Actual: -28 (6.3)
Actual: 0.7% (3.6%)
Support can be found at 1.4982 (20 sma) and 1.4871 (50 sma).
Resistance for the pair can be seen at 1.5290 (May high) and 1.5345 (March 15 high)