USD rallies to a 3-month high and weighs on market sentiment

Tuesday, July 21, 2015

The strong USD continues to weigh on market sentiment adding pressure to most commodity prices. The USD index continues its strong rally after trading around 98.0 against a basket of currencies. WTI front month futures remained under pressure after hovering around the key level of $50 per barrel, while Brent futures have been trading sideways around $56.50 this morning. Bearish oil fundamentals weigh on market sentiment. Due to the absence of major economic data, it seems that the strong USD and corporate earnings results from Apple and Microsoft are likely to dominate the markets in today’s trading session.  

WTI front month futures remain under pressure around $50/barrel

CLQ5 Comdty (WTI CRUDE FUTURE  A 2015-07-21 09-11-26

China’s Foreign Direct Investment increased 0.7% y/y in June, beating analysts’ expectations of a 0.5% rise. The Hang Seng index rebounded strongly and climbed over 0.6% towards 25,570, while the Shanghai Composite index gained 0.64% to end the session at 4017.67. In Japan, the Nikkei rallied nearly 1% to retest 20,850 following robust Japanese economic data. The Leading index was reported at 106.2 in May and Nationwide Department sales rose 0.4% y/y in June.

Precious metal prices rebounded in early trade this morning following yesterday’s sell-off. Gold plunged to a 5-year low yesterday at $1086 and ended the session at $1096.50. However, this morning the yellow metal reversed yesterday’s sharp losses and climbed over 0.9%, hovering around $1100/ounce. This morning, silver recovered and posted strong gains after rising over 1% towards $15. Platinum and palladium followed the uptrend and climbed higher this morning.

XAU - Gold rebounds from yesterday's selloff. 

XAU Curncy (Gold Spot   $_Oz )  D 2015-07-21 09-08-41

European equity markets remained under pressure this morning and the euro held around 1.0820 against the USD. The CAC, DAX, IBEX and London equity benchmark indices posted limited losses in early trade, struggling for direction. Investors will be keeping an eye on the release of the UK PSNCR data (Public Sector Net Cash Requirement) this morning. Sterling has slightly rebounded this morning eyeing the 1.56 area following three consecutive sessions of losses.  

Events for today:

0930

UK

Jun

PSNCR & PSNB

 

All times UK Local Time

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