Market Overview – Morning Express
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– U.S. Dollar Index surges to trade above 106, the highest since December 2002, as Euro slides more than a penny on recession fears. Also, USDCNH +0.35%
– Contrary to the move in FX, Services PMI data overnight from both China and the Eurozone actually beat expectations. China crushed at 54.5 versus 49.7 expected and Eurozone topped with 53.0 versus 52.8, lifting the Composite to 53.0 versus 52.8.
– Citi warns of the Euro going to parity unless a reprieve in Natural Gas prices.
– Natural Gas prices in Europe surge as supply remains thin and U.S. exports down due to ongoing Freeport pipeline outrage.
– Germany is moving to control domestic Gas supply and provide support to the industry.
– High gas prices to further weigh on Eurozone economy and make it difficult for ECB to hike as much as priced in.
– Risk assets started last night on firm footing on news President Biden is looking to remove some trade tariffs on China and further that U.S and China representatives discussed such.
– U.S. 10-year yield has worked steadily lower after hitting 3.49% on June 16th, finishing Friday at 2.889%.
– Strength in Treasury prices, lower yields, is pricing in a weaker commodity complex and reprieve in inflation. Also, an unwind of heavy short position.
– Factory Orders data is due at 9:00 am CT.
– Busy week ahead with U.S. Services data and FOMC Minutes from June released tomorrow. ADP Payrolls Thursday and Nonfarm Payroll Friday. Fed speak throughout.
E-mini S&P (September) / NQ (September)
S&P, yesterday’s close: Settled at 3827.25, up 37.75 on Friday and down 89.00 on the week
NQ, yesterday’s close: Settled at 11,611.25, up 81.75 on Friday and down 529.25 on the week
– U.S. benchmarks have coughed up last night’s spike and Friday’s strong close. Now retesting critical areas of support defined below.
– Recession fears, not only domestically, but in Europe area weighing heavily on sentiment.
– However, negativity coming out of the weekend and through the opening has not been uncommon. What matters is the type of sentiment that takes hold in the first 90 minutes of trade.
– Bursts of better sentiment could lead to a rebound through and after the European close, 10:00 am and 11:00 am CT. Meaning negativity must be flushed out.
– Price action must hold out above major three-star support at … Click here to get our (FULL) daily reports emailed to you!
Crude Oil (August)
Yesterday’s close: Settled at 108.43, up 2.67 on Friday and up 0.81 on the week
– Citi remains a Crude bear, saying Brent could fall to $65 by end of 2022 on recession fears.
– Saudi Arabia set the price of its Crude to Asia at a new record high.
– China announced testing in Shanghai after restrictions announced in Xi’an due to rise in cases.
– Price action surrendered a battleground of support between 107 and 108 that helped define Friday’s rebound.
– Major three-star support comes in below last week’s low at … Click here to get our (FULL) daily reports emailed to you!
Gold (August) / Silver (Sept)
Gold, yesterday’s close: Settled at 1801.5, down 5.8 on Friday and 28.8 on the week
Silver, yesterday’s close: Settled at 19.667, down 0.685 on Friday and 1.492 on the week
– U.S. Dollar is surging broadly against global currencies. Dollar Index trading above 106 and to the highest since December 2002. Extends against the Chinese Yuan by 0.40%.
– U.S. Dollar move comes on European recession fears, but such has also underpinned the U.S. Treasury complex, with yields coming in sharply. The 10-year is below 2.90%.
– The move in yields is supportive to Gold and Silver, if the U.S. Dollar can stop going higher.
– Pivotal week of economic data starts with Factory Orders today and continues with Services slate and FOMC Minutes tomorrow.
– Price action in Gold responded to a critical level of support on Friday at 1785-1792.6, this must continue to buoy price action.
– Gold must regain our Pivot and point of balance at … Click here to get our (FULL) daily reports emailed to you!
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