Daily Wrap Up 08 July 2022

8 Jul 2022 04:45 PM

Stocks helped by solid US jobs report

Equity markets are higher following the well-received US non-farm payrolls report. The update showed that 372,000 jobs were added last month, and that comfortably topped the 250,000 consensus estimate. The May reading was revised fractionally lower to 384,000, from 390,000. The unemployment rate remained at 3.6%, meeting forecasts. Average earrings were receptable as they came in a 5.1%, a touch lower than the 5.3% posted in the previous report. The minutes from the June Fed meeting were published on Wednesday and another large rate hike is on the cards this month. Shortly after the jobs data were released, the money market was pricing-in a 93% chance of a 0.75% hike, up from 83% prior to the announcement. Fed member, Raphael Bostic, confirmed he fully supports a 0.75% hike at this month’s meeting. This afternoon, we also heard from John Williams, and the US central banker said the Fed needs to be resolute when it comes to inflation. This hammers home the point that monetary policy will probably be tightened at a fast pace to keep a lid on spiralling costs.

It has been a volatile few days for the US dollar, as EUR/USD printed a new 20-year low this morning, and yesterday GBP/USD tumbled to a fresh 27-month low. EUR/USD has since swung into positive territory amid short covering. The chatter about the euro going to parity versus the US dollar has been growing louder and louder recently. In just under two weeks, the European Central Bank will announce its interest rate decision and it is widely believed a 0.25% lift will be delivered.

Gold and silver are now fractionally higher on the session as the greenback has turned lower. Dealers are less fearful about the health of the global economy for now, but this week we have seen silver fall to a two-year low, and copper crashed to a 19-month low. WTI and Brent crude are enjoying rallies today but recently they have fallen to multi-week lows. The broader downtrend in commodities speak to demand worries.

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