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Morning Trading Summary: July 12, 2023
In today's trading session, the global market landscape witnessed a weakening dollar and cautious anticipation as investors eagerly awaited crucial U.S. inflation data. Asian shares showed mixed performance, with gains in Australia but declines in Tokyo and Seoul. The dollar's decline to a two-month low was primarily driven by expectations of easing U.S. inflation and potential changes to the Federal Reserve's rate hike policy. On the other hand, Hong Kong stocks rose due to robust credit expansion in China.
Traders are focusing their attention on the upcoming release of U.S. consumer price data, with anticipation of moderation in both core and headline inflation. This data will provide valuable insights into whether the Federal Reserve is inching closer to the end of its aggressive rate hike policy. In line with this, speculation surrounding potential policy adjustments by the Bank of Japan contributed to the yen's advancement against major currencies, reaching its highest level in a month against the dollar at 139.43.
In the currency markets, the New Zealand dollar rebounded after the Reserve Bank of New Zealand's decision to maintain interest rates unchanged. Additionally, the offshore yuan strengthened against the dollar as China's central bank extended support for the currency.
Commodity prices remained relatively stable, with oil prices reaching two-month highs. This positive development can be attributed to signs of decreasing Russian crude production, indicating a potential end to the supply glut. Gold prices also experienced an upward trend.
The dollar index fell to its lowest level in two months, reflecting market expectations of easing U.S. inflation and a potential end to rate hikes by the Federal Reserve. In contrast, the Hang Seng index in Hong Kong extended its rally, buoyed by positive sentiment in U.S.-listed Chinese shares and expectations of further stimulus measures from Beijing. However, China's Shanghai Composite and Shenzhen Component experienced declines as investors weighed the possibility of additional policy support measures and eagerly awaited the U.S. inflation report.
In New Zealand, the stock market observed the kiwi dollar rising to a seven-week high following the Reserve Bank of New Zealand's decision to maintain interest rates. Traders are now eagerly awaiting the release of U.S. CPI and PPI data for further insights.
The Reserve Bank of New Zealand, in its recent announcement, kept the official cash rate unchanged at 5.5% and emphasized the necessity for a restrictive approach to bring inflation back within the target range by the second half of 2024. Meanwhile, Japanese shares fell to one-month lows as investors booked profits in technology stocks and anxiously awaited the U.S. inflation report. Conversely, Australian shares climbed, supported by higher commodity prices, particularly in the energy and mining sectors.
Key events to keep an eye on throughout the week include the Canada rate decision, speeches by the Bank of England Governor, the U.S. CPI release, the Federal Reserve's Beige Book publication, and remarks from various Fed speakers. These events are expected to significantly influence market sentiments and investor decisions in the coming days.
Forex Trading, Morning Market movers, Gold, Oil & USD.
Remember to stay informed and adapt your trading strategies accordingly to make the most of the current market conditions. Happy trading!