July FOMC Pricing Favours 1% Hike
Pricing for the upcoming July FOMC has swung in favour of a full percentage point hike following yesterday’s US CPI report. June CPI was seen rising to 9.1% annually, marking the hottest US inflation reading in 40-years. Looking at the monthly data, headline CPI was seen coming in at 1.3% in June, up from 1% prior and well above the 1.1% the market was looking for. Additionally, core CPI was seen at 0.7% on the month, up from 0.6% prior and, again, well above the 0.5% the market was looking for.
With the latest US inflation data putting rest to any idea of consumer prices cooling near-term, the pressure on the Fed has increased. With the Fed opting for a larger .75% hike last time, the market is now anticipating the Fed to take further action this month, opting for a larger 1% hike, such as we saw from the BOC yesterday. With this in mind, USD is seeing renewed demand into the end of the week. Traders will now be looking to tomorrow’s retail sales data for the next key insight into the US economy. If retail sales are seeing rising on the month, as forecast, this should keep USD higher into the FOMC meeting.
Technical Views
NASDAQ
The NASDAQ has been grinding steadily lower this year in a well-defined bear channel. Price is currently sitting on support along the 11240.8 level, capped by resistance at 12269.1. With the channel the broader focus, the preference is for a downside break towards the channel lows and 9801.1 level next. To the topside, bulls need to see a break of 12269.1 to shift momentum higher.
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Written by James Harte
With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.
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Source: Tickmill