💸 TL;DR

The US Dollar continues to fall as investors expect US CPI data to show decreasing inflation today which may slow the rate of Fed hikes. On the other hand, average UK earnings grew faster than expected and S&P 500 momentum remains strong.

📰 What’s moving markets?

• The US Dollar Index has fallen to a three-month low against a basket of currencies as investors consider the possibility of US inflation falling to 3.10% (from 4.00% last print). The market is still expecting the Fed to hike rates by 0.25% in two weeks but bond yields have eased in the US over the prospect over the prospect that the Fed might pause future rate hikes.

• The opposite is true in the UK: average UK earnings grew by 6.90% YoY yesterday (expectations: 6.80%) which raised further concerns about the ability of the BoE to slow the economy and ease inflation. UK 2yr Gilt yields have risen to over 5.42%.

• Markets are still risk-on with Asian shares rising today and US and European futures pointing slightly higher.

• Activision Blizzard rose 10% yesterday to $90.99 as US regulators approved Microsoft’s acquisition which was initially announced last year at $95 per share. UK regulators said they would reconsider their stance.

📊 Chart of the day

S&P 500 price momentum is very strong at the moment with the Fear & Greed Index suggesting market participants are exhibiting “extreme greed”.

S&P 500 price momentum

📅 Coming up this week

Monday 10th July

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Tuesday 11th July

• UK Average Earnings (including bonuses) expected: 6.80%, last: 6.40%, actual: 6.90%

• UK Unemployment Rate expected: 3.80%, last: 3.80%, actual: 4.00%

• Germany Headline CPI (YoY) expected: 6.40%, last 6.10%, actual: 6.40%

• Japan PPI Inflation (YoY) expected: 4.30%, last 5.10%, actual: 5.1%

Wednesday 12th July

• US Headline CPI (YoY) expected: 3.10%, last: 4.00%

• US Core CPI (YoY) expected: 5.00%, last: 5.30%

• Bank of Canada Interest Rate Decision expected: 5.00%, last: 4.75%

Thursday 13th July

• UK GDP (MoM) expected: -0.40%, last: 0.20%

• France Headline CPI (YoY) expected: 4.50%, last 5.10%

• US PPI Inflation (YoY) expected: 0.40%, last 1.10%

• US Initial Jobless Claims expected: 249k, last 248k

• South Africa Gold Production (YoY) expected: -1.10%, last 27.40%

• South Africa Mining Production (YoY) expected: 3.30%, last 2.30%

• Delta Air Lines Q2 Earnings expected EPS: $2.42

• Pepsico Q2 Earnings expected EPS: $1.95

Friday 14th July

• JP Morgan Q2 Earnings expected EPS: $3.66

• Citi Q2 Earnings expected EPS: $1.45

• United Healthcare Q2 Earnings expected EPS: $2.10

• Wells Fargo Q2 Earnings expected EPS: $1.16

• State Street Q2 Earnings expected EPS: $2.10

📈 The markets at a glance