A look at the day ahead in U.S. and global markets from Mike Dolan
After an intense month focused on election risk around the world, markets quickly switched back to the more prosaic matter of the cost of money – and whether disinflation is resuming to the extent it allows borrowing costs to finally fall.
Thursday’s U.S. consumer price update for June is the key moment of the week for many investors – with the headline rate expected to have fallen two tenths of a percentage point to 3.1% but with ‘core’ rates still stuck at 3.4%.
Morning Bid: Eyes switch to inflation vs elections, Powell up
EURUSD 4 HOUR – WAITING FOR POWELL
Given expectations of a dovish tilt for Fed Chair Powell’s testimony today, the dollar upside should be limited ahead of it.
This suggests markets should be positioned for a more dovish testimony so it will be the reaction to his comments that will be more important than what he says barring some clear signal of a rate cut (markets are pricing in an 80% chance of a Sept cut).
Otherwise, expect support as long as 1.08+ trades but needing to take out 1.0845-50 to suggest a run at key targets in the 1.09-1.10 area.
AUDUSD 4 HOUR CHART – AIMING FOR .68?
Key target is close to .69 with .6800 the next obstacle. To make a run at .68, .6750 would need to become support.
Minor range .6710-.6761
Split the range and .6735 is the midpoint… needs to hold to keep a bid.
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TSLA – Tesla
Tesla on Track for Longest Winning Streak Since June 2023
Tesla, Inc. (TSLA) is currently at $252.54, up $1.02 or 0.41%Would be highest close since Dec. 28, 2023, when it closed at $253.18
Currently up 10 of the past 11 days
Currently up nine consecutive days; up 38.32% over this period
Longest winning streak since June 13, 2023, when it rose for 13 straight trading days
Best nine day stretch since the nine days ending Feb. 2, 2023, when it rose 41.11%
Up 27.62% month-to-date
Up 1.63% year-to-date
Funding overdrafts – The level of daylight overdrafts — when a bank withdraws more money than it has in its account at the Fed. They recently reached levels and behavior similar to pre-crash conditions of 2019. A bit concerning, it should be noted that major banks also recently resoundingly passed stress tests which is an offset should shock conditions arise, either sudden or gradual. Likely temporary. Also, the two heavy factors of war and elections have not stopped the steady purchasing of US, Euro, and MSCI stocks.
I am fixated on July 15th as having the potential for either strong buying or a shift toward risk off, for a variety of reasons including that fund managers and the like will begin to return from early vacations.
One of those Mondays…Here is my Power of 50 article as GBPUSD, EURUSD, AUDUSD and USDJPY all paused around or shy of respective 50 levels in what turned into a slow drip, paint drying session.
FWIW the softer GBPUSD tine appears toi be coning from EURGBP buying.
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