Markets Report - 11 July 2022

A daily breakdown of the markets for the 11th July 2022, provided to you by Sterlex.

🇪🇺💶Nord Stream 1 Gas Pipeline's annual maintenance has started. Although this is a planned shutdown, investors are concerned about whether the reopening will occur as planned as well. Germany recorded its first trade deficit in May since 1991, “The sharp deterioration in Germany’s trade balance has also attracted more market attention last week. The European currency comes under renewed and quite strong downside pressure and drags EUR/USD back to the vicinity of the 1.0100 region on Monday. It has mainly been driven by the sharp rise in import (energy) prices.”. It was reported that Germany recorded its first trade deficit in May since 1991.

🇬🇧💷UK Conservative Leadership Candidate Jeremy Hunt said on Monday that he wants to cut all taxes. The pound is trading above last week’s lows vs. Zahawi entered the race to succeed Boris Johnson as PM. Hunt added that “I can tax cuts within our current fiscal rules.” Meanwhile, various UK media outlets are reporting UK Finance Minister Nadhim Zahawi has plans to impose 20% cuts on every government department in order to pay for his planned tax cuts. the USD and it holding most of its recent gains vs. As there is still a long way to go before the new leadership can prove its worth to sceptical investors, the GBP is likely to have to wait until seeing a fresh start, economists at Rabobank report. the beleaguered EUR.

🇺🇸 🏦The GBP/USD pair struggled to capitalize on last week's modest recovery move from its lowest level since March 2020 and attracted fresh selling around the 1.2035 region on Monday. This week's US economic docket also features the release of monthly Retail Sales data and Prelim Michigan Consumer Sentiment on Friday. On the other hand, the recent political turmoil in the UK and Brexit woes continued undermining the British pound. The data will drive the USD demand and provide a fresh directional impetus to the GBP/USD pair.

The pair extended its steady intraday descent through the early European session and dropped to a fresh daily low, around the 1.1960-1.1955 region in the last hour. This, in turn, exerted some downward pressure on the GBP/USD pair. The market focus, however, would remain on the release of the latest US consumer inflation figures, due on Wednesday. The US dollar has resumed its surge, with the DXY Index hitting its highest level since 2002. The US dollar regained strong positive traction on the first day of a new week and inched back closer to a two-decade high touched on Friday amid hawkish Fed expectations. However, the US dollar’s surge looks unlikely to endure, in the view of economists at UBS.