Markets Report - 25 July 2022

A daily breakdown of the markets for the 25th July 2022, provided to you by Sterlex.

🇪🇺💶Monday’s offered stance in the euro comes in line with a mild attempt of rebound in the German 10y Bund yields, all following recent multi-week lows, and marginal losses in European stocks following the opening bell on Monday. In the meantime, the price action around the European currency closely follows increasing speculation of a probable recession in the euro area, dollar dynamics, geopolitical concerns, fragmentation worries and the Fed-ECB divergence. EUR/USD so far recedes for the second session in a row following the better mood surrounding the greenback.

🇬🇧💷GBP/USD is trading on the back foot below 1.2000, despite the latest bounce from the 1.1960 area. The US dollar has entered into a consolidative mode after staging a decent turnaround from two-week lows. Ahead of that, traders will look forward to the UK political news and the US Durable Goods Orders data for fresh trading impetus. Markets remain in a risk-off mood amid looming recession fears while the UK leadership uncertainty also keeps the GBP bulls on the defensive. The focus this week, however, remains the Fed rate hike decision this week. British PM candidate Liz Truss set out investment plans while another candidate Rishi Sunak said on Friday that he would put the government on a crisis footing from "day one" of taking office.

🇺🇸 🏦The DXY came under downside pressure following nearly 20-year highs north of the 109.00 mark in mid-July, although it seems to have met some decent support near 106.00 for the time being. So far, the dollar remains underpinned by the Fed’s divergence vs most of its G10 peers (especially the ECB) in combination with bouts of geopolitical effervescence and the re-emergence of the risk aversion among investors. In the US money markets, the recent strong appetite for bonds appears somewhat mitigated ahead of the opening bell in the old continent, lending in return some support to yields across the curve.