The Bullet Report: USD surges as FED Rate Hike speculation resumes

Today’s calendar features UK labor market report for May which is always a market mover. While the report covers the period before the UK’s EU referendum, it will give us important information about how the economy performed in the period ahead of the EU vote. In Europe, Consumer Confidence data for July is expected to slow down as the report represents data after the Brexit for the first time. The forex markets are pretty steady in Asian session so far. Dollar jumped yesterday on reviving expectation of rate hike by Fed.

Currencies: Better US data revived expectations for a FED rate hike this year. Currently, fed fund futures are pricing in 19% chance of rate hike by September and 47% chance by December. The ICE U.S. Dollar index , a gauge of the dollar’s strength against a basket of six rival currencies, gained 0.6% to 97.0880, its strongest level since March 10. EUR tested the 1.0995/00 support yesterday but failed to break through (low of 1.0998). Downward momentum has improved considerably and a daily closing below this key support would indicate that the outlook for EUR has shifted to bearish again. For GBPUSD declined sharply on Tuesday as higher than expected British inflation figures for June did little to alter expectations that the Bank of England would ease monetary policy as early as next month. To the upside, immediate resistance can be seen at 1.3134. To the downside, immediate support can be seen at 1.3054, a break below at this level will open the door towards next level at 1.2954.

Stocks: Another day, another record high for US stocks. The Dow Jones Industrial Average recorded its sixth straight record close Tuesday, even as the two other main benchmarks finished lower following a series of weak earnings reports. The Dow gained 26.03 points, or 0.1%, to 18,559.08, finishing higher for the eighth straight day — its longest winning streak in more than three years, and its longest stretch of consecutive record closes in about two-and-a-half years.

Oil and Gold: Oil futures fell Monday after it was confirmed the attempted coup in Turkey over the weekend didn’t negatively impact the flow of oil and natural gas. Crude Oil fell 59 cents, or 1.3%, to settle at $44.65 a barrel on the New York Mercantile Exchange, after losing 1.6% a day earlier. That’s the lowest close since May 9. Brent crude on London’s ICE Futures exchange fell 30 cents, or 0.6%, to end at $46.66 a barrel. Gold rose to $1338 resistance overnight but was quickly sold off to $1332 and is trading at $1328 at time of writing

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