- European stocks at record high
- Fed vice chair Clarida: Taper could begin later this year
- ADP report weaker than expected
- US ISM's services index jumped to a new record high
- US crude stocks unexpectedly rise
European indices recorded a third session of gains as investors welcomed upbeat economic data and solid performance of technology stocks which jumped 1.9% to levels last seen during the dot-com bubble. On the data front, a PMI survey showed the Eurozone private sector activity growth reached its highest level since 2006 while the retail sales rose for a second consecutive month in June due to the loosening of COVID-19 restrictions.
US indices are trading in mixed moods following hawkish comments from Federal Reserve Vice Chair Richard Clarida and recent macroeconomic data. Clarida suggested the central bank could start cutting back on bond purchases later in the year, however this will largely depend on labour market recovery. Following Fed vice chair comments, the dollar index rebounded to weekly highs at 92.30 after testing a key support level near 91.80 earlier this session. The yield on the benchmark 10-year Treasury note fell below 1.2%, hovering around its weakest level since mid-February.
On the data front, the ADP showed that private firms added only 330k positions last month, a sharp deceleration from the downwardly revised 680k in June and well below the analysts ’expectations of 700k rise. Meanwhile, ISM Non-Manufacturing PMI jumped to a new record of 64.1 in July, from 60.1 in June, beating market estimates of 60.5. Now, all eyes turn to Friday's NFP report, as investors await further hints on the Federal Reverse next steps.
WTI crude fell 3% and is trading below $68.50 a barrel on Wednesday, the lowest since July 20th, while Brent fell 2.40% and is trading around $70.60 amid concerns that the rapid spread of the Delta variant of the COVID-19 will hurt demand. On the supply side, EIA data showed a surprise build in US crude stocks last week, which was the biggest rise since the first week of May.
USDJPY tested lower limit of the descending channel after the release of the ADP report, however sellers failed to uphold momentum and pair rebounded following hawkish comments from Fed Clarida and upbeat ISM services survey. Pair is currently testing the upper limit of the aforementioned channel. Should a break higher occur, then the nearest key resistance to watch lies at 110.00 which is marked by previous price reactions. Source: xStation5
