MHMarkets:Rising recession fears lead to market turmoil, rising euro zone bond spreads face stagflation challenges

Fundamentals:

Earlier, U.S. economic data showed that inflation remained stubbornly high in June, leaving the Federal Reserve likely to aggressively raise interest rates if it deems necessary.

The U.S. personal consumption expenditures (PCE) price index rose 1.0% in June, the largest increase since September 2005, after rising 0.6% in May. In the 12 months through June, the PCE price index rose 6.8%, the largest increase since January 1982. Excluding volatile food and energy, the core PCE price index surged 0.6% in June after climbing 0.3% in May.

The dollar initially rose on inflation data, but pared gains after final data from the University of Michigan showed consumers' inflation expectations fell in July. Federal Reserve Chairman Jerome Powell last month cited University of Michigan consumer confidence data as the key behind the shift to more aggressive interest rate policy.

Data from Action Economics showed that the Chicago manufacturing index fell to a new 23-month low of 52.1, refreshing the previous record of 56.0, which also caused some drag on the dollar.

However, market expectations for a rate hike by the ECB have eased in recent weeks, as a recession, possibly due to a cut in Russian gas supplies, is seen as driving the ECB to a more dovish rate path. Gazprom will cut the flow of natural gas to Europe via the Nord Stream 1 gas pipeline to just 20% of total capacity this week, raising concerns about soaring energy prices.

On the disk performance:

On Friday, spot gold fluctuated widely, breaking through the 1760 mark, and finally closed up 0.58% at $1,765.22 per ounce; after spot silver broke through and stepped back at the $20 mark many times, it finally closed up 1.7% at $20.32 per ounce.

The U.S. dollar index fluctuated violently during the session. After dropping to the lowest point of 105.55, the U.S. dollar rebounded more than 100 points before the market, then fell back, failed to hold the 106 mark, and finally closed down 0.311% at 105.85; the 10-year U.S. bond yield fell below the lowest level since April 8, and finally closed at 2.658%.

In terms of crude oil, the two oil prices rose and fell. After WTI crude oil broke through the US$100 mark and rose 4%, the increase narrowed and finally closed up 1.75% at US$98.28 per barrel; Brent crude oil closed up 1.9% at 103.76 USD/barrel.

Technical information:

Dollar:

The U.S. dollar index fluctuated violently during the session. After dropping to the lowest point of 105.55, the U.S. dollar rebounded more than 100 points before the market, then fell back, failed to hold the 106 mark, and finally closed down 0.311% at 105.85;

The U.S. dollar index hit a three-week low in volatile trading on Friday (July 29). After a batch of mixed economic data, investors worries about a recession temporarily outweighed their worries about inflation. There were also many positions adjustment at the beginning of the month. Earlier, U.S. economic data showed that inflation remained stubbornly high in June, leaving the Federal Reserve likely to aggressively raise interest rates if it deems necessary. The dollar initially rose on inflation data, but pared gains after final data from the University of Michigan showed consumers' inflation expectations fell in July.

Speculators' net-long bets on the dollar dipped in the latest week, according to data from the U.S. Commodity Futures Trading Commission (CFTC) released on Friday. The net long dollar position fell to $18.46 billion in the week ended July 26 from $18.98 billion the week before. U.S. dollar positions at the International Moary Market in Chicago are calculated based on net positions in six major currencies: Japanese yen, euro, British pound, Swiss franc, Canadian dollar and Australian dollar.

Focus on resistance: 108.5 to 110 area      Focus on support: 103 to 105 area

Gold:

At the beginning of the Asian market on Monday (August 1), spot gold fluctuated and fell slightly. As of press time, it was trading at $1,764.30 around, holding most of last week's gains; gold prices rose 2.24% last week, marking the second consecutive weekly rise, hardware prices rose 0.57% last week, and the daily line recorded three consecutive positives, mainly because the Fed chairman's speech was dovish after the Fed raised interest rates by 75 basis points as scheduled, which made the market expect the Fed to slow down the rate hike process, and the second quarter GDP data of U. S. was also unexpectedly worse than expected. The dollar continued to weaken, and the daily line was overcast for three consecutive days. It once fell to a new low of 105.53 since July 6. At the same time, factors such as the geopolitical situation in Russia and Ukraine also provided support for the price of gold.

This trading day, we need to pay attention to the ISM manufacturing PMI data of US. This week, we also need to pay attention to the RBA interest rate decision, the Bank of England interest rate decision, the July ISM non-manufacturing PMI of US, and the July non-farm payrolls report of US. It is expected that Fed officials will also pay attention this week. Investors will also need to pay close attention to the speeches that will come out one after another.

At present, the short-term is still biased towards the bullish outlook, and the price of gold is expected to continue to rise. Pay attention to the resistance near the low of 1786.70 on May 16. If the resistance is successfully broken, it is expected to further rise to the vicinity of the 1800 mark. My personal suggestion is to remember not to chase more operations. If you want to do more, you need to wait for a fall to support the price reasonably.

Resistance: 1765----1786         Support: 1735----1720

Crude Oil:

On Monday (August 1), U.S. crude oil fell slightly in early Asian trading, and is now at $98 per barrel, due to rising fears of economic recession and the accelerated spread of monkeypox around the world. However, geopolitical tensions still support oil prices, which this week focus on the OPEC+ meeting.

In general, amid the accelerated spread of monkeypox around the world, concerns about economic recession have risen, the market focused on the OPEC+ meeting this week, and expectations that the organization will soon increase supply weakened, and oil prices were under pressure, but geopolitical tensions continued to provide oil prices support, oil prices may fluctuate at the 100 mark in the short term.

From a technical point of view, the current bullish rebound of crude oil is likely to have been completed, and the shadow line on the daily line is obvious, indicating that the upper resistance is heavy, and the current oil market may once again enter a new round of mid-line decline.

Resistance: 99.3 to 100.0  Support: 94.8 to 96.5

(The above analysis only represents the opinions of analysts and does not serve as any investment guidance recommendation, and does not assume any responsibility for any loss or damage caused by any direct or indirect transaction risks, losses or gains related to any personal investment.)