Yuan higher as China eases barriers, dollar in demand as GDP outlook deteriorates

Asian stock market closes in red on Tuesday. The Shanghai Composite is down 0.42% at 3199.02 Overall, the Singapore MSCI is down 0.30% at 294.60. Over in Hong Kong, the Hang Seng Index is down 0.89% at 19441.18. In Japan, the Nikkei 225 is down 0.72% at 27885.87, while the Topix index is down 0.098% at 1950.22 South Korea’s Kospi is down 0.43% at 2393.16. Australia S&P/ASX 200 down 0.85% at 7291.30.

Top News of the Day:

The dollar crept higher on Wednesday as some of the biggest U.S. banks warned of an impending recession, which dampened appetite for riskier assets and kept the greenback in demand.

Top bankers from JPMorgan Chase & Co, Bank of America and Goldman Sachs Said overnight that the banks are bracing for a worsening economy next year, as inflation and high interest rates cuts into consumer demand.

Against the dollar, sterling was last 0.03% lower at $1.2131, after falling 0.4% overnight.

The greenback rose 0.2% against the Japanese yen to 137.30 yen, following a 0.16% overnight gain.

“We’ve been forecasting a recession in the U.S., the UK, the euro zone and Japan … It’s part of our baseline,” said Joseph Capurso, head of international and sustainable economics at Commonwealth Bank of Australia.

“(That) will provide more support to the U.S. dollar, as a safe-haven currency.”

Against a basket of currencies, the U.S. dollar index edged 0.07% higher to 105.62.

It had risen nearly 0.3% overnight, extending a brief rally for a second straight session after upbeat U.S. services and factory data released at the start of the week pointed to underlying momentum in the world’s largest economy.

Market Summary as per 6/12/2022:

European equities Tuesday closing. The DAX futures contract in Germany traded down 0.72% at 14343.19, CAC 40 futures down 0.14% at 6687.79. UK 100 futures contract in the U.K. down 0.61 at 7521.39

In the U.S. on Wall Street, the Dow Jones Industrial Average Closed down 1.03% at 33596.34. The S&P 500 down 1.44% at 3941.26 and the Nasdaq 100 down 2.00% at 11014.89, NYSE closes 0.95% down at 15328.44.

Top Market News Today:

In the Forex market, GBPUSD down 0.23% at 1.2110. The USDJPY up 0.49% at 137.72 The USDCHF up 0.18 at 0.9433. EURUSD down 0.23% at 1.0446. EUR/GBP down 0.01% at 0.8623. The USD/CNY down 0.09% at 6.9866 at the time of writing.

In the Commodity market U.S. Gold futures up at 0.07% $1,772.38. Elsewhere, Silver futures up 0.34% at $22.420 per ounce, Platinum down 0.42% at $991.65. per ounce, and Palladium up 1.50% at $1876.23.

Brent Crude Oil up 0.05% at $79.38 per barrel.

In the Cryptocurrency Markets, Bitcoin at 16781.80 down 1.79%, Ethereum down 3.22% at 1230.43, Litecoin at 76.87 down 76.87%, at the time of writing.

Top Market Segment to Watch Out for Today:

OIL: – Oil futures edged slightly higher on Wednesday on hopes for improved Chinese demand while uncertainty about how a Western cap on Russian oil prices would play out kept markets on edge after a sharp fall the previous session.

Brent’s slump on Tuesday was the largest daily decline in prices since late September, which have traded in a $62 range this year.

Expectations of rising China demand continued to be a positive driver, as the country posted fewer new COVID-19 infections for two consecutive days.

“China has (been) rapidly eased COVID-19 restrictions, which may boost demand,” markets analyst Leon Li at CMC Markets said in a note.

A potential drawdown in U.S. crude stockpiles of around 6.4 million barrels, according to API figures, also gave some sentiment support on the supply front.

However, uncertainty on how the price cap on Russian oil would play out on supply contributed to volatility. Russia is considering three options, including banning oil sales to some countries and setting maximum discounts at which it would sell its crude, to counter the price cap imposed by Western powers, the Vedomosti daily reported on Wednesday.

Economic News:

US: A U.S. agency tasked with overseeing the audits of public companies on Tuesday said it imposed $7.7 million in fines and sanctioned three firms across KPMG’s global network for violations of professional auditing standards, quality control standards and other rules.

KPMG Colombia, KPMG UK and KPMG India each agreed to pay the civil penalties to settle a swathe of violations from 2016-2021, from signing off on blank work papers to improper answer sharing on internal training tests, the Public Company Accounting Oversight Board (PCAOB) said in a statement.

The companies are all member firms of KPMG, known as one of the “Big Four” accounting firms, which also include Deloitte & Touche LLP, Ernst & Young LLP and PricewaterhouseCoopers LLP.

Larry Bradley, global head of audit at KPMG, acknowledged the PCAOB’s findings and said the firm “remains committed globally to the highest standards of quality and integrity.”

The PCAOB also barred or suspended four KPMG auditors from participating in public company audits. The settled enforcement actions highlight the board’s more aggressive policing of auditors under Democratic leadership.

“These actions should send the message to KPMG and all other registered firms that the PCAOB is committed to rooting out misconduct wherever it occurs and will employ all sanctions at its disposal to protect investors and improve audit quality,” said Chair Erica Williams.

Euro Zone: – British Prime Minister Rishi Sunak’s government on Tuesday said it would ease restrictions on building onshore wind farms, heading off a revolt by his party’s lawmakers who had demanded they should be permitted with local support.

Sunak had opposed relaxing the ban on onshore farms in his campaign to become British leader just a few months ago and has said he wanted to focus on offshore wind.

But some in his Conservative Party have been demanding onshore turbines should be allowed where there was local consent, and said they would seek to make changes to a proposed legislation going through parliament.

The government in a statement said it would begin a consultation to see how local authorities could show local support could be demonstrated.

“Under the proposals, planning permission would be dependent on a project being able to demonstrate local support and appropriately address any impacts identified by the local community,” the statement said.

“Local authorities would also have to demonstrate their support for certain areas as being suitable for onshore wind, moving away from rigid requirements for sites to be designated in local plans.

The government said the consultation, which would also seek views on whether local communities who backed new projects should get lower energy bills, would start by Christmas and conclude by the end of April next year.

Top Economic Releases Today:

1. USD: Crude Oil Inventories Forecast –3.305M, Previous –12.580M at 21:00
2. AUD: GDP (QoQ) (Q3) Actual 0.6%, Forecast 0.7%, Previous 0.9% at 06:00
3. CAD: BoC Interest Rate Decision Forecast 4.25%, Previous 3.75% at 20:30
4. EUR: GDP (QoQ) (Q3) Forecast 0.2%, Previous 0.2% at 15:30
5. GBP: Halifax House Price Index (YoY) Actual 4.7%, Previous 8.3% at 12:30

TECHNICAL SUMMARY

GBPUSD TECHNICAL ANALYSIS

TRADE SUGGESTION – BUY AT 1.21500, TAKE PROFIT AT 1.22696, SL AT 1.20396

EURUSD TECHNICAL ANALYSIS

TRADE SUGGESTION – BUY AT 1.04800, TAKE PROFIT AT 1.05864, SL AT 1.04179

AUDUSD TECHNICAL ANALYSIS

TRADE SUGGESTION– BUY AT 0.66975, TAKE PROFIT AT 0.67432, SL AT 0.66474

USDJPY TECHNICAL ANALYSIS

TRADE SUGGESTION- SELL AT 136.904, TAKE PROFIT AT 135.311, SL AT 137.863

NASDAQ 100 INDEX TECHNICAL ANALYSIS

TRADE SUGGESTION – SELL AT 11518.61 TAKE PROFIT AT 11224.68, SL 11722.74

WTI CRUDE OIL TECHNICAL ANALYSIS

TRADE SUGGESTION– SELL AT 73.50, TAKE PROFIT AT 72.31, SL 74.69

SILVER TECHNICAL ANALYSIS

TRADE SUGGESTION– BUY AT 22.390, TAKE PROFIT AT 23.070, SL 22.009

BITCOIN TECHNICAL ANALYSIS

TRADE SUGGESTION- SELL AT 16748.29, TAKE PROFIT AT 16196.22, SL AT 17049.42