Tuesday July 20th Morning Update

The US$ steadies, oil prices slip, equity markets are up, while US yields dip as a glimmer of optimism returns. Currency & equity markets extend gains amid speculation that the worst this year’s risk-off sentiment is over, even as concern over a possible global downturn sparked by central bank rate hikes lingers. Today sees key CAD BoC CPI, US Existing Home Sales, US EIA Crude Oil Stocks and EU Consumer Confidence will help provide intraday direction to markets.?In other news.?Putin signals gas pipeline will restart, but with conditions. ECB is looking more closely at a ?% hike at its deposit rate decision on Thursday. UK Inflation hits 9.4% to a fresh 40-year high. President Putin says Ukraine did not make good on preliminary peace deal, US accuses Moscow of planning annexation. Draghi demands Italian unity as the price for staying on as PM.?The?currency markets.?Euro holds near 2-week high ahead of ECB. China CNY slips on corporate dollar demand and ongoing covid disruptions. GBP firms on BoE rate expectations after surging UK inflation. The US Index steadies after falling almost 1% this week, while MTD the US$ Index remains up 1.8%. CNY dips 0.1%, while Asian currencies are down 0.2% on average vs US$. Trading currencies remain positive with JPY, CHF & NOK are flat, while ZAR & MXN up 0.25%, AUD strengthens 0.4% and NZD rallies 0.5% vs US$.

Current level US$ Index???????????????106.810?????????Up 0.1%

Oil prices slip 1% ahead of US energy news and anticipation Russia will resume supply to Europe as scheduled on Thursday. C$ steadies as oil prices slip and the US$ steadies after 3-days of weakness. Canadian inflation will be the key focus point today as markets expect inflation to hit 8.5% yoy in June vs 7.7% in May which supports further BoC rate hikes in 2022. In the last 7-days we have seen C$ trade between 1.3223–1.2853, a break of 1.2816 opens the potential of 1.2678 (June10th) next. Support lowers to 1.2816 while resistance resets to 1.2966.

Current level US$/C$???????????????????1.2888???????????up 0.15%

Euro consolidates drops below 1.0200 with Italy, oil, and ECB in focus. Euro steadies near its 2-week highs as markets expect an aggressive 50bp rate hike on Thursday on surging EU inflation numbers. Italian politics is overshadowing Euro strength as uncertainty remains if PM Draghi can maintain his coalition government. President Putin signals gas pipeline will restart but warned that unless a spat over sanctioned parts is resolved, flows will be tightly curbed. The EU proposes a 15% cut in gas consumption on Russia supply concern. Support lowers to 1.0150 while resistance remains at 1.0285.

Current level EUR/US$????????????????1.0180???????????down 0.4%

EURGBP dips as the surge in UK inflation helped boost the prospect of further BoE interest rate hikes. Support holds at .8435 (1.1855) while resistance remains at .8600 (1.1628).

Current level EUR/GBP????0.8504 (1.1755)????????Down 0.4%

GBP drops below 1.2000, but finds support from the prospect of UK rate hikes. The UK inflation level spiked to 9.4% yoy in June and increases the prospect that the BoE will hike another 50bps at its next meeting in August. The UK tory leadership race will cut to the final two candidates today and then the conservative party members will have the final say on who will be the next PM. The current candidates are Former chancellor Sunak, Trade Minister Mordaunt and Foreign Secretary Truss. With the light economic docket today, we expect the pound to consolidate around current levels. Support holds at 1.1935 while resistance remains at 1.2030.

Current level GBP/US$????????????????1.1970????????????Down 0.2%

Other Ccy levels vs C$ - EURCAD 1.3126?GBPCAD 1.5424?AUDCAD .8891?CADCHF.7532?CADJPY 107.22 CADTHB 28.44?CADCNY 5.2400?CADNOK 7.7228?CADSEK 7.9724?CADDKK 5.6681?CADZAR 13.2702

Other Ccy levels vs US$ - JPY 138.18?CHF.9705?AUD.6900?NZD.6237?CNY 6.7538?MXN 20.5040?INR 79.9940?PLN 4.6830?CZK 24.015?ZAR 17.0830?ILS 3.4446?AED 3.6729?KWD 0.30761

Other Major X levels – EURCHF .9888?EURJPY 140.81?EURSEK 10.4680?EURNOK 10.1367?GBPCHF 1.1623?EURAUD 1.4763?GBPAUD 1.7348?AUDCHF .6699?AUDJPY 95.37?CHFJPY 142.51