Financial Markets Today: Quick Take – July 12, 2022 Financial Markets Today: Quick Take – July 12, 2022 Financial Markets Today: Quick Take – July 12, 2022

Financial Markets Today: Quick Take – July 12, 2022

Macro 6 minutes to read
Saxo Strategy Team

Summary:  US equity market weakness on Monday continued overnight in Asia with the dollar strengthening towards parity against the euro in response to the region’s energy crisis and acute recession fears. Bonds also benefited from the current state of unease about the global economic outlook amid high inflation, China’s continued struggle with Covid, and geo-political uncertainties. Precious and industrial metals trade lower with crude oil still range bound ahead of two monthly oil market reports. Key focus being Wednesday’s US CPI print, not least considering it was last month’s print that helped trigger an aggressive FOMC rate hike and the current recession focus.

The Saxo Market Call podcast is on holiday and will return later this month.

What is our trading focus?

Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I)

US equity futures traded lower overnight after slumping on Monday, with traders positioning for another hot inflation reading on Wednesday and the start of a key earnings season that may provide clues on the direction of the economy. While the weakness was being led by megacaps like Tesla and Apple, it is also worth noting that the trading volumes across the US equity market was the lowest of the year, reflecting the current holiday season where liquidity dries up, thereby raising the risk of higher volatility. Into the earnings season, traders will be watching whether corporate America is resilient enough to pass on higher costs to consumers. 

Hong Kong’s Hang Seng (HSI.I) and China’s CSI300 (000300.I)

In spite of stronger-than-expected total outstanding aggregate financing (+10.8% YoY) and outstanding RMB loan data (+11.2% YoY) released yesterday after market close, investors’ primary concerns are the renewed worries about potential disruptions to economic activities due to rise in Covid-19 cases and looming recession risks in the U.S. and Europe.  For Monday July 11, mainland China reported 347 new locally transmitted cases, including 59 cases in Shanghai.  Shanghai is doing mass PCR testing today and again on Thursday in nine out of 16 districts.  PCR mass testing and VAT rebates have been putting a lot of pressures on local governments’ budgets and limiting their capacities to stimulate the economy.  While China reported sharply higher passenger car sales (+41% YoY) and EV sales (+130% YoY) in June, BYD (01211.xhkg) fell 11% on speculation that Berkshire Hathaway may be unloading the company’s shares.  

EURUSD trades near parity

The dollar’s continued push higher against most major currencies has taken it to within a few cents of parity against the euro, a level last seen 20 years ago. The European energy crisis, driven by reduced supplies from Russia, has taken gas prices to demand destructive territory more than ten times above the long-term average. The risk of recession and the ECB’s inability to combat inflation by raising rates, thereby widening interest rate spreads to the Greenback, have all fueled the drop in the common currency. While parity is the focus, the next key area of support is closer to €0.96, the top of the 2000 to 2002 consolidation range.

Crude oil (OILUKSEP22 & OILUSAUG22)
Crude oil and the fuel market in general has so far managed to find support despite the recession and strong dollar led sell-off across most other commodities, most notably the industrial metal sector. However, with the focus on recession and financial traders positioning themselves accordingly, tight fundamentals have not prevented the sector from taking a hit either. The losses seen in Asia today being driven by a Covid-19 resurgence in China adding to concerns about a global economic slowdown. It highlights the current challenge with traders having to navigate recession fears against a supply side challenged by sanctions and under investments. Focus on monthly oil market reports from OPEC and IEA.

Gold and silver clobbered by strong dollar

The yellow and white metals continue to struggle amid a surging dollar which has taken the Greenback to decade highs against the euro and the Japanese yen. Overnight, gold slid to a nine-month low with the key focus being the strong dollar worsening the technical outlook which during the latest reporting week to July 5 saw hedge funds cut their net long in COMEX gold to a three-year low, while investors in ETFs have been net sellers in all but one out of the last 14 trading trading sessions. While the dollar continues to rise, the focus on gold-supportive geopolitical and financial market risks is likely to take a back seat. In addition, continued weakness across industrial metals have battered silver to the extent the XAUXAG ratio trades above 90, a two-year high.

US Treasuries (TLT, IEF)
The US 10-year yield dropped back below 3% after rallying above following Friday’s stronger than expected job report. This despite expectations that Wednesday’s US CPI print may edge closer to 9%, thereby supporting the Federal Reserve’s case for another jumbo rate hike at the July 27 meeting.


What are we watching next?

Natural gas focus on Nord Steam 1 and current heatwave

European gas trades higher on Tuesday with the Dutch TTF benchmark near €170/MWh or $51/MMBtu. Punitive and demand destructive high prices has strengthened European recession risks while making it very difficult for the ECB to combat surging inflation through hiking rates, thereby supporting the decline in the euro towards parity against the dollar. Reduced supplies from Norway supporting the price at a time of heightened worries that the Nord Stream 1 pipeline will stay shut following annual maintenance that ends around July 20. The fact Russia/Gazprom have decided not to ship additional gas through other pipelines, has been seen as a warning that Russia will further weaponize its gas weapon on Europe in retaliation for the regions support for Ukraine. This at a time where a heat wave across Europe has raised demand for electricity towards cooling.

Earnings Watch
A preview of Q2 earnings releases over the next two weeks can be read on the trading platform or at

Economic calendar highlights for today (times GMT
1600 – EIA's Short-Term Energy Outlook
2030 – API's Weekly Crude and Product Stock Report
During the day: OPEC’s Monthly Oil Market Report

The week ahead from Saxo’s APAC team: 
Saxo Spotlight: What’s on investors and traders radars this week?

Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app:

Apple Sportify Soundcloud Stitcher


The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website. This content is not intended to and does not change or expand on the execution-only service. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
Notification on Non-Independent Investment Research (
Full disclaimer (
Full disclaimer (

Saxo Bank (Schweiz) AG
The Circle 38

Contact Saxo

Select region


All trading carries risk. Losses can exceed deposits on margin products. You should consider whether you understand how our products work and whether you can afford to take the high risk of losing your money. To help you understand the risks involved we have put together a general Risk Warning series of Key Information Documents (KIDs) highlighting the risks and rewards related to each product. The KIDs can be accessed within the trading platform. Please note that the full prospectus can be obtained free of charge from Saxo Bank (Switzerland) ltd. or the issuer.

This website can be accessed worldwide however the information on the website is related to Saxo Bank (Switzerland) Ltd. All clients will directly engage with Saxo Bank (Switzerland) Ltd. and all client agreements will be entered into with Saxo Bank (Switzerland) Ltd. and thus governed by Swiss Law.

The content of this website represents marketing material and has not been notified or submitted to any supervisory authority.

If you contact Saxo Bank (Switzerland) Ltd. or visit this website, you acknowledge and agree that any data that you transmit to Saxo Bank (Switzerland) Ltd., either through this website, by telephone or by any other means of communication (e.g. e-mail), may be collected or recorded and transferred to other Saxo Bank Group companies or third parties in Switzerland or abroad and may be stored or otherwise processed by them or Saxo Bank (Switzerland) Ltd. You release Saxo Bank (Switzerland) Ltd. from its obligations under Swiss banking and securities dealer secrecies and, to the extent permitted by law, data protection laws as well as other laws and obligations to protect privacy. Saxo Bank (Switzerland) Ltd. has implemented appropriate technical and organizational measures to protect data from unauthorized processing and disclosure and applies appropriate safeguards to guarantee adequate protection of such data.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the U.S. and other countries. App Store is a service mark of Apple Inc.