MHMarkets:Europe raised interest rates by 50 basis points and US jobless claims came in higher than expected

The Fundamentals:

The European Central Bank unexpectedly raised interest rates by 50 basis points in July, its first increase in 11 years and ending an era of negative interest rates in the Eurozone. In addition, the ECB has launched an anti-financial fragmentation tool, TPI, aimed at prventing financial ragmentation within the Eurozone. The ECB said TPI purchases are not subject to “priori restrictions” and the sacale of purchases depends on the severity of policy transmission risks, but did not provide other details on the TPI, including key information such as sacale duration and threshold.

Initial claims for jobless benefits came in at 251,000 for the week ended July 16, versus expectations of 240,000, and the number of states applying for unemployment insurance rose for a third straight week to the highest level since November. The agency attributed it to a growing number of companies announcing layoffs, indicating some weakness in an otherwise solid job market.

The Technical:

Dow: The three major U.S. stock indexes posted a third straight day of gains, with the Nasdaq up 1.37%, the Dow 0.51% and the S&P 500 up nearly 1%. Tesla closed up 9.7 percent, its highest since May 10. The Dow is choppy, with an upper focus around 33240 backed-up pressure.   

Usd: The DOLLAR Index was volatile on the day, quickly rebounding nearly 100 points after a short-term dip, before giving up gains and closing down 0.43% at 106.58. The 10-year Yield fell sharply to end at 2.882%; The euro pulled up nearly 80 points against the dollar on the surprise ECB rate hike before plunging 120 points to stay close to the 1.02 mark. Usd retreated above, bulls cautious, watch 105 target below.

Gold: Spot gold hit $1,680 ahead of the ECB decision, then rebounded sharply to hit the $1,720 mark before closing up 1.27% at $1,718.02 an ounce. Gold low shock, below the monthly line support 1680 position stabilized rebound, focus on 1744 target position.

Oil: On the crude front, both oil prices plunged, with WTI crude recovering slightly after falling as much as 5% on the day to end down 3.1% at $98.92 a barrel. Brent crude settled down 2.62 percent at $104.81 a barrel. Crude oil shock, watch target near 103 above.

 (The above analysis only represents the view of analysts. Currency markets are risky and investors should be cautious. )