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America’s Roundup: Dollar higher in choppy trade as inflation data eyed, Wall Street ends mixed, Gold retreats, Oil settles below $100 a barrel on economic worries, strong dollar-May 11th,2022

Posted at 11 May 2022 / Categories Market Roundups


Market Roundup

•US Redbook (YoY) 13.1%,15.2% previous

•US IBD/TIPP Economic Optimism 41.2, 45.5 previous

 •US API Weekly Crude Oil Stock 1.618M,-0.457M forecast,-3.479M previous

•US 3-Year Note Auction 0.000%, 2.738% previous

Looking Ahead - Economic Data (GMT)

• 00:30 Australia May Westpac Consumer Sentiment   -0.9% previous

•01:30 China Apr PPI (YoY)  7.7% forecast, 8.3% previous

•01:30 China CPI (YoY)  1.8% forecast, 1.5% previous

•01:30 China Apr CPI (MoM)  0.2% forecast, 0.6% previous

•05:00 US Mar Leading Index (MoM) -1.2% previous

•05:00 US Mar Coincident Indicator (MoM)  0.5% previous

Looking Ahead - Economic events and other releases (GMT)

•No significant events

Currency Summaries

EUR/USD: The euro steadied against the U.S. dollar on Tuesday as aggressive repricing of European Central Bank monetary tightening expectations supported euro. Money markets are currently pricing 92 bps of ECB rate hikes by year-end, from around 95 bps on Monday. ECB dove de Guindos on April 20 said that the bank should end its Asset Purchase Programme in July and could raise interest rates that same month. On the data front, German investor sentiment rose slightly in May on expectations the economic situation in Europe's largest economy will deteriorate less markedly than predicted previously. The ZEW economic research institute said on Tuesday its economic sentiment index rose to -34.3 points from -41.0 in April. Immediate resistance can be seen at 1.0557 (5DMA), an upside break can trigger rise towards 1.0597 (38.2%fib).On the downside, immediate support is seen at 1.0490(23.6%fib), a break below could take the pair towards 1.0422 (Lower BB).

GBP/USD: The British pound edged lower on Tuesday, heading back towards its lowest level in nearly two years on signs that a weakening economy will force the Bank of England to slow its interest-rate hiking cycle. On Thursday, the BoE raised its benchmark interest rate to 1.0% but said it saw the economy shrinking in 2023 and a near 1% fall in gross domestic product in the final quarter of 2022. At 1503 GMT, the pound was 0.2% lower against the U.S. dollar at $1.2305, just above its lowest level since June 2020 of $1.2262 reached on Monday. Markets are currently pricing in a further 106 basis points of tightening from the BoE this year, taking the benchmark rate to just above 2.0%. Immediate resistance can be seen at 1.2332(5DMA), an upside break can trigger rise towards 1.2405(38.2%fib).On the downside, immediate support is seen at 1.2276 (23.6%fib), a break below could take the pair towards 1.2180(Lower BB).

USD/CAD: The Canadian dollar weakened to its lowest level in 18 months against its U.S. counterpart on Tuesday as oil prices fell and recent volatility in global equity markets continued. Canada is a major producer of commodities, including oil, so the loonie tends to be sensitive to the outlook for the global economy. U.S. crude  prices settled 3.2% lower at $99.76 a barrel as the market balanced demand concerns with impending European Union sanctions on Russian oil. The loonie was trading 0.1% lower at 1.3020 to the greenback, or 76.80 U.S. cents, after touching its weakest level since November 2020 at 1.3052.  Immediate resistance can be seen at 1.3049 (23.6%fib), an upside break can trigger rise towards 1.3081(Higher BB).On the downside, immediate support is seen at 1.2968 (38.2%fib), a break below could take the pair towards 1.2899 (50%fib).

USD/JPY: The dollar strengthened against yen on Tuesday ahead of a key reading on inflation that could provide clues on the Federal Reserve's monetary policy path. Investors will closely eye the April consumer price index reading on Wednesday for any signs inflation may be starting to cool, with expectations calling for a 8.1% annual increase compared to the 8.5% rise recorded in March. The greenback has climbed nearly 9% this year to reach 20-year highs as investors have gravitated towards the safe haven on concerns about the Fed's ability to tamp down inflation without causing a recession, along with worries about slowing growth arising from the war in Ukraine and rising COVID-19 cases in China. Strong resistance can be seen at 130.78(23.6%fib), an upside break can trigger rise towards 131.86 (Higher BB).On the downside, immediate support is seen at 130.06(11DMA), a break below could take the pair towards 129.78(38.2%fib).

Equities Recap

European stocks rose from two-month lows on Tuesday, as bargain hunters returned to buy beaten-down shares following a bruising selloff on worries about a sharp slowdown in global economic growth.

The UK's benchmark FTSE 100 closed up by 0.37 percent, Germany's Dax ended up  by 1.15 percent, and France’s CAC finished the day up by 0.51 percent.

The S&P 500 and Nasdaq ended higher on Tuesday, with big growth shares rising after the previous day's selloff as Treasury yields tumbled.

Dow Jones closed down by 0.26 percent, S&P 500 ended up 0.25 percent, Nasdaq finished the day up by 0.98 percent.

Treasuries Recap

U.S. Treasuries rallied on Tuesday, with the yield on the benchmark 10-year note tumbling from more than a three-year high to below 3% as the market paused to reassess the inflation outlook a day before key consumer price data is released.

 

The yield on 10-year Treasuries  slid 11.4 basis points to 2.965%, while the 30-year bond  fell 10.8 basis points to 3.100%, almost trading under 3% at one point.

Commodities Recap

 U.S. crude oil price settled below $100 a barrel on Tuesday to its lowest level in two weeks as the demand outlook was pressured by coronavirus lockdowns in China and growing recession risks, while a strong dollar made crude more expensive for buyers using other currencies.

U.S. West Texas Intermediate crude settled down $3.33, or 3.2%, to $99.76 a barrel, while Brent crude was down $3.48, or 3.28%, at $102.46 a barrel. Both benchmarks were down for a second straight day and fell by more than $4 a barrel earlier on Tuesday.

Gold prices reversed course and fell on Tuesday as the dollar resumed strengthening, while investors shifted their attention to U.S. inflation data for cues on the Federal Reserve’s monetary policy strategy.

Spot gold was down 0.5% at $1,844.95 per ounce by 01:52 p.m. EDT (1752 GMT), after rising as much as 0.6% earlier in the session. U.S. gold futures settled down 1% at$1,841.00.


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