Forex Market

Market Update – May 9 – USD dominance rips through every marker on FED

Monday Markets Blues

Sometimes the cause take place after the effect? This is what looks to be the case this week. The USD surged to 2001 to has been bought and fixed income sold on ideas that the Fed had taken a hawkish turn, with investors searching for safety.  The hikes will be front-loaded with the next 50 bp hikes discounted for the next two meetings (June and July) and a strong leaning for the same in September (~66%). Yields 10-year is up 1.0 p at 3.14%. Stock markets are broadly lower, with Japanese markets underperforming and the Nikkei down -2.5%. Tighter lockdowns against in Beijing and Shanghai raised pressure on its economy, while China reported faster-than-expected growth in exports for April, while imports were flat.

Meanwhile in the market, speculation that President Putin might declare war on Ukraine in order to call up reserves during his speech at “Victory Day” celebrations could hurt further market sentiment.

The week ahead is important because it may be the first signs that may be peak inflation is at hand.

USDIndex above 104.10. 
Equities – Nikkei down -2.5%. The ASX closed with a loss of -1.2%, the CSI is currently down -1.4%, while Hong Kong was closed today. USA500 led the way with a drop of 1.1%, while USA100 shed 1.0%
Yields 10-year is up 1.0 p at 3.14%, Australia’s long yield also continued to climb and the German 10-year rate is up 0.4 bp at 1.13% this morning. 
Oil back to 109, after  EU and G7 mull Russian oil imports while Saudi Arabia cut prices for buyers in Asia as China’s lockdowns weigh on demand in the region.
Gold drifted back to 1869 as it looks less attractive from the safety of USD, while elevated yields further weighed on prices.
Bitcoin hammered! Gapped down to at 33,228. The start of a sharp technical fall ?
FX marketsEURUSD ιs just over the 1.05 mark, AUD and NZD also struggled against the largely stronger USD. USDJPY climbed above the 131 mark and Cable is at a near 2-year low at currently 1.2259.

Biggest FX Mover @ (06:30 GMT) USOIL (-2.17%) drfted to  S1 at 108.15 in the EU open. MAs & Stochastics bearishly crossed, and RSI is at 41 sloping lower. H1 ATR 0.91, Daily ATR 4.43.

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Andria Pichidi

Market Analyst

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