China lockdowns hit oil price

 

“If you just work on stuff that you like and you’re passionate about, you don’t have to have a master plan with how things will play out.” — Mark Zuckerberg 

 

 

 

HEADLINES

 

• U.S. dollar rides to two-decade highs as yields rise
• Gold extends decline on dollar rally, elevated yields
• Oil tumbles 4%, weighed down by dollar, China lockdowns
• Stocks slide on growth fears, dollar extends rally
• Analysis: Whispers of S&P 500 bear market grow louder as U.S. stock decline continues
• USD/CAD: Break above 1.3020/41 to clear the way for further gains – Credit Suisse
• GBPJPY Near Term: Upside favored

 

 

 

FOREX

 

U.S. dollar rides to two-decade highs as yields rise 

 

The U.S. dollar climbed to a two-decade high on Monday as rising U.S. Treasury yields prompted hedge funds to add to their bullish bets while the Chinese yuan weakened below 6.77 levels after weak trade data. 

The latest leg of the dollar’s rise, which began after the Federal Reserve raised interest rates by 50 bps last week, has hit currencies that had previously been immune to broad dollar rallies, including the Australian dollar, the yuan and even cryptocurrencies.

Against a basket of major currencies, the dollar topped 104.19 on Monday for the first time since July 2002, extending its almost 9% rise this year.

 

 

 

COMMODITIES

 

Gold extends decline on dollar rally, elevated yields 

 

Gold prices extended their retreat to fall more than 1% on Monday as the dollar hovered near two-decade highs and benchmark U.S. Treasury yields were at their highest in nearly four years. 

While gold is considered a hedge against inflation and economic uncertainties, rapid U.S. interest rate hikes increase the opportunity cost of holding the non-yielding bullion.

Investors also took stock of Britain’s plan to increase tariffs on platinum and palladium imports from Russia and Belarus in new sanctions.

 

Oil tumbles 4%, weighed down by dollar, China lockdowns 

 

Oil prices slipped on Monday alongside equities and was weighed down by a strong dollar and demand concerns on the back of continued coronavirus lockdowns in China, the world top oil importer.

The dollar hitting a fresh two-decade high made oil more expensive for holders of other currencies.

Crude imports by China fell 4.8% in the first four months compared with last year, but included a nearly 7% rise in April.

 

 

 

STOCKS

 

Stocks slide on growth fears, dollar extends rally 

 

Stock indexes around the world dropped on Monday while the dollar pared gains after hitting a two-decade high while oil prices sank as worries about higher interest rates and a tightened lockdown in Shanghai deepened investors' fears of a global economic slowdown. 

Yields on most U.S. Treasury notes lost earlier gains to trade lower on Monday as bargain-hunters stepped in after the benchmark 10-year note hit fresh 3-1/2 year highs on inflation fears.

 

Analysis: Whispers of S&P 500 bear market grow louder as U.S. stock decline continues

 

Expectations of a hawkish Federal Reserve are dimming Wall Street’s outlook for stocks, with some investors now bracing for a potential bear market in the benchmark S&P 500 index.

A bear market - often thought of as a 20% or more decline from a high - would mark the end of the pandemic-era rally that sent stocks to record levels on the back of unprecedented stimulus from the Federal Reserve.

Others, however, believe the Fed’s hyper-focus on inflation makes recession more likely and will continue pounding stocks.

 

 

 

ANALYSIS

 

USD/CAD: Break above 1.3020/41 to clear the way for further gains – Credit Suisse

 

 “Though a more severe pullback cannot be ruled out completely, with the medium-term MACD now shifting higher, we look for 1.2947/63 to eventually break and open the door to test the 38.2% retracement of the 2020/21 downtrend and the 200-week moving average at 1.3020/41.” 

“Only a sustained break above 1.3020/41 would confirm that a new medium-term uptrend has emerged and see scope to challenge the mid-November 2020 high at 1.3172.” 

“Significant support is seen at 1.2716/2675. A break below here would shift the near-term risk back lower again and warn of weakness back toward the lower end of the long-term range.”

 

 

 

CHART

 

GBPJPY Near Term: Upside favored

 

Technical View: Long position above 160.4. Target 163.1. Conversely, break below 160.4, to open 159.45.

 

Comments: The pair is expected to resume advance after correction.

 

 

Source: Trading Central 

 

 

 

 

CALENDAR

*Times in GMT

 

 

 

 

Source: FX Street Economic Calendar

 

 

SOURCES

 

https://www.cnbc.com/2022/05/09/forex-markets-dollar-us-treasury-yields.html 
https://www.reuters.com/article/global-precious/precious-gold-extends-decline-on-dollar-rally-elevated-yields-idUSL3N2X12RQ 
https://www.cnbc.com/2022/05/09/oil-markets-demand-outlook-european-union-russia.html 
https://www.reuters.com/business/global-markets-wrapup-2-pix-2022-05-09/
https://www.reuters.com/business/whispers-sp-500-bear-market-grow-louder-us-stock-decline-continues-2022-05-09/ 
https://www.fxstreet.com/news/usd-cad-break-above-13020-41-to-clear-the-way-for-further-gains-credit-suisse-202205091332