Dollar hits 2-year high

“Far and away the best prize that life offers is the chance to work hard at work worth doing.” – Theodore Roosevelt

 

 

HEADLINES

 

 

• U.S. dollar rallies to more than 2-year high on steep Fed rate hike outlook
• Gold heads for weekly dip on looming rate hikes, strong dollar
• Oil extends losses on growth concerns and Shanghai lockdown
• Wall Street, oil slide, dollar jumps as investors eye rate hikes
• USD/CNY could reach the 6.70 level if PBoC triggers further rate cuts – SocGen
• AUDUSD Near Term: Downside favored

 

 

FOREX

 

 

U.S. dollar rallies to more than 2-year high on steep Fed rate hike outlook

 

 

The dollar surged to a more than two-year high on Friday, continuing to draw support from Federal Reserve Chair Jerome Powell's comments on Thursday that more or less backed a half a percentage point tightening at next month's policy meeting, including consecutive rate increases this year. 

Powell said a half-point interest rate increase "will be on the table" when U.S. central bank meets on May 3-4.

Traders remained wary of intervention from Japanese monetary officials  to strengthen the yen.

 

 

COMMODITIES

 

 

Gold heads for weekly dip on looming rate hikes, strong dollar

 

 

Gold fell 1% on Friday and was set for its biggest weekly decline since mid-March as signs of faster policy tightening by the U.S. Federal Reserve lifted Treasury yields and the dollar. 

Spot gold was down 0.8% at $1,936.14 per ounce by 12:21 a.m. ET (1621 GMT), having earlier touched its lowest level in two weeks. The metal has lost 1.9% so far this week.

The hawkish tone helped the benchmark U.S. 10-year Treasury yields extend gains and also boosted the dollar index, making gold more expensive for overseas buyers. [USD/] [US/]

 

 

Oil extends losses on growth concerns and Shanghai lockdown

 

 

Oil slipped on Friday, burdened by the prospect of weaker global growth, higher interest rates and COVID-19 lockdowns in China hurting demand even as the European Union considers a ban on Russian oil that would further tighten supply.

The International Monetary Fund this week cut its global economic growth forecast while the U.S. Federal Reserve Chair on Thursday said that a half-point increase to interest rates “will be on the table” at the next Fed policy meeting in May.

 

 

STOCKS

 

 

Wall Street, oil slide, dollar jumps as investors eye rate hikes 

 

 

U.S. stocks and oil tumbled on Friday while bond yields continued to gain as investors prepared for a bevy of interest rate hikes in a global inflation fight.

All three major indices on Wall Street steepened their losses one day after Federal Reserve Chairman Jerome Powell indicated that the U.S. central bank was preparing a half-point interest rate hike at its upcoming May meeting, with more to come.

 

 

 ANALYSIS

USD/CNY could reach the 6.70 level if PBoC triggers further rate cuts – SocGen 

 

 

“Mounting economic pains will pressure the government to relax its zero-Covid policy, and that by end April the lockdowns in Shanghai will be eased enough to allow supply chains to function nearly normally. If so, the PBoC could resume rate cuts to support the economy further, which would further weaken the yuan toward 6.50.”

“An overshoot to 6.70 or above cannot be ruled out, as the Fed is set to tighten aggressively. Besides, fiscal easing is underway, the credit impulse is picking up and infrastructure investment growth has started to reaccelerate.” 

 

 

CHART

 

 

AUDUSD Near Term: Downside favored

 

 

Technical View: Short position below 0.7315. Target 0.7235. Conversely, break above 0.7315, to open 0.736.

 

 

Comments: The pair breaks below support.

 

 

 

Source: Trading Central
 

CALENDAR

*Times in GMT

 

 

Source: FX Street Economic Calendar

Footnotes
https://www.reuters.com/article/global-forex/refile-forex-u-s-dollar-rallies-to-more-than-2-year-high-on-steep-fed-rate-hike-outlook-idUSL2N2WK1KP
https://www.reuters.com/article/global-precious/precious-gold-heads-for-weekly-dip-on-looming-rate-hikes-strong-dollar-idUSL3N2WK2PI
https://www.cnbc.com/2022/04/22/oil-markets-demand-outlook-in-china-us-federal-reserve.html
https://www.reuters.com/business/global-markets-wrapup-1-2022-04-22/
https://www.fxstreet.com/news/usd-cny-could-reach-the-670-level-if-pboc-triggers-further-rate-cuts-socgen-202204221445