GBP slumps after dovish BOE

 

“Make every detail perfect and limit the number of details to perfect.” — Jack Dorsey 

 

HEADLINES

 

• Dollar bounces, sterling tumbles on dovish BoE
• Gold retreats post Fed-led boost as dollar gains upper hand
• Oil steadies near $110/bbl; strong dollar offsets supply worry
• Wall Street tumbles on fear Fed may need bigger rate hike to tame inflation
• Musk's $44 bln buyout of Twitter faces U.S. antitrust review -report
• USD/CAD: Return above 1.2846/53 needed to retest the March high at 1.2900/15 – Credit Suisse
• GBPUSD Near Term: Downside favored

 

FOREX

 

Dollar bounces, sterling tumbles on dovish BoE

 

The dollar rebounded on Thursday but held below 20-year highs reached last week, a day after the Federal Reserve affirmed that it would take aggressive steps to combat soaring inflation but played down the prospect of even larger rate hikes.

The dollar index was last at 103.82, up 1.2% on the day. It reached 103.93 last Thursday, the highest since December 2002.

The euro fell to $1.051, down 1.05%, after dropping to $1.0470 last Thursday, the lowest since January 2017.

 

 

COMMODITIES

 

Gold retreats post Fed-led boost as dollar gains upper hand

 

Gold prices fell on Thursday, giving up some gains from a more than 1% rise, as a bounce in the dollar offset support for bullion from a relatively less hawkish stance on interest rate hikes from the U.S. Federal Reserve.

Dampening appetite for gold among overseas buyers, the dollar index gained 1.3% boosted by safe haven inflows driven by a retreat in Wall Street, while the yield on 10-year Treasury notes rose over 3%.

 

Oil steadies near $110/bbl; strong dollar offsets supply worry

 

Oil prices steadied on Thursday, under pressure from a stronger dollar and a drop in global stock markets while supported by supply worries after the European Union (EU) laid out plans for new sanctions against Russia including an embargo on crude.

Japan said it would face difficulties in immediately cutting off Russian oil imports.

Yawger said that situation could change as the U.S. government buys crude to replenish strategic crude reserves.

 

STOCKS

 

Wall Street tumbles on fear Fed may need bigger rate hike to tame inflation

 

Wall Street's main indexes tumbled on Thursday as investors fretted the Federal Reserve's rate hike might not be enough to bring inflation under control and the U.S. central bank might need to take more drastic action.

The U.S. central bank on Wednesday raised interest rates by half a percentage point as expected and Fed Chair Jerome Powell explicitly ruled out a hike of 75 basis points in a coming meeting.

Traders, however, on Thursday raised their bets on a 75 basis-point hike at the Fed's June meeting. 

 

Musk's $44 bln buyout of Twitter faces U.S. antitrust review -report

 

The U.S. Federal Trade Commission (FTC) is reviewing Tesla (TSLA.O) Chief Executive Elon Musk's $44 billion takeover of Twitter Inc (TWTR.N), Bloomberg News reported on Thursday, citing a person familiar with the deal.

The FTC declined to comment, while Musk could not be reached for comment.

The deal has the support of Republicans, who hope conservatives banned from the site, like former President Donald Trump, will be allowed to return.

 

ANALYSIS

 

USD/CAD: Return above 1.2846/53 needed to retest the March high at 1.2900/15 – Credit Suisse 

 

“USD/CAD is falling sharply back lower again, with next near-term support now seen at 1.2684/53. We retain our bullish bias whilst above this area, though a move back above 1.2846/53 is needed to relieve the immediate downward pressure and pave way for a renewed test of the March high at 1.2900/15.” 

“Above March high at 1.2900/15 would see scope to challenge the 2021 high at 1.2947/67, which we view as a key medium-term barometer for the market.” 

 

CHART

 

GBPUSD Near Term: Downside favored

Technical View: Short position below 1.245. Target 1.23. Conversely, break above 1.245, to open 1.252.

Comments: The pair remains under pressure. Further weakness favored.

 

 

 

 

Source: Trading Central 

 

 

CALENDAR

 

 

*Times in GMT

 

 

 

 

Source: FX Street Economic Calendar

 

 

Footnotes

https://www.cnbc.com/2022/05/05/forex-markets-dollar-us-federal-reserve.html
https://www.cnbc.com/2022/05/05/gold-markets-us-federal-reserve.html
https://www.cnbc.com/2022/05/05/oil-markets-european-union-russia-china-economy.html
https://www.reuters.com/business/futures-slip-after-fed-driven-rally-wall-street-2022-05-05/
https://www.reuters.com/technology/musks-44-bln-buyout-twitter-faces-ftc-antitrust-review-report-2022-05-05/
https://www.fxstreet.com/news/usd-cad-return-above-12846-53-needed-to-retest-the-march-high-at-12900-15-credit-suisse-202205051303