Oil drops after IMF cuts outlook

 

“Imagination is everything. It is the preview of life’s coming attractions.” – Albert Einstein 

 

HEADLINES

 

• U.S. dollar ascends to fresh 20-year peak vs yen on Fed, BOJ policy contrast
• Gold edges lower as firm U.S. dollar weighs
• Oil prices fall 5% after IMF cuts growth outlook
• Wall Street buoyant on earnings optimism, overshadows rising yields
• USD/CAD to rise over the next months on Fed tightening - Danske Bank
• GBPUSD Near Term: Downside favored

 

FOREX

 

U.S. dollar ascends to fresh 20-year peak vs yen on Fed, BOJ policy contrast 

 

The dollar rose on Tuesday to a fresh 20-year high against the Japanese yen, supported by the divergence in monetary policy between a Federal Reserve determined to keep a lid on soaring inflation and a Bank of Japan that has kept interest rates ultra-low. 

The dollar index , which measures the greenback against six other currencies, also climbed on Tuesday, rising past 101 for the first time in more than two years. It was last up 0.2% at 100.96.

 

COMMODITIES

 

Gold edges lower as firm U.S. dollar weighs 

 

Gold eased on Tuesday after having touched a resistance at the $2,000 per-ounce level in the previous session, as the dollar rose to a two-year high and dented bullion’s appeal. 

While bullion is considered a safe store of value during times of political and economic crises, as well as a hedge against inflation, a firmer dollar makes greenback-priced gold more expensive for other currency holders.

 

Oil prices fall 5% after IMF cuts growth outlook 

 

Oil prices were down about 5% in volatile trading on Tuesday on demand concerns after the International Monetary Fund (IMF) cut its economic growth forecasts and warned of higher inflation.

The price decline on Tuesday followed a rise of more than 1% on Monday, when oil prices hit their highest since March 28 on Libyan oil supply disruptions. Libya's National Oil Corp (NOC) warned on Monday of "a painful wave of closures" and declared force majeure on some output and exports as forces in the east expanded their blockade of the sector over a political standoff.

 

STOCKS

 

Wall Street buoyant on earnings optimism, overshadows rising yields 

 

All three of Wall Street's main indexes sailed higher on Tuesday as positive earnings reports emboldened investors amid more talk of aggressive policy steps to stem inflation and 30-year Treasury yields breaching 3% for the first time in three years. 

Of the 49 companies in the S&P 500 index that have reported quarterly earnings so far, 79.6% have exceeded profit estimates, as per Refinitiv data. Typically, 66% beat estimates.

 

ANALYSIS

 

USD/CAD to rise over the next months on Fed tightening - Danske Bank 

 

“We believe that CAD on a longer-term strategic basis will face support from elevated commodity prices and rising demand for buying inflation protection – which Canadian markets deliver. Meanwhile, short-term we are still worried that global recession risks could lead to a setback to risk and by extension also deliver a hit to risk sensitive assets incl. CAD. Given CAD’s close connection to the USD and the US economy, the Canadian currency is better protected than most other growth-sensitive currencies – yet we still see topside to USD/CAD in our base case.” 

 

CHART

 

GBPUSD Near Term: Downside favored

Technical View: Short position below 1.306. Target 1.298. Conversely, break above 1.306, to open 1.309.

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

 

 

Source: Trading Central
 

CALENDAR

 

*Times in GMT

 

 

 

Source: FX Street Economic Calendar

Footnotes
https://www.reuters.com/business/nothing-stops-yen-slide-falls-fresh-20-year-low-2022-04-19/
https://www.cnbc.com/2022/04/19/gold-markets-dollar.html
https://www.reuters.com/business/energy/oil-steady-despite-libya-supply-drop-shanghai-preparing-reopen-2022-04-19/
https://www.reuters.com/business/futures-slip-bond-yields-hit-new-highs-2022-04-19/