Oil reaches 7-week high

“There’s nothing wrong with staying small. You can do big things with a small team.” — Jason Fried 

 

 

HEADLINES

 

 

• Dollar rally stalls as risk appetite returns 
• Gold slips after strong U.S. retail sales data, rate hike bets
• Oil jumps to 7-wk high, then dips on hopes for Venezuela supply
• Wall Street rallies, led by Tesla and other growth stocks
• GBP/USD could head as low at 1.20 on a 3-month view – Rabobank
• GBPJPY Near Term: Upside favored

 

 

FOREX

 

 

Dollar rally stalls as risk appetite returns 

 

The dollar eased for a third straight day on Tuesday, pulling back from a two-decade high against a basket of major peers, as an uptick in investors’ appetite for riskier bets diminished the U.S. currency’s safe-haven appeal.

The dollar remained subdued after data showed U.S. retail sales increased solidly in April as consumers bought motor vehicles amid an improvement in supply and frequented restaurants, showing no signs of demand letting up despite high inflation.

 

 

COMMODITIES

 

 

Gold slips after strong U.S. retail sales data, rate hike bets 

 

Gold fell on Tuesday pressured by robust U.S. retail sales data and expectations of aggressive interest rate hikes, although a pullback in the dollar limited losses. 

Gold seems to have come under some pressure since the data, said Ryan McKay, a commodity strategist at TD Securities.

Gold is considered a hedge against surging inflation, but rate hikes translate into higher opportunity cost of holding non-yielding bullion.

 

 

ENERGY

 

 

Oil jumps to 7-wk high, then dips on hopes for Venezuela supply 

 

Oil prices jumped over $115 a barrel on Tuesday, their highest in about seven weeks, as the European Union kept pushing for a ban on Russian oil imports that would tighten supply. 

Prices retreated and were slightly lower after Reuters reported that sources said U.S. President Joe Biden’s administration will authorize as soon as Tuesday for U.S. oil company Chevron Corp to negotiate with Venezuelan President Nicolas Maduro’s government, temporarily lifting a ban on such discussions.

 

 

STOCKS

 

 

Wall Street rallies, led by Tesla and other growth stocks 

 

Wall Street rallied on Tuesday, lifted by Apple, Tesla and other megacap growth stocks after strong retail sales in April eased worries about slowing economic growth. 

Ten of the 11 major S&P sector indexes advanced, with financials (.SPSY), materials (.SPLRCM) and technology (.SPLRCT) each up over 2%.

Tuesday's broad rally followed weeks of selling on the U.S. stock market that last week saw the S&P 500 sink to its lowest level since March 2021.

Traders are pricing in an 85% chance of a 50-basis point rate hike in June.

 

 

ANALYSIS

 

 

GBP/USD could head as low at 1.20 on a 3-month view – Rabobank 

 

“The pound is the best performing G10 currency on a 1 day view as stronger than expected UK labour data raised the prospect that the BoE may have to go further with policy tightening to rein in inflationary pressures.  While a strong labour market is a good reflection of economic health, it is not good news for everyone insofar as higher interest rates will compound the impact of the cost of living crisis for many lower income households.”

“GBP/USD has pushed to its best levels since May 5 today with its reprieve being underpinned by a broad-based pullback in the USD. The softer tone in the USD reflects a better tone in risk appetite today. That said, we continue to view the medium-term outlook for risk appetite as vulnerable and don’t view GBP/USD as being out of the woods.”

 

 

CHART

 

 

GBPJPY Near Term: Upside favored

Technical View: Long position above 159. Target 162.35. Conversely, break below 159, to open 157.85.

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/2022/05/17/forex-markets-dollar-us-interest-rates.html 
https://www.reuters.com/markets/europe/gold-flat-dollar-retreat-offsets-rising-us-bond-yields-2022-05-17/ 
https://www.cnbc.com/2022/05/17/oil-rises-on-eus-russian-oil-ban-effort-demand-hopes-.html
https://www.reuters.com/markets/europe/futures-climb-technology-growth-stocks-rebound-2022-05-17/
https://www.fxstreet.com/news/gbp-usd-could-head-as-low-at-120-on-a-3-month-view-rabobank-202205171625