Search LOGIN

Wall Street rolls over again

 

 

“The fastest way to change yourself is to hang out with people who are already the way you want to be.” — Reid Hoffman 

 

 

HEADLINES

 

 

British Pound: The sick man of the currency world 

Gold futures are flat as dollar rises, Fed chief hardens stance

Oil falls 2% as U.S. refiners ramp up output, equities retreat

Instant View: Wall Street recoils 3% on Target, tightening concerns

USD/JPY: We continue to see the potential for further upside – Rabobank

AUDUSD Near Term: Upside favored

 

 

FOREX

 

British Pound: The sick man of the currency world 

 

 

In volatile currency markets, one trade stands out as an easy bet: selling the British pound. 

With the world's fifth-biggest economy grappling with a particularly unhealthy cocktail of slowing growth and surging inflation, the British currency has become the medium of choice to express a negative view.

Official data on Wednesday showed inflation reached a 40-year high of 9% in April - more than four times the Bank of England's 2% target while Britain's worst cost of living crisis in three decades will not subside until late this year, according to a Reuters poll.

 

 

COMMODITIES

 

 

Gold futures are flat as dollar rises, Fed chief hardens stance 

 

 

Gold futures were flat Wednesday as the dollar recovered slightly, piling pressure on greenback-priced bullion along with firm Treasury yields and an aggressive inflation stance by the U.S. Federal Reserve chief. 

Gold has been consolidating since the end of last week but the overall direction is down, towards about $1,750, said Ilya Spivak, a currency strategist at DailyFX. “The question is when do we find fresh momentum to take us there?” Spivak said.

 

 

ENERGY

 

Oil falls 2% as U.S. refiners ramp up output, equities retreat 

 

 

Oil prices reversed course and fell over 2% on Wednesday after government data showed U.S. refiners ramped up output, easing worries of a supply crunch, and as traders took cues from a drop in equities market. 

Capacity use on both the East Coast and Gulf Coast was above 95%, putting those refineries close to their highest possible running rates.

Both benchmarks also gave up earlier gains of $2-$3 a barrel following a change in risk sentiment as equity markets fell, said UBS analyst Giovanni Staunovo.

 

STOCKS

 

 

Instant View: Wall Street recoils 3% on Target, tightening concerns 

Wall Street's stock indexes tumbled more than 3% on Wednesday as a growth share rally reversed amid concerns about economic growth highlighted by a 26% plunge in Target Corp shares after the retailer became the latest victim of surging prices. 

Rising inflation, the conflict in Ukraine, prolonged supply chain snarls, pandemic-related lockdowns in China and prospects of aggressive policy tightening by central banks have weighed on the markets recently.

STOCKS: Dow down 2.95%, S&P 500 down 3.41%, Nasdaq fell 4.08%

 

 

ANALYSIS

 

 

USD/JPY: We continue to see the potential for further upside – Rabobank 

 

 

“Despite the pressure on the trade balance, Japan’s current account recorded a second straight surplus in March, proving that investment income into the country can still outweigh the impact of surging energy and commodity costs. The better than expected current account release helped restore confidence in the JPY’s safe haven status and coincided with a dip lower in the value of USD/JPY towards the end of last week. We continue to favour the USD over the JPY as a safe haven in this current crisis and see scope for a move towards USD/JPY132.00 on a 1 to 3 month view.  This view assumes that the Fed hikes interest rates at an aggressive pace in the coming months and that the BoJ retains an extremely dovish policy position.” 

 

 

CHART

 

 

AUDUSD Near Term: Upside favored

Technical View: Long position above 0.691. Target 0.711. Conversely, break below 0.691, to open 0.6845.

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

 

 

 

 

Source: Trading Central 

 

 

CALENDAR

 

 

*Times in GMT

 

 

 

 

Source: FX Street Economic Calendar

 

Footnotes


https://www.reuters.com/markets/europe/british-pound-sick-man-currency-world-2022-05-18/
https://www.cnbc.com/2022/05/18/gold-markets-dollar-us-federal-reserve.html
https://www.reuters.com/markets/europe/oil-prices-climb-hopes-china-demand-recovery-2022-05-18/
https://www.reuters.com/markets/stocks/sp-500-tumbles-3-target-tightening-concerns-2022-05-18/
https://www.fxstreet.com/news/usd-jpy-we-continue-to-see-the-potential-for-further-upside-rabobank-202205181650
 

UNLIMITED ACCESS!

The best way to keep track of your accounts. Get notifications
and access your dashboard any time!

Open a live or demo account, make secure deposits or get latest
market updates for free!