Author: Enrico A
What you need to take care of on Friday, May 6: The American dollar recovered all the ground shed post-Fed and even reached fresh weekly highs against
At 1.0520, EUR/USD is down some 0.9% in late trade on Wall Street. The price dropped from a high of 1.0641 to a low of 1.0492 on the day with the US d
Events to Look Out for Next Week
The focus remains on inflation and the much anticipated response from the FOMC, RBA and BOE next week, while the markets price in action from the ECB down the road. The advent of month-end, a holiday in Japan on Friday, and the UK also shut on Monday accelerated some profit taking on Wall Street after the early rally. It looks as though many are sidelined into the weekend and ahead of the FOMC where there is a lot of uncertainty over the aggressiveness of the Fed’s normalization path, and the BOE’s ambiguity. Hiking rates too much too quickly would only increase the risk of…
GBPUSD: Weekly Review 02-06 May 2022
The escalation of the war in Ukraine and, the prospect of a slowdown in China’s growth following the renewed COVID-19 lockdowns have created a significant disadvantage in risk appetite. Future global growth indicators indicate further decline and geopolitical challenges show no signs of decline. GBPUSD managed to limit last week’s losses, having closed the market with an increase of +0.98% on Friday. However, throughout April, the Pound struggled to move higher, with its largest weekly and monthly declines since June 2021. The strengthening US dollar and international factors are the main drivers of the recent fall in the GBPUSD exchange…
USD continues to hold onto recent gains, Stocks crashed (NASDAQ -4.17% Friday to close a miserable April and register its biggest daily loss since September and a weekly loss of -3.9%), Asian markets weaker (many closed due to Eid holidays) and European FUTS down over 1.5%. (UK closed today). Yields jumped higher and VIX soared over 7% to 31.30. Oil & Gold both rallied and then gave up all their gains. Weekend data – Chinese Manu & Services PMI’s (47.4 vs 49.5 & 41.9 vs. 48.4) the worst in 2 yrs as lockdowns grip the economy. Berkshire Hathaway invested over…
Twitter Buyout Hurts Tesla
Last week, the richest person in the world, Elon Musk, confirmed acquisition of Twitter Inc for a total of $44B. To close the deal, Musk committed his own money ($21B), secured borrowings and at the same time offloaded some Tesla stocks. Latest news reports that the Tesla CEO sold $8.5B worth of the company shares, consequently “leading to the company dropping below its $147B valuation. The takeover may divert some of Musk’s attention from his existing businesses including Tesla, which raises investors’ concern. While Musk has the authority to restructure Twitter the way he wants after the acquisition (for example,…
In the US the big event is the FOMC meeting (Tuesday, Wednesday) where a half point rate increase is universally anticipated. Concurrently, there is a heavy economic calendar too that will help gauge the extent of the impacts from the surge in yields and mortgage rates over the past two months, and in turn help guide the FOMC’s policy path going forward. After the downdraft in Q1 growth, weaker than expected data could intensify fears over a stagflationary, and possibly recessionary environment. The US Dollar is firmer, back up over the 103.00 level at 103.40, the strongest since late 2002 heading into what is…
USD continues to hold onto recent gains, Stocks bounced back from Friday’s crash but VIX remains over 30.0 and the RBA increased interest rates by 25 bp, not the 15bp most were expecting, to 0.35%. US ISM Manufacturing PMI – missed significantly at 55.4 vs. 57.5 & 57.1 last time. Yields jumped higher with 10-yr over 3.00% at one point. Gold slumped over 2% as yields rose, and Oil rose over $5 following news of EU threats (with Germany apparently in agreement) to cut Russian energy imports and ‘more Russian banks’ to leave SWIFT. Asian markets mixed and European Futures…
Market Update – May 4 – Tightening time
USD continues sideways ahead of the Fed, Tech Stocks were hit by news that the US began a probe into Didi Global Inc’s 2021 debut in New York. VIX is under 29.00 as a 50 bp hike is fully priced in, with risk of a hawkish outcome. Better than expected factory orders and JOLTS data had no real impact in the market. Yields jumped higher with 10-yr at 2.99%. Aussie and Kiwi got a lift from strong local data this morning – Australian retail sales jumped 1.6% in March, outpacing forecasts for a third straight month. Jobs data in New Zealand…
Headlines in regards to how high inflation and rising interest rates will slow growth, and Canada’s GDP report last week reinforced the view that the momentum in the Canadian economy is not stopping. In February, GDP rose by 1.1%, the fastest advance since March 2021, above the market forecast of 0.8% amid the easing of Omicron-related restrictions. Improvements to the February print and a strong flash forecast for March point to 5.6% annualized growth for Q1. Compared to the others, Canada is clearly superior. https://www.bankofcanada.ca/rates/interest-rates/canadian-bonds/ The BoC may no longer need to convince that a 50 bp hike is needed…
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