Date : 6th May 2022.
Market Update – May 6 – Massive U-turn ahead of NFP.
The markets did a big U-turn after Wednesday’s post-FOMC rally, and the pop in rates hammered Wall Street. Along with positioning, the recent massive swings in the markets and mostly bearish tones have been fostered by escalating fears over inflation, an overly aggressive tightening path from the Fed, and increasing angst over slowing growth, in other words, “stagflation.” That potential was imbedded in the Q1 productivity report that revealed near record contraction in productivity as well as unit labour costs, leaving a hollow ring to Chair Powell’s beliefs that the Fed can tame inflation and that the economy can achieve a “softish” landing with a “significant chance” of avoiding a “significant slowdown, or a big jump in unemployment.”
RBA flags further tightening ahead. The RBA said in its quarterly monetary policy report that it will need to raise interest rates further, against the background of tightening labour markets that risk triggering a wage price spiral.
Biggest FX Mover @ (06:30 GMT) GBPCHF (-0.73%) declined in the EU open at 1.2157, with next support to 1.2114. MAs & Stochastics bearishly crossed, and RSI is at 36 sloping lower. H1 ATR 0.00169, Daily ATR 0.01081.
Always trade with strict risk management. Your capital is the single most important aspect of your trading business.
Please note that times displayed based on local time zone and are from time of writing this report.
Click HERE to access the full HotForex Economic calendar.
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Click HERE to READ more Market news.
Andria Pichidi
Market Analyst
HFMarkets
Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
Market Update – May 6 – Massive U-turn ahead of NFP.
The markets did a big U-turn after Wednesday’s post-FOMC rally, and the pop in rates hammered Wall Street. Along with positioning, the recent massive swings in the markets and mostly bearish tones have been fostered by escalating fears over inflation, an overly aggressive tightening path from the Fed, and increasing angst over slowing growth, in other words, “stagflation.” That potential was imbedded in the Q1 productivity report that revealed near record contraction in productivity as well as unit labour costs, leaving a hollow ring to Chair Powell’s beliefs that the Fed can tame inflation and that the economy can achieve a “softish” landing with a “significant chance” of avoiding a “significant slowdown, or a big jump in unemployment.”
RBA flags further tightening ahead. The RBA said in its quarterly monetary policy report that it will need to raise interest rates further, against the background of tightening labour markets that risk triggering a wage price spiral.
- USDIndex at a 5th winning week – breached 103.95. Currently at 103.84 ahead of US jobs report that is likely to back the case for aggressive monetary policy tightening.
- Equities – was crushed by the revived hawkish outlook and the pop in yields. The USA100 dove over -5% but finished with a -4.99% decline. The USA500 tumbled -3.56%, with the USA30 -3.12% lower.
- Yields 10-year up 17 bps to 3.105%, with the 2-year up 10 bps to 2.738%.
- Oil climbed to 111.36 high, after the Biden administration outlined a plan to refill oil reserves (SPR). But it has dropped right back down to 109.34. Reportedly, the Department of Energy will put out a tender for 60 mln barrels in the fall, according to an unnamed source. But the purchases will be at some time in the future, which saw the price fall back. Having the government an assured buyer should provide some support. Meanwhile, the looming EU ban on Russian oil imports and the less hawkish than feared FOMC result have helped calm fears. There were no surprises from OPEC which stuck to its plan for a modest hike in output.
- Gold drifted back to 1866 as the USD and Treasury yields rallied.
- Bitcoin tumbled 8% overnight, hitting at 35,278.
- FX markets – EURUSD at 1.0508, USDJPY holds above the 130.50, Cable down to 1.2333. AUD turns below 0.7100.
Biggest FX Mover @ (06:30 GMT) GBPCHF (-0.73%) declined in the EU open at 1.2157, with next support to 1.2114. MAs & Stochastics bearishly crossed, and RSI is at 36 sloping lower. H1 ATR 0.00169, Daily ATR 0.01081.
Always trade with strict risk management. Your capital is the single most important aspect of your trading business.
Please note that times displayed based on local time zone and are from time of writing this report.
Click HERE to access the full HotForex Economic calendar.
Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work. Click HERE to register for FREE!
Click HERE to READ more Market news.
Andria Pichidi
Market Analyst
HFMarkets
Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.