Europe Roundup: Euro rises, focus on rate hike bets , European shares extend losses, Gold gains, Oil prices extend losses on fears of economic slowdown-May 19th,2022

Posted at 19 May 2022 / Categories Market Roundups

Market Roundup

•Sweden Capacity Utilization (QoQ) (Q1) 0.1%, 0.1% previous

•EU Mar Construction Output (MoM) 0.00%, 1.86% previous

• EU Mar Current Account  -1.6B  ,20.8B previous

•UK May CBI Industrial Trends Orders 26 ,14 previous

Looking Ahead - Economic Data (GMT)

•12:30 US Continuing Jobless Claims 1,320K forecast, 1,343K previous

•12:30 US Jobless Claims 4-Week Avg 192.75K previous

•12:30 US Initial Jobless Claims  200K forecast, 203K previous

•12:30 US May Philly Fed CAPEX Index  19.90 previous

•12:30 US May Philly Fed Employment 41.4 previous

•12:30 US May Philly Fed Business Conditions  8.2 previous

•12:30 US May Philadelphia Fed Manufacturing Index 16.0 forecast, 17.6 previous

•12:30 Canada Apr New Housing Price Index (MoM)  0.6% forecast,1.2% previous

•14:00 US Apr Existing Home Sales  5.65M forecast,5.77M previous

•14:00 US Apr Existing Home Sales (MoM) -2.7% previous

•14:00 US  Leading Index (MoM)  0.3% forecast,0.3% previous

•14:00 US Natural Gas Storage 87B forecast, 76B previous

Looking Ahead - Economic events and other releases (GMT)

•No events ahead


EUR/USD: The euro rose on Thursday as investors priced in the chance of an aggressive near-term tightening path by the European Central Bank, while the safe-haven dollar paused after significant gains in the previous sessions. Money markets are pricing in around 105 basis points (bps) of ECB rate hikes from around 95 bps on Tuesday before ECB official Klaas Knot signalled a 50-basis-point rate increase was possible in July. U.S. money markets are still discounting around 200 bps of Fed rate hikes by December 2022.Risk appetite in the currency market is fragile as stocks slid, tracking Wall Street's worst day since mid-2020, as warnings from some of the world's biggest retailers underscored how hard inflation is biting. Immediate resistance can be seen at 1.0543(38.2%fib), an upside break can trigger rise towards 1.0653 (50% fib).On the downside, immediate support is seen at 1.0500 (11DMA), a break below could take the pair towards 1.0446(23.6%fib).

GBP/USD: Britain’s pound inched up against the dollar on Thursday, but stayed clear of recent two-week highs as soaring inflation combined with a murky growth outlook prevented a stronger rebound.At 0850 GMT, sterling was up 0.4% at $1.2395. However, the currency stayed off highs of $1.25 seen earlier this week, having tumbled on Wednesday after data showed UK inflation rising to a 40-year record and concerns flared about a sharp economic slowdown given the pain inflicted on consumers. An easing in the safe-haven dollar also aided the pound’s recovery, with the market awaiting British April retail sales data on Friday for fresh direction. Immediate resistance can be seen at 1.2395(38.2%fib),an upside break can trigger rise towards 1.2533(50%fib).On the downside, immediate support is seen at 1.2328 (9DMA), a break below could take the pair towards 1.2214 (23.6%fib).

USD/CHF: The dollar declined against the Swiss franc on Thursday as demand for safe haven assets  increased as investors worried about global inflation, economic  slowdown and the Ukraine war. Broader economic optimism supported risk-sensitive currencies and pushed down the dollar. Poor U.S. housing data also added to slowdown concerns, and Fed Chair Jerome Powell had ratcheted up the hawkish rhetoric the previous day by saying the U.S. monetary authority would push interest rates as high as needed to stem a surge in inflation The U.S. dollar, which had rallied on falling risk appetite, eased 0.15% against a basket of major currencies, after a 0.55% jump overnight that ended a three-day losing streak.Immediate resistance can be seen at 0.9866(23.6%fib), an upside break can trigger rise towards 0.9937 (9DMA).On the downside, immediate support is seen at 0.9723(38.2% fib), a break below could take the pair towards 0.9632 (38.2%fib ).

USD/JPY: The dollar edged lower  against the Japanese yen on Thursday as dollar took a breather after significant gains in the previous sessions. The focus remained on what central banks will now do as they walk the tightrope of trying to regain control of inflation, which is now at 40-year highs in some countries, without causing painful recessions.Two U.S. central bankers said they expect the Federal Reserve to downshift to a more measured pace of policy tightening after July, but in Europe markets were suddenly pricing in as many as four ECB hikesOn Tuesday, the Bank of Japan said it intended to stick with its dovish stance and maintain the current monetary stimulus to create sustainable increases in prices. Strong resistance can be seen at 129.14(9DMA), an upside break can trigger rise towards 129.88(23.6fib).On the downside, immediate support is seen at 127.47 (38.2%fib), a break below could take the pair towards 126.82(Lower BB).

Equities Recap

European stocks fell on Thursday to extend losses from the previous session, as mounting concerns over high inflation and slowing global growth sent investors flocking to the safe haven of the dollar and bonds.

At (GMT 12:30 ),UK's benchmark FTSE 100 was last trading down at 2.20 percent, Germany's Dax was down by 1.67 percent, France’s CAC was last down by 1.88 percent.

Commodities Recap

Gold prices bounced back on Thursday as a drop in U.S. dollar and Treasury yields coupled with a slide in risk assets rekindled demand for the safe-haven bullion amid worries about global growth.

 Spot gold  jumped 0.9% to $1,830.99 per ounce by 1150 GMT, while U.S. gold futures   rose 0.8% to $1,829.80.

Oil prices fell on Thursday, following earlier gains, on concerns that high fuel prices could hurt economic growth, but planned easing of restrictions in Shanghai and a tight supply outlook capped losses.

Brent crude futures for July were down $1.25, or 1.2%, at $107.86 a barrel by 0932 GMT. U.S. West Texas Intermediate (WTI) crude futures for June fell $1.96, or 1.8%, to $107.63 a barrel.

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