Market jumps into fear of growth

By FXTM Senior Research Analyst Lukman Otunuga

Asian stocks on Tuesday continued to be under pressure as large-scale sales across financial markets worried investors bloody. European futures have shown a positive day, but despite overall market vigilance, a lack of risk-seeking can limit upward profits.

Growing concerns about rising interest rates and a global slowdown economic growth The risky assets were burned, crushing emotions on Monday.

In the currency arena, the king dollar has reached a level not seen in 20 years, with risk aversion and the Treasury yield rising above 3.20% for the first time since 2018.

Commodity markets also plummeted as investors looked for sell buttons in all asset classes. Gold prices stabilized early Tuesday, but precious metals could face headwinds in the form of a stronger dollar, higher Treasury yields and a Fed rate hike bet.

Oil prices aren’t looking very clean either, as China’s blockade and global growth concerns are squeezing demand outlook.

The negative mood and uncertainty of the market as a whole may encourage investors to maintain a safe distance from higher-risk assets this week. Gold support..

On the data side, the results of the German ZEW Economic Confidence Survey will be released late Tuesday. The market expects the May sentiment index to fall to -42.0, compared to -41.0 in April.

Later that day, all the speeches from numerous Fed officials that could cause dollar volatility. However, this week’s main course and major risk event is Wednesday’s US Consumer Price Index report.

Can’t the dollar move forward?

As US Treasury yields rose to highs in a new cycle, the dollar’s bullish rushed into trading week with new vitality, reaching levels not seen in Monday’s 20 years.

The greenback is highly valued for all G10 currencies this quarter, supported by the Federal Reserve’s expectations of rate hikes and risk aversion due to ongoing geopolitical risks.

If the dollar index (DXY) exceeds 104.00, this could open the door to higher levels. However, technical pullbacks may be the next course of action before the Bulls step into higher gear.

Dollar volatility should continue to be an important subject, given how last week was packed with US economic data and speeches from Federal Reserve officials.

The Fed’s speakers will be in the limelight later on Tuesday. If they make a hawkish tone and regain expectations over a 75 basis point rate hike in June, the dollar could expand profits across the board.

The latest US inflation report was released on Wednesday, with prices expected to rise 8.1% year-on-year from 8.5% in March.

Numbers above market expectations could push the dollar up and DXY can secure a strong closing price above 104.00.

Oil falls in China’s blockade

Oil prices stumbled weekly, dropping 6% on Monday due to a combination of factors that weighed on demand outlook.

The product was under pressure as Saudi Arabia lowered prices for some customers in Asia and Europe, while weak export data from China exacerbated downside losses.

Rising interest rates, concerns about a recession, and growing concerns about the Covid-19 regulation in China, which leads to slower export growth, are also putting pressure on prices.However, the ongoing geopolitical risks are Ukraine-Russia conflict You can mitigate the downside loss.

Looking at the technology, it’s all at the level of about $ 100 on both rough benchmarks. If this turns out to be unreliable support, you may see a sharp sellout. Initial support at Brent is $ 97.24 on a 100-day simple moving average.

Gold is hit

The past few weeks haven’t been kind to money. Expectations for a stronger dollar, higher Treasury yields and a positive approach to monetary policy towards the Fed have hit precious metals. The road to gold remains rough and rocky, as the greenback has reached a level not seen in the last 20 years.

On the technical side, the daily chart price is bearish with support of $ 1855. It will be interesting to see if the bull can keep this level or reduce the price. The 200-day simple moving average, which has received widespread attention, is $ 1835. Whatever the outcome, volatility is certainly on the card.


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