Europe Roundup: Sterling Stabilizes Near June 2020 Low, European Stocks Gain, Gold Recovers, Oil Falls as Economy Worries, Dollar Strength Weighs May 10, 2022

Market overview

•Italian industrial production in March (Annual) 3.0%, 1.3% forecast, 3.3% previous

•Italian Industrial Production (monthly) in March 0.0%, -1.9% forecast, 4.0% previous

• EU ZEW May Economic Sentiment 29.5,43.0 previous

• German ZEW Economic Sentiment in May -34.3, -42.0 forecast, -41.0 previous

Future Outlook – Economic Data (GMT)

• 12:55 US Redbook (YoY) 15.2% previous

•14:00 United States IBD/TIPP Economic Optimism 45.5 previous

• 4:00 pm US EIA Short Term Energy Outlook

•5:00 p.m. US 3-year note auction 2.738% previous

Future Outlook – Economic Events and Other Releases (GMT)

• 12:30 p.m., US FOMC member Bostic takes the floor

•2:00 p.m. German President Buba, Nagel, speaks

• 5:00 p.m. Kashkari, member of the US FOMC, speaks

•5:00 p.m. US Fed’s Waller speaks

•5:20 p.m. De Guindos of the ECB speaks

• 7:00 p.m., member of the US FOMC.

•11:00 p.m. Bostic, member of the American FOMC, takes the floor


EUR/USD: The euro stabilized against the US dollar on Tuesday as the aggressive reassessment of the European Central Bank’s monetary tightening forecast supported the euro. Money markets are currently pricing in 92 basis points of ECB rate hikes by the end of the year, up from around 95 basis points on Monday. BCE Dove de Guindos on April 20 said the bank is expected to end its asset purchase program in July and may raise interest rates that same month. Investors were awaiting data on German investor sentiment at 09:00 GMT which analysts expect to see further decline. Immediate resistance can be seen at 1.0557 (5DMA), a break up can trigger a rise towards 1.0597 (38.2% fib). On the downside, immediate support is seen at 1.0490 (23.6% fib), a break below could take the pair towards 1.0422. (lower BB).

GBP/USD: The pound was little changed on Tuesday, halting after slipping to near two-year lows on signs that a weakening economy will force the Bank of England to slow its currency cycle. rise in interest rates. At 0825 GMT, the pound was stable against the US dollar at $1.2328, just above its lowest level since June 2020 of $1.2262 hit on Monday. The BoE on Thursday raised its benchmark interest rate to 1.0% but said it had seen the economy contract in 2023 and a nearly 1% drop in gross domestic product in the last quarter of 2022. Markets are currently pricing in an additional 110 basis points of BoE tightening this year, bringing the benchmark rate back to just above 2.0%. Immediate resistance can be seen at 1.2405 (38.2% fib), a break up can trigger a rise towards 1.2433 (5DMA). On the downside, immediate support is seen at 1.2276 (23.6% fib), a break below could take the pair towards 1.2187 (BB lower).

USD/CHF: The dollar was little changed against the Swiss franc on Tuesday as investors worried about the toxic cocktail of rising interest rates and slowing economic growth. Growing fears of a recession and slowdown in China weighed on commodity-linked currencies and oil prices, although security flows kept the dollar near 20-year highs. Growth concerns resurfaced after central banks in the US, Britain and Australia raised interest rates last week and investors braced for further tightening as policy makers fight soaring inflation. Immediate resistance can be seen at 0.9943 (23.6% fib), a break up can trigger a rise towards 0.9971 (BB ​​upper). On the downside, immediate support is seen at 0.9882 (daily low), a break below could take the pair towards 0.9838. (38.2% fiber).

USD/JPY: The dollar fell slightly against the yen on Tuesday as investors await key US inflation data that could impact the Federal Reserve’s monetary policy. Monthly CPI data will be watched closely for any impact it may have on the US central bank’s rate hike plans. Last week, the US Federal Reserve raised its benchmark overnight interest rate by half a percentage point as it struggles to unwind the ultra-loose monetary policy of the era of the pandemic and tries to fight against soaring inflation. Strong resistance can be seen at 131.44 (23.6% fib), a break up can trigger a rise towards 131.95 (BB upper). On the downside, immediate support is seen at 129.83 (daily low), a break below could take the pair towards 129.45. (38.2% fiber).

Summary of actions

European stock indices opened higher on Tuesday as risk appetite showed some recovery from sharp falls on Monday, but analysts said fears of weaker growth still weighed on markets.

At (09:12 GMT), Britain’s benchmark FTSE 100 last traded at 0.91%, Germany’s Dax up 1.62%, France’s CAC ended up 1.28% .

Summary of raw materials

Gold prices rallied on Tuesday as the dollar retreated from two-decade highs, rekindling demand for bullion at the price of the greenback as investors await key U.S. inflation data that may have an impact on the Federal Reserve’s monetary policy.

Spot gold was up 0.3% at $1,859.00 an ounce at 0810 GMT. US gold futures were little changed at $1,859.00.

Oil prices fell more than 1% on Tuesday, extending steep declines from the previous day as coronavirus lockdowns in major oil importer China, a strong dollar and growing recession risks stoked concerns over the outlook for global demand.

Brent crude was down $1.19, or 1.1%, at $104.75 a barrel at 0607 GMT after falling to $103.19.

U.S. West Texas Intermediate crude fell $1.07, or 1%, to $102.02 a barrel after hitting an intraday low of $100.44.

Mary I. Bruner