Ipek Ozkardeskaya
Swissquote Bank Ltd
Joint decision from the US and the UK to ban Russian oil sent another shockwave to commodity prices yesterday.
The European natural gas prices spiked to all-time highs and crude oil rallied to $130 mark.
Stock markets are highly volatile as uncertainties loom. The European indices rally again this morning, BUT the rallies are mostly driven by intra-day trades, whereas longer-term investors are leaving the market; hedge funds and the like are reportedly cutting exposure and covering shorts as visibility became very limited.
The VIX index rises steadily, as the selloff in the stocks continue. The S&P500 started the day in the positive and ended 0.72% down, while Nasdaq lost some 0.30%.
What really boosts the optimism in the European markets is partly the news that the EU countries will be issuing a massive joint bond to finance energy and defense… so the European Central Bank (ECB) could potentially buy it!
Joke aside, the extra massive cash would add to the inflationary pressures in Europe and should, in theory, force the ECB to become more aggressive on its monetary policy despite the Ukrainian threat to the economic recovery.
The ECB hawks are therefore in charge of the market and the EURUSD is trading past the 1.09 mark since yesterday.
The US dollar index consolidates a touch below the 99 mark, gold spiked to $2070 an ounce & Bitcoin rallied after US Treasury Secretary Yellen accidentally published remarks revealing Biden's impending crypto order.
This report has been prepared by Swissquote Bank Ltd and is solely been published for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any currency or any other financial instrument. Views expressed in this report may be subject to change without prior notice and may differ or be contrary to opinions expressed by Swissquote Bank Ltd personnel at any given time. Swissquote Bank Ltd is under no obligation to update or keep current the information herein, the report should not be regarded by recipients as a substitute for the exercise of their own judgment.
Recommended Content
Editors’ Picks
AUD/USD jumps above 0.6500 after hot Australian CPI data
AUD/USD extended gains and recaptured 0.6500 in Asian trading, following the release of hotter-than-expected Australian inflation data. The Australian CPI rose 1% in QoQ in Q1 against 0.8% forecast, providing extra legs to the Australian Dollar upside.
USD/JPY hangs near 34-year high at 154.88 as intervention risks loom
USD/JPY is sitting at a multi-decade high of 154.88 reached on Tuesday. Traders refrain from placing fresh bets on the pair as Japan's FX intervention risks loom. Broad US Dollar weakness also caps the upside in the major. US Durable Goods data are next on tap.
Gold price cautious despite weaker US Dollar and falling US yields
Gold retreats modestly after failing to sustain gains despite fall in US Treasury yields, weaker US Dollar. XAU/USD struggles to capitalize following release of weaker-than-expected S&P Global PMIs, fueling speculation about potential Fed rate cuts.
Crypto community reacts as BRICS considers launching stablecoin for international trade settlement
BRICS is intensifying efforts to reduce its reliance on the US dollar after plans for its stablecoin effort surfaced online on Tuesday. Most people expect the stablecoin to be backed by gold, considering BRICS nations have been accumulating large holdings of the commodity.
US versus the Eurozone: Inflation divergence causes monetary desynchronization
Historically there is a very close correlation between changes in US Treasury yields and German Bund yields. This is relevant at the current juncture, considering that the recent hawkish twist in the tone of the Fed might continue to push US long-term interest rates higher and put upward pressure on bond yields in the Eurozone.