• Market sentiment remains cautiously optimistic amid a quiet session.
  • Powell’s 50 bps rate hike, downbeat US data join hopes of faster recovery from covid to underpin positive mood.
  • PBOC holds MLF rate unchanged ahead of the key data dump from China.
  • US Retail Sales, risk catalysts eyed for fresh impulse.

Global traders keep the previous day’s upbeat mood, despite failing to bolster the bullish bias, amid a quiet Asian session on Monday. The market sentiment remains mildly positive as the latest Fedspeak and the US data join positive headlines from China to keep buyers hopeful. However, geopolitical fears from Europe remain on the table to test the optimism.

While portraying the mood, the S&P 500 Futures print mild gains after the Wall Street benchmarks rallied the previous day. Further, the US 10-year Treasury yields also extend Friday’s recovery moves, up 1.5 basis points (bps) around 2.95% by the press time.

That said, downbeat prints of the US Michigan Consumer Sentiment Index for May, backed by Fed Chair Jerome Powell’s repetition of 50 bps rate hikes concerns, triggered the market’s rebound the previous day.

The positive mood also took clues from the downbeat US inflation expectations, as per the 10-year breakeven inflation rate per the St. Louis Federal Reserve (FRED) data. That said, the inflation precursor dropped to the lowest levels since late February, before portraying a corrective pullback to 2.69%.

Furthermore, hopes of easing the virus spread in China spread optimism in Asia as the latest covid update from Reuters suggests softer numbers from Shanghai. “Chinese financial hub Shanghai reported 869 new local asymptomatic coronavirus cases for May 15, down from 1,203 a day earlier. Confirmed symptomatic cases fell to 69, from 166 the previous day, data released on Monday showed,” said the news.

It’s worth noting that the People’s Bank of China’s (PBOC) refrains from any change in the Medium-Term Lending Facility (MLF) rate, for 1-year it's around 2.85% at the latest, also keeps the traders hopeful.

Meanwhile, worsening geopolitical concerns in Ukraine joins the European Union’s (EU) plan for more sanctions on Russia to weigh on sentiment. Also challenging the mood are broad fears over inflation and economic growth moving forward, mainly due to the covid resurgence in China and the Russia-Ukraine tussles, not to forget tighter monetary policies.

Given the light calendar on Monday, except for China’s Retail Sales and Industrial Production (IP) data, market players may extend Friday’s moves with eyes on qualitative catalysts. That said, the traders’ rush for clues to confirm the global economic challenges surrounding inflation also highlights this week’s US Retail Sales data for April as the key factor to follow.

Also read: Macro and Prices: Sentiment swings between inflation and recession

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Feed news Join Telegram

Recommended content


Recommended content

Editors’ Picks

AUD/USD bulls seek a break of 0.6925 for 0.6950 target area

AUD/USD bulls seek a break of 0.6925 for 0.6950 target area

AUD/USD is consolidated at the start of the Asian day following some back and forth at the start of the week. The Aussie is trading at 0.6922 and will be dependent on the trajectory of the greenback in the absence of domestic data this week other than Retail Sales tomorrow. 

AUD/USD News

EUR/USD retreats from fortnight high near 1.0600 on recession/inflation fears

EUR/USD retreats from fortnight high near 1.0600 on recession/inflation fears

EUR/USD holds onto the pullback from a two-week high as bulls get rejections from short-term key resistances, as well as risk-off mood, during Tuesday’s Asian session. The major currency pair remains pressured around 1.0585.

EUR/USD News

Gold bounces off $1,820 support zone, focus on US data, Fed’s Powell

Gold bounces off $1,820 support zone, focus on US data, Fed’s Powell

Gold Price consolidates recent losses at around $1,825.00 during Tuesday’s Asian session. In doing so, the yellow metal takes clues from the market’s cautious optimism ahead of the key US consumer sentiment numbers and the much-awaited central bankers’ debate at the ECB forum.

Gold News

ApeCoin price edges near a critical level, is the uptrend genuine?

ApeCoin price edges near a critical level, is the uptrend genuine?

ApeCoin price shows compression of two Simple Moving Averages as price consolidates. APE price shows bullish re-entrance on the Volume Profile pattern, but traders should steer away from being early buyers. Invalidation of the bear trend remains at $6.15.

Read more

FXStreet Premium users exceed expectations

FXStreet Premium users exceed expectations

Tap into our 20 years Forex trading experience and get ahead of the markets. Maximize our actionable content, be part of our community, and chat with our experts. Join FXStreet Premium today!

BECOME PREMIUM

Forex MAJORS

Cryptocurrencies

Signatures