Spreadex Market Update
Markets Bounce Back on China Lockdown-Easing News, US Retail Sales Due Today
Equities markets soar as China announces Shanghai lockdown to end June 1st. USD offered ahead of April retail sales, Powell to speak later. GBP boosted by better wages and employment data. JPY falls on reduced safe-haven demand. Oil, gold and silver benefit from USD correction.
Key Factors for Today
- USD weaker ahead of retail sales data
- Risk rebounds on China lockdown news
- FX reversal with commodity currencies rebounding, JPY weakening
- UK wages rise, unemployment falls
- Gold, silver & oil higher today
Coming Up
- EUR flash quarterly GDP
- USD Retail sales
- USD Fed’s Powell speaks
US Dollar Softens as Traders Eye Weaker Retail Sales
The US Dollar is under pressure once again across the European open on Tuesday. The greenback is potentially setting up for a third consecutive day in the red following selling across the Asian session overnight as risk markets rebounded. Today’s data sheet has plenty to monitor for USD traders. First up, we have April retail sales, expected to have fallen against March’s figures amidst the broad cost-of-living crisis. Weak figures should underscore growth concerns in the US though are unlikely to derail Fed rate hike expectations for June. Fed’s Powell speaks later in the day and traders will be closely monitoring his comments for further hawkish details.
Equities Rebound as China Eases Lockdowns
Equities are seeing a better start again today. The FTSE and the DAX have both been bid across the European open, taking their cue from strength in US and Asian equities. News of easing lockdown restrictions in Hong Kong and Shanghai have been met by relief from investors, setting the tone for a positive session today in Europe. US data will be on watch, however, with the potential for volatility on any unexpected results.
JPY Falls Amidst Risk-On Trading, GBP Rallies on Better Data
In FX, we’ve seen a reversal in recent trends across late Asia and early Europe, due to the recovery in risk appetite. Commodity currencies are rebounding firmly with AUD, NZD and CAD leading over JPY and USD as safe-haven flows dissipate. GBP has seen better demand today also following a slew of better data this morning. UK wages were seen rising at at7% in the three months through March with the unemployment rate falling to cycle lows of 3.7%. Up next, eurozone quarterly GDP will be on watch in light of recent ECB hawkishness.
Gold & Silver Recover
The correction in USD so far this week has allowed for a recovery in gold and silver prices. Gold is now trading up around 2.5% off the week’s lows following a reversal yesterday with silver up around 6%, supported also by the bounce in equities.
Oil Extends Recent Gains
Oil prices have also benefitted from the pullback in the Dollar. Crude futures bounced firmly off the lows yesterday, currently around 5% higher as price continues to advance above the 108.94 level towards the 116.60 late March highs. News of the Shanghai lockdown ending has been a big driver of oil strength overnight and should keep crude supported near-term on better demand expectations.
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