29 April 2022 – Daily FX Update

Overview

Euro loses to growth numbers

Gold in a safe-haven-ish situation

Investors discount Fed expectations

FOREX

U.S. Dollar Index

The dollar was down on Friday morning in Asia but held firm at a 20-year high and is set for its best monthly gain in a decade. Bets on rising U.S. interest rates, alongside doubts about growth in Europe and China, gave the safe-haven U.S. currency a boost. While the U.S. Dollar Index edged down 0.17% to 103.485.

Euro (EURUSD)

The euro has fallen 5% in April, and just over 7% since Russia’s invasion of Ukraine on Feb. 24, against the dollar. Concerns about Europe’s energy security, inflation, and economic growth continue thanks to the ongoing war in Ukraine, as well as Russia’s halting of gas supplies to Poland and Bulgaria earlier in the week. These concerns also saw the pound hit a 22-month low overnight.

Across the Atlantic, the euro fell through $1.05 for the first time in five years on Thursday, and last traded at $1.0511.

Japanese Yen (USDJPY)

The yen fell as low as 131.25 overnight after the Bank of Japan pledged to buy endless amounts of bonds daily as needed. The Japanese currency fell through 130-per-dollar for the first time since 2002 on Thursday, and is also down almost 7% in April 2022, its worst month since Nov. 2016.

The USD/JPY pair edged down 0.18% to 130.62, with Japanese markets closed for a holiday. The dollar index hit a two-decade high of 103.93 as the yen fell and was up more than 5.3% through April 2022. If sustained, it would be the index’s best monthly gain since May 2012 and even data showing that the U.S. GDP contracted 1.4% quarter-on-quarter in the first quarter of 2022 proved to be a small obstacle.

Indices

US indices

 U.S. Indices futures fell Thursday following a deluge of Big Tech earnings, as soured investor sentiment following a robust performance from major benchmark averages during regular trade. Dow Jones Futures were down 0.3%, S&P 500 Futures fell 0.8% and Nasdaq 100 Futures were down 1.4%.

The S&P 500 and Nasdaq 100 contracts retreated, with the tech-heavy Nasdaq falling over 1% after Amazon forecasted slow sales growth and Apple warned of supply constraints. Amazon shares tumbled 9% in extended trading and Apple’s fell 2%, eclipsing the S&P 500’s best climb since early March 2022 in regular hours.

Asian Indices

Asian shares were set for their best day in six weeks on Friday led by Chinese tech stocks after reports of a possible resolution to the Sino-U.S. audit dispute, giving investors much needed respite from worries of a global economic slowdown. In China, Hong Kong’s Hang Seng is up 3.8% while the Shanghai Composite is up 2.3%.

In Australia, the ASX 200 gained 0.78% as the Australian producer price index grew 4.9% year-on-year and 1.6% quarter-on-quarter in the first quarter of 2022. While the Japanese markets are closed for a holiday.

Metals

Gold rose on Friday as worrying U.S. economic data revived some interest in the safe-haven but was likely to record its largest monthly drop since September amid bets for aggressive interest rate hikes by the Federal Reserve.

Gold prices were headed for their biggest monthly percentage drop since September 2021, as the dollar and U.S. 10-year Treasury yields have strengthened. Spot gold was up 0.4% to $1,905 per ounce, however, gold lost about 3% so far this month. Meanwhile, U.S. gold futures were up 0.6% to $1,903.10.

All other metals are set for a monthly fall. Spot silver gained 0.1% to $23.16 per ounce, platinum dipped 0.5% to $915.19, while palladium rose 0.5% to $2,243.74.

Crude oil

Oil prices were fluctuated on Friday as China’s COVID-19 lockdowns weighed on the outlook for crude demand, although supply disruption fears as Western sanctions curb crude and products exports from Russia underpinned prices.

Brent crude futures rose 15 cents to $107.74 a barrel after gaining 2.1% in the previous session. West Texas Intermediate crude dipped 3 cents to $105.33 a barrel after settling 3.3% higher on Thursday.

On the supply side, OPEC+ is to increase production for June when it meets on May 5.

However, Russia’s oil production may fall by 17% in 2022, as sanctions imposed on Moscow hurt investments and exports. Russia calls it a “special military operation” to disarm Ukraine.

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