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The U.S. dollar took the top spot this week after a bearish turn in risk sentiment hit the markets on Thursday. Inflation updates were strong again this week, pushing higher the odds of strong monetary policy tightening moves ahead

Notable News & Economic Updates:

Ukraine-Russia Conflict updates:

  • Russian bombs and missiles continue hitting locations around Ukraine; begins new assault on Donbas on Tuesday
  • EU lawyers say paying for Russian gas with Rubles would break sanctions
  • Biden says U.S. will send $1.3 billion in additional military and economic support to Ukraine
  • Russia test fires a nuclear-capable ICBM missile
  • Russia revealed its intention to take “full control” of southern Ukraine as well as the Donbas region

Cosmos Asset Management announced that it would list Australia’s first Bitcoin ETF next week

World Bank cuts 2022 global growth outlook on Russia invasion; working on crisis-response package of around $170B

Shanghai official reported on Wednesday  a downtrend in COVID-19 cases; Shanghai factories sputter towards reopening as city aims to ease lockdown

IMF cut its growth forecast from 4.4% in 2022 down to 3.6%

EIA: U.S. crude stockpiles slump as export surge to more than 2-yr high

Federal Reserve Chair Powell said that taming inflation ‘absolutely essential,’ and a 50 basis point hike possible for May

Oil gains on Monday as Libya shuts its largest oil field amid protests, but sentiment turned bearish after negative headlines on global growth outlook from IMF and World Bank

ECB President Lagarde said bond buying is very likely to end in July or August, and interest rates to rise later in the year

Intermarket Weekly Recap

Dollar, Gold, S&P 500, Oil, U.S. 10-yr Yield, Bitcoin Overlay 1-Hour

Dollar, Gold, S&P 500, Oil, U.S. 10-yr Yield, Bitcoin Overlay 1-Hour

We saw mixed priced action among the major asset classes through the first part of the week as there didn’t seem to be a major headline to spark broad directional moves early on. Oil prices were on the downtrend due to global growth fears, while crypto saw broadly positive vibes, possibly on news of another bitcoin ETF launching soon.

From a risk sentiment standpoint, from Monday through early Thursday we saw a general risk-on lean with equities & crypto higher, gold lower, and bond yields mostly stabilized.

With no major bullish headlines and negative headlines from Ukraine and global growth concerns, it’s arguable that this could have been a small technical bounce in positive risk sentiment after weeks of negative vibes due to the war and inflation fears.

It’s also possible that news of China lightening up on COVID restrictions in Shanghai was taken as a good sign for risk assets, or at the very least, lowered recession odds.

The mood quickly shifted on Thursday, though, correlating with comments from Federal Reserve Chair Powell that restoring price stability is “absolutely essential.” This topped off a week that actually saw a slew of stronger-than-expected inflation data updates and hawkish rhetoric from global central bank leaders.

These headlines likely increased the odds and speculation that monetary policy tightening will slow down the global economy in the coming months. Bond yields and the U.S. dollar crept higher on Thursday, while the rest of the major asset classes took a dip well into the Friday session.

Because of this last minute shift in sentiment, the U.S. dollar was able to grab the lead against the major currencies on Friday, closely followed by the euro, which had its own string of hawkish rhetoric from European Central Bank officials this week, including ECB President Lagarde who signaled an end to bond purchases by August.

USD Pairs

Overlay of USD Pairs: 1-Hour Forex Chart

Overlay of USD Pairs: 1-Hour Forex Chart

U.S. home builder confidence index: -2 in April to 77

Fed’s Bullard wants to get rates up to 3.5% by year end

Fed’s Evans sees year-end rates at 2.25%-2.5%, and then likely higher

U.S. Housing starts rose 0.3% in March to 1.793M units; Building permits increased 0.4% to 1.873M units

U.S. Mortgage applications slip -5% w/w as interest rates hit a 12-yr high

Federal Reserve Bank of San Francisco President Mary Daly said Fed should hike rates expeditiously to neutral by year-end

U.S. existing home sales fall 2.7% in March as house prices reach all-time highs

U.S. weekly jobless claims total 184K, slightly above forecast/previous

Flash US Manufacturing PMI at 59.7 in Apr. vs. Mar: 58.8, a 7-month high.

GBP Pairs

Overlay of GBP Pairs: 1-Hour Forex Chart

Overlay of GBP Pairs: 1-Hour Forex Chart

BOE Mann says interest rates could rise again in May

BoE’s Bailey says there should be “no appeasement” of Russia

U.K. retail sales sank by 1.4% vs. projected 0.3% dip, previous 0.5% decline

Bank of England may slow interest rate rise as Bailey warns of UK recession

UK consumer confidence index plunged to a near all-time low in April at -38 from -31 previous

EUR Pairs

Overlay of EUR Pairs: 1-Hour Forex Chart

Overlay of EUR Pairs: 1-Hour Forex Chart

German producer prices jumped 4.9% vs. expected 2.7% gain, previous 1.4% increase

Euro area international trade in goods was in €7.6B deficit in February; €15.8B deficit for EU

Euro area industrial production was up by +0.7% m/m in February; +0.6% m/m in the EU

ECB’s Nagel says a rate hike in early Q3 2022 is possible

Macron comes out on top in French election TV debate with Le Pen

Eurozone Consumer Confidence index rose to -16.9 from -18.7 in March

Annual inflation up to 7.4% in the euro area; Up to 7.8% in the EU

ECB’s de Guindos backs ending bond purchases in July

ECB Governing Council member Pierre Wunsch said that interest will be back at zero or more by end of year

German flash manufacturing PMI slipped from 56.9 to 54.1 vs. 54.6 estimate; German flash services PMI rose from 56.1 to 57.9 vs. 55.4 consensus

CHF Pairs

Overlay of CHF Pairs: 1-Hour Forex Chart

Overlay of CHF Pairs: 1-Hour Forex Chart

Swiss National Bank Chairman Thomas Jordan sees a substantial amount of the inflation rise as temporary; but there is big risk that some prices will stay elevated

CAD Pairs

Overlay of CAD Pairs: 1-Hour Forex Chart

Overlay of CAD Pairs: 1-Hour Forex Chart

Canada inflation surged to a 31-year high at 6.7% in March vs. 6.1% forecast

Canada new housing price index rose 1.2% m/m in March

Scotiabank says there is a “solid case” for a potential 75 bps – 100 bps interest rate hike from the Bank of Canada in June after the strong CPI data

Canadian retail sales edged up 0.1% to $59.9B in February

Canada Industrial Product Price Index (IPPI) rose 4.0% m/m in March; Raw Materials Price Index rose 11.8% m/m

NZD Pairs

Overlay of NZD Pairs: 1-Hour Forex Chart

Overlay of NZD Pairs: 1-Hour Forex Chart

RBNZ Gov. Orr: “We expect to be doing more rate rises over coming quarters”

BusinessNZ: NZ services sector climbed from 48.9 to expansion territory (51.6) in March

New Zealand inflation hits a 32-year high of 6.9%

AUD Pairs

Overlay of AUD Pairs: 1-Hour Forex Chart

Overlay of AUD Pairs: 1-Hour Forex Chart

Minutes of the Monetary Policy Meeting of the Reserve Bank of Australia Board

RBA minutes: Higher inflation and wage growth have “brought forward” the timing of first rate hike

Australian flash manufacturing PMI ticked up from 57.7 to 57.9; flash services PMI moved up a point from 55.6 to 56.6

JPY Pairs

Overlay of Inverted JPY Pairs: 1-Hour Forex Chart

Overlay of Inverted JPY Pairs: 1-Hour Forex Chart

BOJ Governor Kuroda says weak yen benefits the Japanese economy

Bank of Japan boosts defense of yield target, offers to buy debt for four days

Japanese trade deficit at 0.90T JPY vs. projected 0.58T JPY shortfall

Japanese tertiary industry activity sank 1.3% vs. projected 0.3% uptick in Feb

Japanese flash manufacturing PMI fell from 54.1 to 53.4