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The U.S. easily took the top spot this week against all contenders, not just in the forex market but across the financial space.

Risk-off sentiment seems to have been the dominant theme driven by continued growth, inflation and geopolitical concerns.

Notable News & Economic Updates:

People’s Bank of China cut the Foreign Exchange Deposit Reserve Ratio by 1% on Monday to 8%

Oil rebounded on Tuesday as Chinese central bank assurances of support ease demand concerns

Four European gas buyers made Ruble payments to Russia on Wednesday

Australia Consumer Price Index comes in above expectations at 2.1% q/q vs. 1.3% q/q previous

EIA US weekly crude oil inventories came in at +692K vs +2000K expected

On Thursday, Bank of Canada Governor Tiff Macklem pledged to act “as forcefully as needed” to bring inflation down

U.S. 2022 Q1 advance GDP fell -1.4% versus expectations of around +1.1%

The Bank of Japan kept interest rates on hold at -0.10% on Thursday as expected

Despite public frustrations, the Chinese government dug deeper into zero-COVID policy on Friday; Beijing ordered schools to close to contain virus

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

Looking at the chart above, it’s looking like it was a risk-off kinda week as most major asset classes spend the majority of the time in the red.

It’s likely the driver for this environment continues to be slowing economic growth and high inflation concerns, which gave us fresh catalysts as early as Monday. It was then that we got  that Beijing would likely begin lockdown protocols to contain the fast spreading COVID-19 pandemic, further raising the odds of a recession in China.

We also got news from the Ukraine War that Russian President Putin dropped plans for a peace deal, instead looking to capture more territory in Ukraine. From that front, we got alarming comments from Russian Foreign Minister Lavrov when he warned that there are real risks of nuclear war.

So, there was a lot to be fearful of early in the week, which is likely why we saw the U.S. dollar moving higher from the jump, while most asset classes, even gold, in the red.

Fortunately for risk bulls, risk sentiment started lean a bit more positive starting on Wednesday, arguably linked to reports that the People’s Bank of China will step up support for the economy as China continues to battle the resurgence of COVID-19.

We also see a big of a pop higher in risk taking on Thursday, correlating with the weaker-than-expected update in expected U.S. GDP.  A bit of a weird reaction, but arguably, weakness in recent economic updates may be making the case that central banks may not be as forceful with policy tightening as priced in by traders up until this week.

Risk sentiment shifted back negative on Friday, possibly a refocus by the market on the COVID situation in China after the Chinese government re-iterated their focus on ZERO-COVID (i.e., lockdowns, school closures and mass testing). Also, preliminary GDP data from the Eurozone came in below expectations on net, possibly contributing to the risk-off turn in sentiment as well.

Again, the U.S. dollar was king it is likely we are witnessing de-risking by traders across all markets at the moment. This is arguably signaled by strength in the Japanese yen, which took the second spot among the major currencies, despite virtually guaranteeing ultra-loose monetary policy for the foreseeable future.

USD Pairs

Overlay of USD Pairs: 1-Hour Forex Chart

Overlay of USD Pairs: 1-Hour Forex Chart

Dallas Fed Manufacturing Survey Index ticked -2 points lower to 10.8 in April

U.S. home-price appreciation accelerates once again, up +20.2% y/y in Feb. vs. +18.9% y/y in Jan.

U.S. new home sales fell by -8.6% in February

U.S. Consumer confidence index ticks lower to 107.3 in April from 107.6 in March

U.S. Durable Goods Orders: +0.8% in March vs. +1.7% in February

Richmond Fed Manufacturing Index: 17 in April vs. 13 in March

U.S. mortgage applications slide by -8.3%, the lowest rate since 2018

U.S. pending home sales fall by 1.2%, the lowest since May 2020, on rising rates and high home prices

U.S. GDP drops 1.4% in Q1 2022, shrinks for first time since 2020

U.S. weekly initial jobless claims fall to 180k vs. 180k expected

Core PCE Index rose 6.6% y/y in March (fastest rate since 1982); Employment costs grew 1.4% q/q

U.S. consumer sentiment index for April was revised lower to 65.2 vs. a preliminary read of 65.7

GBP Pairs

Overlay of GBP Pairs: 1-Hour Forex Chart

Overlay of GBP Pairs: 1-Hour Forex Chart

U.K. House Price Index rose +1.6% in April to a new record average high of £360,101

U.K. public sector net borrowing increased from 9.9B GBP to 17.3B GBP

U.K. Nationwide House Price Index grew at 0.3% in April vs. 1.1% previous

EUR Pairs

Overlay of EUR Pairs: 1-Hour Forex Chart

Overlay of EUR Pairs: 1-Hour Forex Chart

France’s Macron wins a second term, defeats Le Pen in first reelection win in 20 years

German Ifo Business Confidence: 91.8 in April vs. 90.8 in March

GfK: German consumer morale falls to a historic low of -26.5 heading into May

Spanish unemployment rate climbed from 13.3% to 13.6% vs. 13.0% estimate

French flash GDP: +0.0% q/q vs. 0.3% forecast; Flash CPI above forecast at 0.4%

Germany’s import prices up by 31.2% y/y in March, the fastest increase since 1974

ECB’s Lane say first rate hike is no big deal, cautious on further moves

Germany Preliminary GDP: 0.2% q/q as expected

Euro area GDP flash estimate for Q1 2022: 0.2%; +0.4% in the EU

CHF Pairs

Overlay of CHF Pairs: 1-Hour Forex Chart

Overlay of CHF Pairs: 1-Hour Forex Chart

Swiss trade surplus narrowed from 5.88B CHF to 2.99B CHF vs. projected 6.23B CHF

Swiss National Bank Chair Thomas Jordan said on Friday that higher inflation has not  yet justified an interest rate hike

Swiss National Bank Chair Thomas Jordan also said that the SNB owns no bitcoin, but could buy it in the future.

Swiss Retail trade turnover in March fell by -5.9%

CAD Pairs

Overlay of CAD Pairs: 1-Hour Forex Chart

Overlay of CAD Pairs: 1-Hour Forex Chart

On Monday, Bank of Canada Governor Tiff Macklem said BOC to consider another half-percentage-point rate hike at its next policy decision

Canada GDP rose by +1.1% in February vs. 0.2% in January

NZD Pairs

Overlay of NZD Pairs: 1-Hour Forex Chart

Overlay of NZD Pairs: 1-Hour Forex Chart

New Zealand credit card spending jumped 3.4% vs. previous 1.1% gain

New Zealand trade deficit narrowed from NZ$691M to NZ$392M

New Zealand ANZ business confidence index dipped from -41.9 to -42.0 in April

AUD Pairs

Overlay of AUD Pairs: 1-Hour Forex Chart

Overlay of AUD Pairs: 1-Hour Forex Chart

Australia’s inflation hits a 21-year high of 5.1%, prompting AU banks to pull forward rate hike calls

Australian Consumer Confidence weekly survey came in at 96.5 vs 96.8 prev.

Australian Q1 import prices rose 5.1% vs. 7.1% forecast, 5.8% previous

Australia’s producer prices rocket by 21.2% y/y to fresh record highs in Q1 2022

JPY Pairs

Overlay of Inverted JPY Pairs: 1-Hour Forex Chart

Overlay of Inverted JPY Pairs: 1-Hour Forex Chart

Japan Services PPI: +1.3% y/y in March vs. 1.1% previous

Japanese BOJ core CPI up from 1.0% to 1.1% as expected

Japanese Finance Minister Suzuki continues to jawbone yen but denies joint intervention with US

Japanese preliminary industrial production ticked 0.3% higher vs. 0.5% forecast

Japanese retail sales rose 0.9% vs. expected 0.3% gain, previous 0.9% drop

The Bank of Japan kept interest rates on hold at -0.10% as expected on Thursday; they revised up their inflation forecast to near 2%; vowed to keep interest rates ultra-low by buying an unlimited amount of bonds daily