Market Update 19th April 2022

By Alfie Warman

Good morning from CCM. Following a sunny bank holiday weekend as Easter came and went quickly, it’s time to get back into the action as we update you on today's market dynamic.

The dollar started the week strong, and during the Asian trading session the US Dollar index climbed to its highest level since May 2020 at 101.2. The greenback has simmered as it so often does with the switch to the European trading session. It’s strengthened on the back of US treasury bond yields soaring and continued trepidation because of the ongoing geopolitical tension.??The BoE and ECB’s recent dovish outlooks has helped the dollar advance. The ECB meeting last week echoed the same tone as previous occasions and by now the French election seems to have been priced in by marketeers.?

?The BoE continues to fight inflation has the 30 year highs are expected to continue to print higher, and with Boris Johnson’s face dominating the back pages, GBP has additional barriers to break before tackling the USD.?

The cable thus sits above 1.30 currently, although has already flirted with lows of 1.298. Fed talk to come this week will give us a better indication whether the dollar is overpriced against its European rivals. St Louis Fed President Bullard said yesterday that a 75bps, rather than the almost guarantee 50bps, rate hike can’t be ruled out at the next decision. This should limit any downturn here for the USD and traders await Chi town Fed President Evans’ take amid a fairly quiet docket in terms of data.

?EURUSD lingers in low territory again despite posting an intraday advance. Sitting below 1.08, investors aren’t convinced and are challenging the Euro. USD rates are climbing higher and rumours of a disgruntled European Council and leaks of a possible July hike for the ECB could help fight it. At one point the French election bared weight for the Euro but it’s seems the expected win for the left will now not move the Euro when Macron is re-elected. Stifled by their reinforced dovish stance, the ECB require some resilience to climb against the USD, but anything meaningful may have to wait until we see plans of a rate hike on paper.

?GBPEUR is up to heights seen at the turn of the year. Above mid 1.20, investors believe sterling safety is the way to go in this pair. This two are fighting their own battles and speeches of a hawkish nature will go a long way for GBP on Thursday when we hear from Bailey. Pushed back and under pressure, the PMI data this week from Euro members could help boost the Euro here.

?That’s all for this week as the calendar intensifies as the week progresses, we’ll look into everything you need to know.