Market Update 28th April 2022

Good morning!

Here is your daily market update as the week and in fact April approaches its conclusion.?

It is quite remarkable that again today we see drastic slides in the major pairs against the USD. The retreat against the Dollar has been so severe, that the levels seen this morning following on from the previous couple of days have fallen to prices below those seen during the height of the coronavirus pandemic.

?These continue to be unprecedented times however, and after a two-year battle with a fatal disease, it won’t take a vaccine to stifle the gunfire in the latest warfare as the Russian volatility continues. Threats of a lightning-fast response to any intervening external nations, Putin remains steadfast in his approach.

China’s lockdown has sparked further fear into the market. Hospitals across the nation are inundated with COVID cases, but deaths remain low. It’s pursuit of a ‘zero covid’ nation has led the lockdown endured over the past month, but major cities are still seeing cases increase.

Big policy decisions to come next week are also being priced in by investors. Hawkish Fed expectations ahead of next week come at a time where the US Dollar Index has climbed to multi year highs.?

?The cable favours the Dollar amid the risk dynamic. Last Friday's weak economic data (Retail Sales) points to slow economic growth in the UK this year because of the pressure the geopolitical tensions are applying (to USD counterparts). The pair are towards the bottom of 1.25 after lows at the top end of 1.24 already today. The pair could feel the effect of some positive GDP data from across the pond, which will push this price down.

?EURUSD has extended its multi-year slide. Sitting around 1.052 currently, the energy crisis as a result for the Russian investors continues to stifle investors, favouring USD. Euro market has had to contemplate the risk of recession if Russia shuts off its energy flow. Consequently, the single factor that has briefly given the eurozone a glint of hope, a rate hike speculated to be around June/July could be quashed in response to deteriorating economic growth.?

?GBPEUR remains in a narrow margin and has fell on previous weeks amid the wider scale market mood. The ECBs tactical relief for the Euro with Lagarde’s reference to a summer hike has given the currency some respite if nothing else. Their seemed to be a dovishness, understandably, from speakers last week but the latest bodes well for the Euro, at least within this pair. As aforementioned, weak macroeconomic data sits poorly for the GBP although the safety it brings with the shadowing energy crisis over the Euro still sees it preferred here. These two are only to respond with significance to any change is risk complex.

?Harmonised Index of Consumer Prices (MoM) from Germany and US GDP data are keys for today. A timely boost for the Euro is required whilst strong GDP data will aid the continued USD dominance.

That’s all for today, rounding up your daily update for Thursday 28th April.