- Strengthening of the dollar USD
- Declines in the stock market and precious metals
- Correction on crude oil
- US 10-year bond yield continues to move higher
During the Tuesday session we could observe the appreciation of the American currency. The US dollar gained the most against the GBP, where the move exceeded 1%. The USD dollar also appreciated 0.85% against NZD and 0.65% against AUD. Other currencies also weakened against the dollar - CAD (-0.45%), JPY and CHF (-0.3%) and EUR (0.1%).
Global indices traded sharply lower on Tuesday as a spike in Treasury yields and dragged tech shares down. The yield on the 10-year Treasury topped 3-months highs of 1.5% and the 5-year rate rose above 1% for the first time since February 2020 as the energy crisis is boost inflation concerns. Rising bond yields and panic sell-off also cause a strengthening of the dollar, lower precious metals prices and a weakening of emerging market currencies. Also latest comments from Fed members, which confirm the upcoming tapping process and possible interest rate hikes in 2022 weighed on market sentiment. Meanwhile, ECB President Christine Lagarde told the ECB Forum on Central Banking that there are no signs that recent price increases are becoming broad-based across the economy, while promising patience before policy tightening. The Spanish IBEX35 fell 2.6%. The German DAX and the French CAC40 also lost over 2%.
Start investing today or test a free demo
Create account Try a demo Download mobile app Download mobile appRegarding the commodity market, WTI crude futures pared gains and dropped below $ 75.0 per barrel after a 5-day rally, but remaining close to levels not seen since October 2018, as traders digested OPEC's World Oil Outlook amid ongoing concerns about demand outstripping already tight supplies. The report warned that output is expected to remain below 2019 levels, even as demand recovers sharply, due to underinvestment in some OPEC + producers. The organization expects demand to expand by 1.7 million bpd in 2023 to 101.6 million bpd. Precious metals are also under selling pressure today due to the stronger dollar. The price of palladium fell over 4%, while platinum lost 2%. Gold and silver prices also experience losses, however downward moves do not exceed 1%.
Worse sentiment can also be seen in the cryptocurrency market. The main digital currencies are trading lower, as investors are still digesting the latest news from China. In the evening, Bitcoin loses 4%, and Ethereum declines nearly 6%.
US100- Tech companies faced heavy selling pressure during today's session. By looking at the D1 interval, one can see that the index is testing the neckline of the head to shoulder formation (red dotted line). Should break lower occur, then downward move kmay accelerate towards the support zone around 13,950 pts, which is marked with the lower limit of the 1: 1 structure and previous price reactions. Source: xStation5
VOLX volatility index clearly increased today. At the moment, the keyzone seems to be located around 25-26, which acted as strong resistance in the past (in previous months, when the index reached this level, corrections in the stock market slowed down). However, if current sentiment prevails, then the index may break out from the consolidation zone, which could herald even greater volatility on the markets. Source: xStation5
The content of this report has been created by XTB S.A., with its registered office in Warsaw, at Prosta 67, 00-838 Warsaw, Poland, (KRS number 0000217580) and supervised by Polish Supervision Authority ( No. DDM-M-4021-57-1/2005). This material is a marketing communication within the meaning of Art. 24 (3) of Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Directive 2002/92/EC and Directive 2011/61/EU (MiFID II). Marketing communication is not an investment recommendation or information recommending or suggesting an investment strategy within the meaning of Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse (market abuse regulation) and repealing Directive 2003/6/EC of the European Parliament and of the Council and Commission Directives 2003/124/EC, 2003/125/EC and 2004/72/EC and Commission Delegated Regulation (EU) 2016/958 of 9 March 2016 supplementing Regulation (EU) No 596/2014 of the European Parliament and of the Council with regard to regulatory technical standards for the technical arrangements for objective presentation of investment recommendations or other information recommending or suggesting an investment strategy and for disclosure of particular interests or indications of conflicts of interest or any other advice, including in the area of investment advisory, within the meaning of the Trading in Financial Instruments Act of 29 July 2005 (i.e. Journal of Laws 2019, item 875, as amended). The marketing communication is prepared with the highest diligence, objectivity, presents the facts known to the author on the date of preparation and is devoid of any evaluation elements. The marketing communication is prepared without considering the client’s needs, his individual financial situation and does not present any investment strategy in any way. The marketing communication does not constitute an offer of sale, offering, subscription, invitation to purchase, advertisement or promotion of any financial instruments. XTB S.A. is not liable for any client’s actions or omissions, in particular for the acquisition or disposal of financial instruments, undertaken on the basis of the information contained in this marketing communication. In the event that the marketing communication contains any information about any results regarding the financial instruments indicated therein, these do not constitute any guarantee or forecast regarding the future results.
