Daily summary: Risky assets in retreat, dollar on the offensive

8:54 PM August 19, 2022

  • In European markets, market sentiment deteriorated. The German DE30 lost 1.12%, the French FRA 40 slipped 0.94%.

  •  Friday's session saw a continuation of yesterday's trend, i.e. the strengthening of the dollar and a discount on risky assets such as stock indices and cryptocurrencies.

  • The deterioration in sentiment can be linked to concerns about the global economic situation, worries about the G20 meeting, and rising expectations for stronger hikes by the Fed (as indicated by recent statements by central bank members), as well as rising US bond yields.

  • The economic calendar for today was relatively empty. In the German market, we learned the PPI inflation reading, which surprisingly rose at a record pace to 37.2% y/y (forecast at 32% y/y; previously 32.7% y/y). ECB members hinted at a second major rate hike at their next meeting in September. Canadian retail sales in June came in at 1.1% m/m versus expectations of 0.3% m/m and the previous reading of 2.2% m/m. Core inflation came in at 0.8% m/m (consensus at 0.9% m/m; previous reading of 1.9% m/m).

  • The mood in the US stock market has also deteriorated, with markets constantly assessing what interest rate hikes we can expect in the future. Yields on US 10-year notes jumped nearly 3.5% mid-day.  

  • The loser of today's session is the New Zealand dollar, which is losing as much as 1,2% against the USD The quotations of the main currency pair EURUSD are getting bolder and bolder towards parity, currently it is about 40 pips short of the level of 1.0000

  • In the commodities market today, we are seeing a deceleration of increases in the oil market, declines in precious metals and a rise in natural gas prices. Noteworthy is the gigantic increase in gas prices in Europe and the United Kingdom, the reason for which was the announcement of the suspension of the Nord Stream gas flow from August 31 to September 2.

  • The cryptocurrency market came under selling pressure on Friday, in the evening hours Bitcoin is trading almost 8% lower, just below the level of $21500, Ethereum is also losing about 8% and is settling just above the level of $1700, which is an important support in the short term.

  • Next week, the focus of investors' attention may be the information coming from the symposium in Jackson Hole. 

 

Bitcoin is following the scenario we assumed.  After the price hit the key resistance at $25,000, the discount on the major cryptocurrency accelerated after breaking the internal trendline (black dotted line). Currently, technical analysis may even point to a move towards the recent minima at the $18,000 level. Source: xStation5

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