Daily summary: Tough end of the week

9:05 PM April 22, 2022

  • European indices finished the week on a bearish note. DAX fell 2.48%, CAC 40 lost 1.99% and FTSE100 fell 1.39% ahead of the second round of the French presidential elections this Sunday, with incumbent Macron leading polls.
  • All major Wall Street indices trade in read as investors increasingly bet the Fed will need to raise rates faster to rein in soaring inflation. Dow Jones hit, 5-week low of 34102 pts, S&P500 fell 1.92% and NASDAQ dropped 1.84%. All three main US stock indexes are now on track to post weekly declines.
  • US PMI report showed broadening service sector inflation, while factory activity rose more than expected.
  • Oil extended declines amid prospects of slower demand from China and the potential ban on Russian oil. Brent trades around $106.65 per barrel, while WTI fell to $102 per barrel
  • Precious metals also took a hit amid stronger dollar and surging treasury yields. Gold dropped to $1935.0 while silver tested $24.00 level 
  • USD and EUR are the best performing major currencies while AUD and NZD lag the most
  • Cryptocurrencies followed the footsteps of US indices, which indicates that their correlation between these two classes of assets is still strong. Bitcoin fell $39,300 while Ethereum dropped below the psychological $3000 level. 

The final session of the week brought dynamic declines in equity markets. Investors ditched stocks and rushed towards the dollar, which appreciated thanks to uncertainty surrounding the outcome of Sunday's presidential elections in France and expectations of a more aggressive tightening of monetary policy. Pessimism also spilled over the cryptocurrency and commodity markets. The VIX volatility index, which measures the level of fear on the markets, rose more than 16% today.

NZDUSD pair fell sharply this week and is currently testing strong support at 0.6640 which coincides with lower limit of the descending channel and 78.6% Fibonacci retracement of the upward wave launched at end of January 2022. Source: xStation5

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