- 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%.
Regarding 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
