12th of April 2022 - Selling continues as AUD tests .74.


Market Headlines

US equity benchmarks started the shortened trading week lower as investors awaited a closely watched inflation report, while government bond yields gained. The Dow Jones Industrial Average fell 1.2% to 34,308.08 on Monday, the S&P 500 was down 1.7% to 4,412.53, and the Nasdaq Composite was 2.2% lower at 13,411.96. All sectors declined, led by energy. The US 10-year yield jumped 5.4 basis points to almost 2.77% its highest since January 2019. West Texas Intermediate crude oil futures declined by $3.33 to $94.93 a barrel. Fuelled by outsized gains in the energy complex, the consumer price index is expected to have increased by an annualized rate of 1.2% in March for a year-over-year gain of 8.4%, making this the fastest pace of growth in the metric for more than 40 years. The core consumer price index will likely increase by 0.47% in March, Goldman Sachs said in a research note. The jump would boost the year-on-year inflation rate by 20 basis points to 6.6%. The data is due overnight.


China’s lockdowns in Shanghai and other industrial centres are starting to weigh on the country's economy. Auto sales have slumped, consumer prices have risen, and economists have lowered growth forecasts. Restrictions to contain the spread of the Omicron variant have resulted in factory shutdowns, further stressing snarled global supply chains.


Currencies

The AUD/USD pair traded in the 0.7420 price zone, under pressure amid falling equities and Australian political uncertainty. NAB’s Business Confidence will be a key indicator for the strength of AUD. Rising worldwide yields and risk off sentiment have pushed the Australian dollar down from highs of .7650 last week.


Soaring US government bond yields helped USD/JPY to reach a fresh multi-year high of 125.76, Currently trading a handful of pips below the latter. Yields soared amid concerns related to skyrocketing inflation and the US Federal Reserve’s aggressive response to it.


EUR/USD is little changed on a daily basis, trading at around 1.0880. Hawkish central bankers, covid in China and Russia-Ukraine tensions put investors on guard.


At 1.2635, USD/CAD is higher by 0.51% and has travelled between 1.2562 and 1.2637 on the day so far as the price of oil slides to a fresh corrective low on the daily charts and the US dollar bounces back to life.


Currency ranges over the last 24 hours




Market Outlook

All eyes will be on inflation data tonight as we have already seen how sensitive the market is to rising yields after the volatility overnight. The energy sector remains volatile after we saw another significant pullback in Crude Oil overnight. The narrative has spread now to global demand worries as some poor data from China this morning in the shape of low auto sales and high CPI has hit investor sentiment in Asia. Some well-followed names in the US such as NIO, XPeng and Tesla are getting hit on the back of the data. Investors will be keeping an eye on gold, silver and other inflationary hedge assets as we await inflation numbers overnight.

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Disclaimer

This material is provided by Navigate Global Payments (Navigate) ACN 615 699 888, AFSL 502711.  The material contains general commentary only and does not constitute investment or any other advice.  Certain types of transactions, like futures, options and high yield securities can be risky, and not suitable for all investors.  This information has been prepared without considering your objectives, financial situation or needs.  Please seek your own independent legal or financial advice before proceeding with any investment decision.  The information is believed to be accurate at the time of compilation and is provided in good faith.  Navigate does not warrant the accuracy or completeness of any information contributed by a third party. The information is subject to change without notice and Navigate is under no obligation to update the information. The information contained in this material are opinions of the author at the time of writing and does not constitute an offer, recommendation to act, a solicitation of an offer, or an inducement to subscribe for, purchase or sell any financial instrument or to enter a legally binding contract.  This information, including any assumptions and conclusions is not intended to be a comprehensive statement of relevant practise or law that is often complex and can change.  Past performance is not a reliable indicator of future performance. Any forecasts given in this material are predictive in character.Navigate Global Payments Pty Ltd nor its related parties or officers accepts no liability whatsoever for any loss or damages suffered through any act or omission taken as a result of reading or interpreting any of the information contained or related to this site.