EUR/USD steadies after falling to a 5-year low in the previous session and posting its biggest loss since March 2020. The pair tumbled 1.2% yesterday after US wholesale inflation data sparked fears of a more aggressive Fed and as tensions between Russia and the West escalated, hitting demand for the euro.
The FTSE closed up by triple digits yesterday, booking gains of 1.4%, helped by early gains on Wall Street following US inflation data. Today the focus is on UK GDP data which is expected to show solid growth across Q1, but that would be mainly owing to solid growth at the start of the year.
The rollercoaster on Wall Street continued last night, with stocks rebounding modestly ahead of key US economic data. While selling ease, sentiment remains fragile amid concerns that the Fed could struggle to raise interest rates sufficiently without choking economic growth.
Gold started the week on the back foot, falling 1.5%, as risk aversion drove trade, and the USD was the safe haven of choice.
AUD/USD is falling for a third straight day. Since Thursday, the pair has tumbled 3.4% as the USD surged on the back of the Federal Reserve 50bp rate hike, expectations for a more hawkish Fed action to come, and strong US jobs report.
The Nasdaq made a spectacular reversal in the previous session, wiping out the gains from the Fed’s decision day. Federal Reserve Chair Jerome Powell’s comments that the central wasn’t considering a 75-basis point rate hike boosted stocks on Wednesday.
GBP/USD rose 1% in the previous session after the Fed hiked interest rates by 50 basis points, as expected, and started a quantitative tightening program. However, the Fed Chair Powell pointed to a less aggressive approach to monetary policy tightening going forward, removing the prospect of a 75 basis point hike in the coming meeting, that 50 basis points are likely.
The DAX fell 0.3% across last week as fear of stagflation rose, marking the fourth straight week of losses.
After four days of losses, AUD/USD is rising firmly higher on Tuesday after the RBA raised interest rates by 25 basis points to 0.35%.
EUR/USD rose 0.1% in the previous session after eurozone wholesale inflation jumped to a record high and unemployment in the region fell to a record low.
