DAILY MARKET REPORT

MONDAY, MAY 09 2022

Markets opened with a risk-off sentiment on Monday as global Central Banks continue to battle rising inflation.  The US dollar index extended gains for the 6^th week in a row post-Fed rate hike and strong US Job report on Friday. The April Jobs report reinforced bets on Fed’s further hawkish tightening at the next policy meeting. Traders should pay attention to the line-up of Central bank members’ speeches including FOMC member Bostic, BoE MPC member Saunders and German Buba Beerman later in the New York session.

Gold extended its slide as US 10-year treasury Yields climb towards a 5-year high at 3. The yellow metal was trading at 1875 early Monday morning and could trade lower as interest-paying assets become more attractive.

The US has imposed a new sanctions package on Russia including accounting services. These sanctions will see new export controls on consumer goods and visa restrictions on Russian businesses. The G7 leaders have planned a ban on Russian oil due to the war in Ukraine and rising geopolitical tensions as Russia continues to retaliate. Major volatility will be experienced in the oil markets as the week begins.

GBPJPY

The GBPJPY outlook is currently bearish as risk aversion renews demand for the Japanese Yen. The tightening lockdown in Shanghai continues to raise global economic growth concerns as commodities demand slows. The Bollinger bands (20) show a bearish breakout and the GBPJPY may target 159.58, 6-week support. The pair has a head and shoulder pattern as indicated by the grey rectangles and a break below the 159.58 support will reinforce the bearish outlook in the near term.

NZDUSD

The NZDUSD pair saw a fresh low as bears broke out to the downside as risk-sensitive assets are under selling pressure underpinning the New Zealand Dollar strength in the near term. The pair breached the 0.6400 support and has more room to trade lower towards the 0.6300 psychological support. Upside gains are capped by the Williams Alligator however a break above 0.6560 may change the outlook to bullish in the near term. The Stochastic oscillator reading is below 20 indicating an extremely oversold outlook, hence trend is susceptible to sharp price retracements.

EURUSD

The EURUSD pair extended its drop towards 1.0500 support as inflationary pressure in the Euro-area weighs on the Euro strength. On the four-hour chart, the pair has a near-term resistance at 1.0600 which coincides with a 50-day moving average. The Relative Strength Index (RSI) is currently neutral as the price trades inside a range between 1.0500 support and 1.0600 resistance. A break below 1.0500 may renew selling pressure towards 1.0450 and 1.0400 subsequently. However, if bulls manage to hold above 1.0500 there may be a price correction towards the 1.0775 area.