News

America’s Roundup: Dollar gains as traders assess Fed rate hike bets Wall Street slips, Gold slips, Oil hit 7-year highs as tight supply bite-January 19th,2022

Posted at 19 January 2022 / Categories Market Roundups


Market Roundup

•Canada Dec Housing Starts 236.1K,  270.0K forecast, 301.3K previous

• US Jan  NY Empire State Manufacturing Index  -0.70, 25.70 forecast, 31.90 previous

• US NAHB Jan Housing Market Index  83,84 forecast, 84 previous

•  US 3-Month Bill Auction 0.170%,0.120% previous

 •  US 6-Month Bill Auction 0.365%,0.275% previous

•  US Nov  Overall Net Capital Flow  223.90B,143.00B previous

•  US Nov  TIC Net Long-Term Transactions 137.4B, 7.1B previous

Looking Ahead - Economic Data (GMT)

•05:20   Japan Oct Trade Balance  -784.1B forecast, -955.6B previous

•05:20   Japan Dec Imports (YoY)  42.8% forecast, 43.8% previous

•05:20   Japan Dec Exports (YoY)  16.0% forecast, 20.5% previous

•05:20   Japan Adjusted Trade Balance -0.49T previous

•06:00 Australia Dec Full Employment Change  128.3K previous

•06:00 Australia Dec Employment Change  43.3K forecast, 366.1K previous

•06:00 Australia Dec Unemployment Rate  4.5%  forecast, 4.6% previous

•07:00 China PBoC Loan Prime Rate 3.80% previous

Looking Ahead - Economic events and other releases (GMT)

•No Significant events

Currency Summaries

EUR/USD: The euro dipped on Tuesday as investors prepared for possible faster U.S interest rate hikes after Treasury yields hit pre-pandemic highs. Investors leaned towards the Fed becoming more aggressive on rate hikes while the ECB remains accommodative. The turn in sentiment came after two-year U.S. Treasury yields, a bellwether for rate expectations, rose above 1% for the first time since February 2020.The U.S. Federal Reserve is not expected to change rates at its Jan. 25-26 meeting but a growing number of investors think March will be the start of a tightening cycle. Immediate resistance can be seen at 1.1350 (38.2% fib), an upside break can trigger rise towards 1.1389(23.6%fib).On the downside, immediate support is seen at 1.1321 (50% fib), a break below could take the pair towards 1.1286(61.8%fib).

GBP/USD: The British pound's declined on Tuesday as dollar rose as investors prepared for possible faster U.S interest rate hikes after Treasury yields hit pre-pandemic highs. Rising Treasury yields, which struck two-year highs, offset sterling's earlier employment-related gains , with markets abuzz with talk of a faster pace of Fed hikes and possibly even a 50bp increase to make up for lost ground as inflation, at 7%, remains well above the FOMC's 2% target. The pound was last down 0.44% against the dollar at $1.3594. It hit a late-October high of $1.3749 last week. Immediate resistance can be seen at 1.3636 (38.2% fib), an upside break can trigger rise towards 1.3703 (23.6%fib).On the downside, immediate support is seen at 1.3577 (50%fib), a break below could take the pair towards 1.3516(61.8%fib).

 USD/CAD: The Canadian dollar was little changed against a broadly stronger U.S. counterpart on Tuesday, as oil prices climbed to their highest level since 2014 and investors bet that the Bank of Canada would raise interest rates as soon as next week . The price of oil, one of Canada's major exports, rose as possible supply disruption after attacks in the Mideast Gulf added to an already tight supply outlook. The loonie was trading nearly unchanged at 1.2505 to the greenback, after trading in a range of 1.2487 to 1.2533.  Immediate resistance can be seen at 1.2537 (38.2%fib), an upside break can trigger rise towards 1.2598 (23.6%fib).On the downside, immediate support is seen at 1.2481(50%fib), a break below could take the pair towards 1.2437 (61.8%fib).

USD/JPY: The dollar initially gained against the Japanese yen on Tuesday but reversed   after the Bank of Japan said it would stick to its ultra-loose monetary policy. Bank of Japan said it would maintain its ultra-loose monetary policy even as its global counterparts move towards exiting from crisis-mode policies. As widely expected, the BOJ left unchanged a -0.1% target for short-term interest rates and a pledge to guide long-term rates around 0% at a two-day meeting that ended on Tuesday. The dollar was up 0.03% against the yen at 114.52 , with the pair having reached as high as 115.06 overnight. Strong resistance can be seen at 114.80 (38.2%fib), an upside break can trigger rise towards 114.93 (21DMA).On the downside, immediate support is seen at 114.30 (50%fib), a break below could take the pair towards 113.84(61.8%fib).

Equities Recap

European stocks closed on a weak note on Tuesday as Treasury yields surged higher amid expectations the Federal Reserve will start hiking interest rate as soon as March.

UK's benchmark FTSE 100 closed down by  0.64 percent, Germany's Dax ended down by 1.02 percent, France’s CAC finished the day down by 0.94 percent.                

Wall Street's main indexes fell sharply on Tuesday as weak results from Goldman Sachs weighed on financial stocks and tech shares continued their sell-off to start the year as U.S. Treasury yields rose to milestones.

Dow Jones closed down by 1.51%percent, S&P 500 closed down by 1.83% percent, Nasdaq settled down  by  2.60 % percent.

Treasuries Recap

Benchmark U.S. Treasury yields jumped to two-year highs and equity markets tumbled on Tuesday, with the Nasdaq falling more than 2%, as traders braced for the Federal Reserve to tackle fast-rising inflation by tightening monetary policy.

The yield on two-year Treasuries rose 8.4 basis points to 1.051% and on 10-year Treasury notes they climbed 10.2 basis points to 1.874%, a yield last seen that high in early January 2020.

Commodities Recap

Oil prices on Tuesday climbed to their highest since 2014 as investors worried about global political tensions involving major producers such as the United Arab Emirates and Russia that could exacerbate the already tight supply outlook.

Brent crude futures rose $1.03, or 1.2%, to settle at $87.51 a barrel. U.S. West Texas Intermediate (WTI) crude futures ended $1.61, or 1.9%, higher at $85.43 a barrel.

Gold prices fell on Tuesday, as the dollar and U.S. Treasury yields strengthened with investors turning their attention to next week's Federal Reserve policy meeting for more signals on its rate hike timeline.

Spot gold was down 0.3% at $1,813.08 per ounce by 13:49 ET (1849 GMT), while U.S. gold futures settled 0.2% lower at $1,812.40.


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