DAILY MARKET ANALYSIS 05-09-2022

The US dollar basket (DXY) broke above 110 early today for the first time in over 20 years as the greenback’s dominance of the FX market shows no sign of abating. The DXY is up over 21 big figures since the start of 2021 - a 23.5% rally – and further gains look likely if the ongoing energy crisis in Europe remains. The US dollar basket is calculated by factoring in movements in six major currencies with the Euro having a 57.6% weighting in the calculation. Weakness in the single currency shows up as a strength in the US dollar basket.

Stocks

The pan-European Stoxx 600 was down 1% by late morning, having recouped some of its earlier losses. Autos shed 3.5% to lead losses as most sectors and major bourses slid deep into negative territory. Oil and gas stocks bucked the downward trend to add 1.3% as prices spiked once more.

Currencies

• EUR/USD manages to leave behind the initial pessimism and rebounds from nearly 2-decade lows in the sub-0.9900 area at the beginning of the week, always against the backdrop of fresh buying interest in the dollar.

• GBP/USD pair kicks off the new week on a weaker note and hits a fresh low since March 2020 during the early European session. Spot prices, however, manage to rebound a few pips, though remain on the defensive below the 1.1500 psychological mark.

•  USD/JPY pair attracts fresh buying on the first day of a new week and maintains its bid tone through the first half of the European session. The pair is currently around the 140.50-140.55 region, just a few pips below a 24-year peak touched on Friday.

•  AUD/USD struggles to gain any meaningful traction on Monday and oscillates in a narrow trading band through the first half of the European session. The pair is currently placed around the 0.6780 region, just a few pips above its lowest level since mid-July touched on Friday.

Cryptos

Bitcoin edged up in Monday afternoon trading in Asia, but it still traded below the US$20,000 resistance line, a level it has now fluctuated around since late August. Ether rose, along with Solana and Polkadot. Cardano reversed morning gains to trade lower.

Commodities

Gold: Gold prices fell slightly on Monday, extending sharp declines from last week as strength in the dollar and growing uncertainty over hawkish U.S. monetary policy weighed on appetite for the yellow metal.

Oil: Oil prices rose strongly Monday ahead of a meeting of top producers to discuss production levels and as worries rise about the supply of gas to Europe.

Up Ahead – Tuesday 06-08-2022

•          AUD   RBA Rate Statement

•          USD   ISM Services PMI

*The information presented above is intended for informative and educational purposes, should not be considered as investment advice, or an offer or solicitation for a transaction in any financial instrument and thus should not be treated as such. Past performance is not a reliable indicator of future results.