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Daily Analysis Report 21 Apr '2022

Daily Analysis Report 21 Apr '2022


During the Asian session, the European currency showed a small decline against the US dollar, correcting after a relatively active rise the day before, which saw the instrument reach fresh local highs for the first time since April 14. In general, the market situation is stable, and investors are only reacting to the release of mixed macroeconomic information in Europe and the United States. As a result of the growing tensions in Ukraine and predictions of an early tightening of the US Federal Reserve’s monetary policy in early May, demand for the dollar remains strong. In this regard, the European Central Bank (ECB) falls behind the US regulator.

Earlier, calls for a prospective interest rate hike were crushed by ECB President Christine Lagarde’s skepticism, which came after she warned of new threats to the region’s economy. However, the “hawks” do not abandon attempts to exert pressure on the European regulator despite particularly scary inflation numbers. The day before, the markets focused on the German Producer Price Index, which jumped from 1.4 percent to 4.9 percent in March, despite market expectations of only a 2.6 percent raise. Consumer inflation increased from 25.9% to 30.9 percent on an annual basis, exceeding investors’ expectations of a rise to 29.1 percent. Investors’ attention will be drawn today to reports on consumer inflation in the eurozone. According to forecasts, price dynamics are expected to accelerate to 2.5 percent monthly and 7.5 percent annually.


During the morning session, the British pound trades with mixed dynamics against the US dollar, stabilizing at about 1.3050. The pound rose sharply the day before, aided by weak US macroeconomic data, but the “bullish” momentum faded noticeably on Thursday, as traders awaited the release of new data, as well as speeches by Catherine Mann, a representative of the Bank of England, and Andrew Bailey, the Governor of the British regulator. Existing Home Sales fell by 2.7 percent in the United States on Wednesday, after falling by a more substantial 8.6 percent.

Sales declined from 5.93 million to 5.77 million in absolute terms, somewhat below market expectations of 5.8 million. Until the end of the week, investors may look forward to Markit’s release of retail sales data for March and business activity data for the manufacturing and services sectors in April. All signs are expected to be negative. Therefore the pressure on the pound may intensify by the end of the week.


During the Asian session, the Australian dollar trades in a range of values against the US dollar, hovering around 0.7430. The instrument has been trading primarily in a downtrend since the start of the daily session, but this nevertheless fits within the context of a mild technical correction following vigorous growth the day before. On Wednesday, the Australian and New Zealand currencies gained sharply in response to the release of rather negative macroeconomic data from the United States on the dynamics of existing home sales. Existing Home Sales decreased by 2.7 percent in March, following an 8.6 percent drop the month before, significantly worse than analysts’ expectations.

Furthermore, words by officials of the US Federal Reserve bolstered the AUD/USD quotations, dampening investors’ hopes for more active moves by the regulator aimed at tightening monetary policy in the country. President of the Chicago Fed, Charles Evans, stated that he intends to hike the rate twice, each time by 0.50 percent. In response, Fed spokesman Rafael Bostic, the President of the Federal Reserve Bank of Atlanta, stated that hiking the rate by more than 0.50 percent would be premature and might harm the US economy’s growth.


In Asian trading, the US dollar is regaining ground against the Japanese yen, following a downtrend the day before, when the US currency fell across almost the entire market against the backdrop of the US Federal Reserve’s rhetoric, which significantly reduced investors’ expectations for a possible rate hike at the May meeting by more than 0.50 percent. Traders also noticed some of the worse US reports on the dynamics of existing home sales. Data from Japan, in turn, put downward pressure on the yen.

Exports from the country fell from 19.1 percent to 14.7 percent in March, falling short of analysts’ expectations of 17.5 percent, while imports fell from 34.1 percent to 31.2 percent in the same month, falling short of investors’ expectations of 28.9 percent. This resulted in a trade imbalance of -412.4 billion yen in March, much higher than economists’ projection of -100.8 billion yen. The Tertiary Industry Index of Japan, which declined 1.3 percent in February after falling 0.7 percent the month before, added to the pressure on the instrument’s position.


Gold prices stabilize near 1950.00, with yesterday’s and today’s Asian session showing multidirectional characteristics. The quotes were marginally backed by the US Federal Reserve’s statements yesterday, which lessened the chance of a more fast tightening of monetary policy during the regulator’s May meeting. Another significant reason was the USD Index’s pullback from record highs due to less-than-optimistic macroeconomic data from the United States. As there is speculation of a probable overcoming of the inflation peak shortly, the demand for gold is progressively increasing. Traders are waiting for figures on the dynamics of Jobless Claims in the United States to be released today. In addition, Jerome Powell, the Chairman of the Federal Reserve, in a speech during the day.

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