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GBPUSD slammed after strong US CPI

“I never dreamed about success, I worked for it.” — Estee Lauder

HEADLINES

  • Sterling tumbles more than 1% vs dollar after U.S. inflation data

  • Gold rebounds in roller coaster trade as economic fears grow
  • Oil falls as U.S. inflation data surges; China imposes lockdowns
  • Stocks slide, dollar gains on hot U.S. inflation data
  • European markets close lower after ECB meeting, U.S. inflation shock; Stoxx 600 down 2.7%
  • NZD/USD set to retest of the YTD low at 0.6230/13 – Credit Suisse
  • EURJPY Near Term: Downside favored

 

 

FOREX

 

 

Sterling tumbles more than 1% vs dollar after U.S. inflation data

 

 

Sterling fell by more than 1% on Friday and was set for a second consecutive week of declines against the U.S. dollar as Britain's gloomy economic outlook left investors on edge while strong U.S. inflation data boosted the greenback.

The pound fell below $1.24 after data showed that U.S. consumer prices accelerated in May, suggesting that the Federal Reserve could continue with its 50 basis point interest rate hikes through September to combat inflation.

 

 

COMMODITIES

 

 

Gold rebounds in roller coaster trade as economic fears grow

Gold prices bounced back in volatile trading on Friday, as focus turned to economic risks after elevated U.S. inflation readings bolstered bets for aggressive interest rate hikes.

U.S. consumer prices accelerated in May, suggesting the Federal Reserve could continue with its 50 basis points rate hikes through September, sending gold to its lowest since May 19 at $1,824.63.

Gold prices have been “remarkably resilient given (rate) hiking expectations, and a softening physical market” on concerns that inflation may outpace rate hikes, said Standard Chartered analyst Suki Cooper.

 

 

ENERGY

 

 

Oil falls as U.S. inflation data surges; China imposes lockdowns

 

 

Oil prices fell on Friday, after U.S. consumer prices rose more than expected and China imposed new COVID-19 lockdown measures.

Brent crude fell $1.06 to settle at $122.01 a barrel. U.S. West Texas Intermediate crude fell 84 cents to settle at $120.67 a barrel.

Both benchmarks still posted weekly gains, 1.9% for Brent and 1.5% for WTI.

 

 

STOCKS

 

 

Stocks slide, dollar gains on hot U.S. inflation data

 

 

Global equity markets slid and the dollar strengthened on Friday after a bigger-than-expected U.S. inflation spike in May raised concerns the Federal Reserve may tighten policy for too long and cause a sharp slowdown.

The U.S. consumer price index increased 8.6% last month, the largest year-on-year increase since December 1981, the Labor Department said. Economists polled by Reuters had expected CPI to rise 8.3% annually.

On Wall Street, the Dow Jones Industrial Average (.DJI) fell 2.13%, the S&P 500 (.SPX) lost 2.33% and the Nasdaq Composite (.IXIC) dropped 3.05%.

 

 

European markets close lower after ECB meeting, U.S. inflation shock; Stoxx 600 down 2.7%

 

 

The pan-European Stoxx 600 ended the day down 2.7%, with banks shedding 4.9% to lead losses as all sectors and major bourses closed in negative territory.

The ECB on Thursday confirmed its intention to hike interest rates by 25 basis points at its July meeting, with a further hike expected in September, the scale of which will be determined by the medium-term inflation outlook.

Credit Suisse closed down 5.7% after State Street dismissed rumors that it is considering a takeover of the embattled Swiss lender.

 

 

ANALYSIS

NZD/USD set to retest of the YTD low at 0.6230/13 – Credit Suisse 

“NZD/USD is showing further weakness following its rejection of the May highs at 0.6568/76. We thus stay with our tactically negative position, supported by the falling 55-day and 200-day moving averages, as well as by daily MACD momentum turning lower. “

“Immediate support moves to 0.6378/62 and then further below to 0.6310/6288, which we expect to eventually break and enable a retest of major retracement support and the YTD low at 0.6230/13.” 

“A sustained close above the May highs and the 55-day moving average at 0.6568/86 would negate our tactically bearish view and indicate yet another mean-reversion within the broader 2021/22 downtrend, similar to the July/Oct 2021 and Jan/April 2022 recoveries. However, this is not our base case.”

 

 

CHART

 

 

EURJPY Near Term: Downside favored

 

 

Technical View: Short position below 141.9. Target 140.1. Conversely, break above 141.9, to open 142.75.

 

 

Comments: The pair breaks below support.

 

Source: Trading Central 

 

CALENDAR

 

 

*Times in GMT

 

 

Source: FX Street Economic Calendar


Footnotes
https://www.reuters.com/markets/europe/sterling-set-second-weekly-decline-vs-dollar-economic-outlook-weighs-2022-06-10/
https://www.cnbc.com/2022/06/10/gold-markets-us-treasury-yields-inflation-data.html
https://www.reuters.com/markets/europe/oil-dives-us-inflation-data-surges-china-imposes-lockdowns-2022-06-10/
https://www.reuters.com/markets/europe/global-markets-wrapup-1-2022-06-10/
https://www.cnbc.com/2022/06/10/europe-markets-open-to-close-after-ecb-meeting-us-inflation-data-ahead.html
https://www.fxstreet.com/news/nzd-usd-set-to-retest-of-the-ytd-low-at-06230-13-credit-suisse-202206101324