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Wall Street pushes stocks down, dollar up on Fed hike fears

“I didn’t fail the test. I just found 100 ways to do it wrong.” – Benjamin Franklin 

 

 

HEADLINES

 

 

  • Dollar driven to five-week high by Fed rate hike forecasts
  • Dollar strength sets gold on its longest losing streak since November
  • Oil prices rise about $1 per barrel on prospect of subdued U.S. rate hikes
  • Wall Street pushes stocks down, dollar up on Fed hike fears
  • Sudden crypto market drop sends bitcoin below $22,000
  • GBP/USD to extend further to the downside over the coming weeks – MUFG
  • EURJPY Near Term: Downside favored

 

 

Dollar driven to five-week high by Fed rate hike forecasts

 

 

The U.S. dollar index hit a five-week high and was on track for its biggest weekly gain since April 2020 on Friday as investors adjusted for the likelihood that the Federal Reserve will keep hiking rates to battle inflation.

The U.S. central bank needs to keep raising borrowing costs to tame decades-high inflation, a string of U.S. central bank officials said on Thursday, even as they debated how fast and how high to lift them.

The dollar index rose 0.36% to 107.96, its highest since July 15, while the euro dropped 0.32% to $1.0055, its lowest since the same date.

 

 

COMMODITIES

 

 

Dollar strength sets gold on its longest losing streak since November

 

 

Gold prices slipped for a fifth consecutive session on Friday, in its longest losing run since November last year, as the bullion’s appeal waned with a stronger dollar and more U.S. interest rate hikes on the horizon.

Spot gold dropped 0.6% to $1,748.58 per ounce by 1:47 p.m. ET (1747 GMT), having hit its lowest since July 28 earlier in the session. U.S. gold futures settled down 0.5% at $1,762.9.

After posting gains in the previous four weeks, prices are down 2.9% so far this week, the most since the week of July 8.

 

 

ENERGY

 

 

Oil prices rise about $1 per barrel on prospect of subdued U.S. rate hikes

 

 

Oil prices rose about $1 a barrel on Fridayafter the U.S. Federal Reserve signalled a more subdued rate hike path that helped to ease fears about an economic slowdown that would weaken crude demand.

Brent crude futures gained 96 cents, or 1%, to $97.55 a barrel by 12:20 p.m. EDT (1620 GMT). U.S. West Texas Intermediate crude was up 1.24, or 1.4%, at $90.52 a barrel.

Both benchmark contracts were headed for weekly losses of less than 1%.

 

 

STOCKS

 

 

Wall Street pushes stocks down, dollar up on Fed hike fears

 

 

U.S. stocks fell and the dollar rose on Friday even as Treasury yields gained, with traders weighing additional interest rate hikes from the Federal Reserve to combat inflation.

With higher rates looming, high-growth and technology stocks such as Amazon.com Inc (AMZN.O) and Alphabet Inc (GOOGL.O) fell more than 2%. Banks declined and were on track to end the week lower, potentially snapping their six-week winning streak. And an earnings miss by heavy equipment maker Deere & Co. (DE.N) added to the risk-off mood.

The Dow Jones Industrial Average (.DJI) fell 0.71%, to 33,758.75; the S&P 500 (.SPX) lost 1.21%, to 4,231.87; and the Nasdaq Composite (.IXIC) dropped 2%, to 12,702.45.

 

 

Sudden crypto market drop sends bitcoin below $22,000

 

 

Bitcoin on Friday fell to its lowest level in more than three weeks, dipping below $22,000 amid a sudden crypto sell-off in early European trading.

Bitcoin plunged from $22,738 to below $21,352.13 at 2:13 p.m. ET, according to CoinDesk data. Earlier in the morning, the cryptocurrency fluctuated between $21,500 and $22,000.

It comes shortly after the world’s largest digital coin surpassed the $25,000 level for the first time since June following a rise in U.S. stocks.

 

 

ANALYSIS

 

 

GBP/USD to extend further to the downside over the coming weeks – MUFG 

 

 

“A recent build-up of long GBP positioning by Leveraged Funds could be vulnerable to liquidation propelling GBP/USD lower still.”

“Instead of the expected modest MoM declines, overall sales increased 0.3% and excluding auto fuel gained 0.4%. The data doesn’t change the overall picture of weak consumer spending. The ex-auto sales print gained 0.2% in June as well but these modest gains were preceded by seven consecutive declines and the record temperatures in the UK in July were very likely a driver of increased sales.”

“We doubt the retail sales data will change the dial on investors’ expectations of the outlook for the UK economy and see this break lower in GBP/USD extending further to the downside over the coming weeks.”

 

 

CHART

 

 

EURJPY Near Term: Downside favored

 

 

Technical View: Short position below 138.05. Target 136.23. Conversely, break above 138.05, to open 138.66.

Comments: The pair is expected to resume descend after correction.

Source: Trading Central 

 

 

CALENDAR

 

 

*Times in GMT

Source: FX Street Economic Calendar

Footnotes
https://www.reuters.com/markets/europe/dollar-hits-1-month-high-fed-officials-talk-up-rate-hikes-2022-08-19/
https://www.reuters.com/article/global-precious/precious-dollar-strength-sets-gold-on-its-longest-losing-streak-since-november-idUSL4N2ZV2BW
https://www.reuters.com/business/energy/oil-edges-higher-optimism-firmer-crude-demand-2022-08-19/
https://www.reuters.com/markets/europe/global-markets-wrapup-1-pix-2022-08-19/
https://www.cnbc.com/2022/08/19/sudden-crypto-market-drop-sends-bitcoin-below-22000.html
https://www.fxstreet.com/news/gbp-usd-to-extend-further-to-the-downside-over-the-coming-weeks-mufg-202208190756