Daily Market Bulletin – 14 April 2022

Market Developments

Investors were in upbeat mood as they digested prospects of potential monetary easing in China, ahead of today's policy decision from the European Central bank and Friday's holiday in many countries.

China's State Council decided on Wednesday that monetary policy tools, like cuts in the reserve requirement ratio (RRR), should be used "at an appropriate time". [1]

The Bank of Canada increased interest rates by 50 basis points, to 1% yesterday, noting that they "will need to rise further". It also announced the start of quantitative tightening (QT), later in the month, by not replacing maturing bonds [2]. CAD strengthened.

Speaking on CNBC on Wednesday, Federal Reserve board member Mr Waller said that he prefers a "front-loading approach" on interest rates and a 50 basis point hike in May "would be consistent with that, and possibly more in June and July". [3]

Today's data showed that the Australian economy added just 17.9K in March, from 77.4K prior, while Unemployment steadied at 4%.

JPM.us lost more than 3% on Wednesday and set new 2022 lows, after JP Morgan reported 42% (y/y) Net Income drop in Q1 2022, due to a net credit reserve build of $902 million. [4]

The US Department of Defense (DoD) announced yesterday an additional $800 million in military aid to Ukraine. The US has committed around $2.6 billion in security assistance since the start of the war. [5]

US Treasury Secretary Ms Yellen issued a warning to China of potential consequences for inaction over Russia. Among other things, she noted that "The world's attitude towards China and its willingness to embrace further economic integration may well be affected by China's reaction to our call for resolute action on Russia". [6]

Main Asia-Pacific stock markets traded higher and European futures are also in good mood. On the FX space, the US Dollar retreats, the JPY Basket is upbeat and main Commodity Currencies (AUD, NZD, CAD) rise against the greenback.

Instruments Snapshot

EUR/USD extends yesterday's gains and retakes 1.0900.

GBP/USD edged new year lows (1.2970) yesterday, but staged a recovery and pushes higher today, eyeing 1.3150.

USD/JPY retreats after Wednesday's nearly 20-year highs (126.33), but holds above 125.00.

USD/CAD stays on the back-foot and probes 1.2550.

AUD/USD is upbeat and reclaims 0.7450.

NZD/USD gains around 0.5%, moving towards 0.6850.

GER30 is constructive and tests 14,200, trying to avoid another negative week.

US30 extends yesterday's advance towards 34,700.

USOil comes under pressure above 103.00, pausing its two-day rise.

XAU/USD faces difficulties and breaches 1,975, after a six-day profitable streak.

Economic Calendar Picks (GMT)

The European Central Bank stands out today as it hands down its monetary policy decision at 11:45 and Ms Lagarde speaks at 12:30. Last month, the ECB had announced a faster tapering and an earlier conclusion of its asset purchases program (APP).

From the rest of the docket, US Retail Sales and Jobless Claims (12:30) are the most high-profile releases.

JP Morgan Chase kicked off the earnings season yesterday in a disappointing way and focus shifts today to Citigroup.

Many stock markets around the globe will be closed tomorrow, including Wall Street, in observance of Good Friday.

See the economic calendar here.

Nikos Tzabouras

Senior Market Specialist

Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. He has a long time presence at FXCM, as he joined the company in 2011. He has served from multiple positions, but specializes in financial market analysis and commentary.

With his educational background in international relations, he emphasizes not only on Technical Analysis but also in Fundamental Analysis and Geopolitics – which have been having increasing impact on financial markets. He has longtime experience in market analysis and as a host of educational trading courses via online and in-person sessions and conferences.

References

1

Retrieved 14 Apr 2022 https://english.www.gov.cn/premier/news/202204/13/content_WS6256ea99c6d02e5335329456.html

2

Retrieved 14 Apr 2022 https://www.bankofcanada.ca/2022/04/fad-press-release-2022-04-13/

3

Retrieved 14 Apr 2022 https://www.youtube.com/watch

4

Retrieved 14 Apr 2022 https://www.jpmorganchase.com/content/dam/jpmc/jpmorgan-chase-and-co/investor-relations/documents/quarterly-earnings/2022/1st-quarter/c1afebcf-9ba1-44de-97fc-a446d7baf619.pdf

5

Retrieved 14 Apr 2022 https://www.defense.gov/News/Releases/Release/Article/2999113/800-million-in-additional-security-assistance-for-ukraine/

6

Retrieved 15 Aug 2022 https://home.treasury.gov/news/press-releases/jy0714

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