Daily Market Bulletin – 13 April 2022

Market Developments

Investors had a lot on their plate, as they digest the RBNZ rate hike, inflation data from the US and the UK, Covid-19 infections in China and the Russia-Ukraine war.

The Reserve Bank of New Zealand (RBNZ) increased rates by 50 basis points to 1.5% - the largest hike since May 2000. The bank pointed to more rate increases, as it judged "appropriate to continue to tighten monetary conditions" in order to achieve price stability and maximum employment. [1]

As per Yesterday's release, US CPI Inflation surged 8.5% year-over-year on March, the highest since May 1981. Federal Reserve governor Lael Brainard reiterated that "inflation is too high and getting it down is going to be our most important task", speaking at Wall Street Journal's Jobs Summit after the CPI print. [2]

Today, UK Consumer Price Index (CPI) jumped 7.0% year-over-year in March, from 6.2% prior.

The Chinese mainland reported 1,500 new locally transmitted COVID-19 cases and 26,525 new asymptomatic carriers (local & imported) for April 12. Shanghai had 1,189 carriers with symptoms (from 994 in the previous day) and 25,141 asymptomatic (from 22,348 in the previous day). [3]

On the Ukraine front and as per BBC's reporting, Russian President Putin will continue what he calls "special operations", while negotiations with Ukraine have reached a dead end [4]. US President Biden called Mr Putin a "dictator" yesterday, while speaking on his efforts to lower energy cost for Americans [5].

UK Prime Minister Johnson received a fine by the London Metropolitan Police "relating to an event in Downing Street on 19th June 2020" [6], or what is known as the "Partygate" and the violation of Covid-19 lockdown measures. Opposition leader Mr Stramer called him to resign [7], since he had broken the law, but the PM continues to resist such calls.

Main Asia-Pacific stock markets were mostly upbeat, whereas their European peers appear more cautious. On the FX space, the US Dollar stays on the front foot, the JPY Basket is soft and Antipodeans (AUD, NZD) are down against the greenback.

Instruments Snapshot

EUR/USD trades with caution, trying to avoid new 2022 low (1.0805).

GBP/USD is soft and sets fresh year lows below 1.3000.

USD/JPY rises to nearly 20 years high above 126.00.

USD/CAD is mixed, as it covers earlier losses, trying to reclaim 1.2650.

AUD/USD returns to negative territory below 0.7450.

NZD/USD loses more than 0.5% on USD strength, reversing course after the RBNZ-fueled spike.

GER30 is inconclusive below 14,200.

US30 is upbeat and reclaims 34,400.

USOIL faces difficulties after yesterday's rise past 100.00.

XAU/USD shows indecision above 1,965.

Economic Calendar Picks (GMT)

Market participants now turn to the monetary policy decision from the Bank of Canada (14:00), which had increased interest rates for the first time since 2018, in the last meeting.

Other than that, US Producer Price Index (PPI) is due at 12:30 and EIA Oil Stockpiles at 14:30. Overnight, focus will shift to Australia for the Employment report (01:30).

The new earnings season gets underway in the United Sates, with banking giant JP Morgan (JPM.us) and Delta Airlines (DAL.us), reporting today before the bell.

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 13 Apr 2022 https://www.rbnz.govt.nz/news/2022/04/monetary-tightening-brought-forward

2

Retrieved 13 Apr 2022 https://www.wsj.com/video/the-fed-lael-brainard-on-inflation-and-the-labor-market/F7B01AEB-4BBC-4D43-A774-3228A2C5C064.html

3

Retrieved 13 Apr 2022 http://english.www.gov.cn/statecouncil/ministries/202204/13/content_WS6256622dc6d02e53353293fd.html

4

Retrieved 13 Apr 2022 https://www.bbc.co.uk/news/world-europe-61077648

5

Retrieved 13 Apr 2022 https://www.whitehouse.gov/briefing-room/speeches-remarks/2022/04/12/remarks-by-president-biden-on-lowering-energy-costs-for-working-families/

6

Retrieved 13 Apr 2022 https://www.gov.uk/government/speeches/pm-statement-12-april-2022

7

Retrieved 15 May 2022 https://twitter.com/Keir_Starmer/status/1513863475759566853

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