English (India)
18
May

Eurozone and Canada CPI, U.S. Housing Starts, Cisco Earnings

calendar 18/05/2022 - 08:07 UTC

While the dollar continued to trade weaker against many other major currencies the upside in the USD/TRY continued as it reached on Tuesday for the first time this year the 16.0-level. Over the course of this year, ever since the lira stabilised after the wild ride in December the currency pair held steady two times for an extended period – first trading mostly between 13.5 and 14.0 between January and end of February and then remaining from March until April mostly below the 15.0-threshold. Fundamentally it should be hard for the lira to remain stable against currencies like the dollar. Even with the current one week repo rate of 14% the impact of the significant rate of inflation in the country can have a significant impact on consumers, industry and investors with he most recent CPI reading showing a y/y rate of inflation close to seventy per cent.

Otherwise the greenback was seen trading weaker against most major and emerging market currencies with even pairs like the USD/INR and USD/CNH closing clearly lower after their recent highs.

Sentiment in the stock markets was clearly bullish with markets around the world like the US Tech 100, Germany 40 and Hong Kong 50 closing in the green on Tuesday.

On Wednesday CPI data will be released in the eurozone and Canada, while from the U.S. statistics on housing starts can be expected. Later in the Asian-Pacific session producer price index (PPI) data will be published in New Zealand followed by Japanese trade balance statistics and Australian unemployment rate data.

EUR/USD

The EUR/USD pair was able to easily surpass the 1.05-level on Tuesday as the dollar continued to depreciate against other major currencies for the third trading day in a row. The euro also performed strongly against most other major currencies with the exception of the pound sterling (GBP) as the EUR/GBP rate was in the red for the fourth trading day in a row.

Fundamental data from the eurozone was fairly positive with the first quarter GDP improving from an earlier estimated 5.0% y/y growth to 5.1%, while the Italian consumer price index (CPI) growth stalled in April with the inflation rate falling from 6.2% y/y to 6.0%.

On Wednesday eurozone CPI statistics are set to be released.

EUR/USD

Gold

Gold prices declined a bit after the gains seen on Monday and are trading on a weekly basis almost flat despite the dollar continuing to devaluate against other major currencies and the 10-year U.S. T-Note yield benchmark recovering closer towards the 3.0%-threshold.

Thus against currently stronger performing currencies gold prices are actually falling. By Wednesday morning the Gold (EUR) CFD on the iFOREX platform was down by around one per cent compared to the closing level of last week.

Silver prices meanwhile were almost flat after reaching intraday the highest price since last Wednesday but unable to advance towards the $22.0 level.

Gold

WTI Oil

While oil prices were initially up on Tuesday, with WTI crude oil traded at levels above $115 per barrel reaching yet another high since March, at the end of the day prices settled lower and continued to decline.

Initially the reports of lockdown being lifted in Shanghai were seen as bullish for the market. On the other hand the continued opposition of Hungary to agree to an EU-wide ban on Russian crude oil imports unless they receive significant concessions could be seen as bearish signal for the market.

In the evening hours prices started to recover again, possibly driven by the inventory numbers presented in the weekly statistical bulletin by the American Petroleum Institute (API) with crude oil and gasoline stockpiles down by 2.4 and 5.1 million barrels respectively. Distillate inventories meanwhile increased by close to 1.1 million barrels. On Wednesday as usual the Energy Information Administration (EIA) publishes its weekly inventory statistics.

WTI Oil

US 500

After a fairly mixed trading day on Monday, by Tuesday equity markets turned sharply higher with the US 500 index trading now well above the previously thought significant threshold of 4,000. Chip sector stocks (US Semiconductors ETF +4.72%) continued to recover at a rapid pace with AMD (+8.73%) being the best-performing component of the NASDAQ Composite Index that day.

Boeing (+6.38%) shares closed also with a strong upside driven at least in part by first investigation results of the recent 737-800 aircraft crash in China as these investigations indicate that someone in the cabin did inputs that would lead to the crash, possibly absolving the manufacturer of any responsibility for the disaster.

Wal-Mart () was meanwhile by far the worst-performing S&P 500 index component as the company clearly missed on expectations for its quarterly earnings. While revenue at $141.57 billion was clearly better than anticipated but other factors disappointed like the weaker same-store sales growth and the minimal one per cent growth in terms of e-commerce sales while at the same time high costs and increased inventory levels also affected the bottom line results.

On Wednesday Target, Cisco Systems and TJX will publish their respective quarterly earnings. Then on Thursday results from Applied Materials and Palo Alto Networks can be expected.

US 500

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