English
12
May

US Jobless Claims, Swiss PPI, UK GDP

calendar 12/05/2022 - 07:40 UTC

After some stability over the past days, many USD-emerging market pairs like the USD/CNH and USD/INR and traded again higher by Thursday morning. The USD/TRY pair remained at a fairly stable position remaining well below the 15.5-threshold after reaching on Tuesday a new year-to-date high.

The carnage in the crypto market continued with the total crypto market cap now estimated to have fallen towards around $1.2 trillion with Bitcoin’s market cap not significantly above the $500 billion level as the biggest crypto also declined below the $27k mark, reaching a new low since December 2020.

The performance among many altcoins these days is seen to be even worse, which allowed the BTC dominance to climb from levels below 40% last week to a position above 42%. Some of the most significant losses were seen in the Terra coin, whose value plummeted by more than 99% compared to a week ago with the TerraUSD coin, which is supposed to be a “stablecoin” trading around the one dollar mark, trading at a significant discount. These developments even caught the attention of U.S. Treasury Secretary Janet Yellen, who according to Bloomberg stated that such “de-pegging” (assuming from the one dollar per coin level) would show that there is a need for a regulatory framework for this type of cryptos.

The USD/CHF pair briefly dipped in the minutes following the publication of the Swiss consumer price index (CPI) statistic for April, which indicated a rate of inflation amounting to 1.3% for just one month. Later on the pair retraced with the dollar recovering, though for the time being remaining under par in that pair.

Fundamental data from the United Kingdom published this morning was quite mixed with the GDP in the first quarter improving by 8.7% compared to last year, which was slightly less than anticipated, while industrial production improved by 0.7% (y/y) in March. That result might have been better than anticipated, though the trade balance deficit increased from GBP20.6 bn. in February to GBP23.9 bn. in March.

EUR/USD

The trend to the downside in the EUR/USD pair that started on Tuesday is continuing with the pair trading by Thursday morning again below 1.05. Over the past days the euro started to decline against in multiple pairs like the EUR/CHF, EUR/CAD and EUR/JPY, while at the same time trading stronger against the weakened Australian Dollar (AUD) and New Zealand Dollar (NZD).

Further important fundamental data for the eurozone can be expected especially on Friday when the French CPI statistic and the eurozone industrial production figures will be released.

EUR/USD

Gold

Gold closed higher on Wednesday, recovering most of the losses from the day before. Though volatility was also high in this market around the time of the CPI release. Fundamentally a decline in yields later in the day could have supported gold as the 10-year U.S. T-Note benchmark retraced from its high just above three per cent towards levels closer to 2.85% by Thursday morning. Higher yields in theory mean higher opportunity costs of holding non-yielding assets, though here the actual real yield after considering the impact of inflation also needs to be considered.

Silver and platinum prices were also up on Wednesday with the latter trading at times again above the $1,000-mark. At the same time palladium prices ended the day lower with a troy ounce of the precious metal trading just above two thousand dollars.

Gold

WTI Oil

After a downside move at the beginning of the week, oil prices sharply rebounded on Wednesday with WTI crude oil trading up by more than 7.6% in a day. Gasoline prices also managed to recover during the trading session.

These energy commodity markets were also subject to increased volatility after the CPI release and continued to move moderately higher in the following hours despite a significant build in crude oil stockpiles reported in the weekly data from the Energy Information Administration (EIA) amounting to 8.5 million barrels. On the other hand distillate and gasoline stockpiles continued to decline.

WTI Oil

US 500

Major stock market indices like the US 500 or the US Tech 100 index closed once again lower with the market now clearly on track to close lower for the sixth week in a row. A significant downside was seen at the time the monthly CPI figures were released in the United States with inflation persisting at a high level, while some analysts hoped that prices would start falling. A high level of inflation of course is expected to lead to a more hawkish central bank policy and with easy access to cheap credit facilities drying up the prospects for growth are seen to be negative. Especially tech stocks were under pressure with some of the biggest market caps of which the FANG+ index (-4.12%) is comprised of closing significantly lower. In particular the weak performance of Apple (-5.44%), which is still the biggest company in terms of market cap but also index weight for the S&P 500 and NASDAQ Composite indices affecting the overall index performance.

Following an already brutal regular trading session with steep losses, Beyond Meat (-13.80%) declined further by more than a fifth of its value in the extended session. Should the stock open at such an after hours price of around twenty to twenty one dollars during the regular session on Thursday, it would mean a new all-time low and the first time the share would be trading in public below the IPO price of $25 from three years ago. The driver for this bearish stock move was clearly the earnings release which failed to live up to investors expectations as the loss per share at $1.58 (adjusted) as bigger than anticipated. Another problem could have been the slow growth in sales as net sales growth amounted to just 1.2%.

On Thursday quarterly results for Affirm Holdings and CyberArk Software will be published.

US 500

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