A busy week lies ahead with a slew of important macroeconomic data, and central bank meetings as well as the ongoing sagas of international trade tensions and sanctions, plus, of course, the corporate earnings season which this week will see Apple's much-anticipated release.
"It's a very busy week for the status of many things and especially the dollar, US yields, and a status check on the Federal Reserve as well," says John Hardy, Saxo's head for FX strategy. The yield on 10-year Treasuries jumped beyond 3% last week (a six-year high) and though it subsequently tipped back lower, it is expected to remain elevated this week, thereby facilitating additional dollar strength, he adds.
Elsewhere, GBP was crushed lower at the tail end of last week by a very weak UK Q1 GDP report and this week will likely extend to the downside with key areas for GBPUSD being 1.3700–1.3750 and then the 1.3600–1.3650.
Meanwhile, equities are in a somewhat confused state – the corporate earnings season is producing strong results but this has failed to lift sentiment, says Peter Garnry, Saxo's head of equity strategy. Investors are increasingly worried about interest rates and macro developments outside the US, he notes. "We remain strategically defensive," Garnry concludes.
But commodities, broadly put, are on a roll and April has show some decent advances, especially for oil which has been boosted by trade tensions and the threat of fresh sanctions in Iran, says Ole Hansen, Saxo's head of commodity strategy. Indeed oil now trades near a three-year high as Iranian and Venezuelan supply worries, along with strong demand, are offsetting a continued rise in the US rig count.
Quarterly Outlook Q2 2022: The End Game has arrived
- Shocks from covid and the war in Ukraine have forced the global financial and political world to change, but what will the end game be?
Productivity and innovation have never been more importantAs the world economy hits physical limits and central banks tighten their belts, could equities be facing a 10-15% downside?
The great EUR recovery and the difficulty of trading itIf the terrible fog of war hopefully lifts soon, the conditions are promising for the euro to reprice significantly higher.
Tight commodity markets – turbocharged by war and sanctionsWith supply already tight, commodities keep powering on. But will it last for yet another quarter?
Between a rock and a hard placeGeopolitical concerns will add upward price pressures and fears of slower growth, while volatility will remain elevated.
The Great ErosionInflation is everywhere and central banks try to combat it. But will they get it under control in time?
Australian investing: Six considerations amid triple Rs: rising rates, record inflation and likely recessionWhile global financial markets are struggling in an uncertain world, the commodity-heavy Australian ASX index is poised to keep a positive momentum.
Cybersecurity – the rush to catch up with realityWith the invasion of Ukraine, governments and private companies are rushing to reinforce their cyber defenses.