(Editor's note: due to technical difficulties, there are some audio issues in today's Morning Call video.)
Saxo Bank Head of FX Strategy John Hardy reports that the euro continues its ascent despite Italian yields continuing to rise with key EURUSD flashpoints at 118.25, 119.25, and of course 1.20.
"It's interesting to see that the European Central Bank appears to be playing hardball with the populist Italian government," says Hardy, adding that markets appear to be pricing in expectations for a hawkish central bank move tied to the end of ECB QE at the bank's June 14 meeting.
Globally, the decline in emerging market currencies is presently centred on Brazil where extreme levels of political unrest place the country at risk of further currency volatility.
In terms of European shares, Saxo Bank head of equity strategy Peter Garnry says that Casino, Carrefour, Santander, AB InBev, and Edenred maintain noteworthy levels of exposure to the Brazilian market.
Elsewhere in stocks, Garnry reports that the US S&P 500 is 12 points away from the most recent "air pocket" seen in March with Saxo's equities head stating that he expects the benchmark US index to push through into this area.
The key element for markets at large remains risk sentiment, says Hardy, with US yields raising a question mark on this front as they have returned to the pivotal 3% area.
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.