Wednesday's session saw US Treasury Secretary Mnuchin out with a slight softening of a Trump administration's China stance, particularly around inbound investments, but the day ended in a determinedly risk-off mode with the dollar stronger across the board.
"The USD posted a strong day and we saw NZDUSD track lower in the wake of the latest dovish Reserve Bank of New Zealand outing," says Saxo Head of FX Strategy John Hardy, who adds that USDJPY is failing to follow its normal risk-off tack lower on both the USD surge and potentially on rising oil prices weighing on Japan's energy-importing economy.
"Today we see the European Union summit begin, and the focus appears to be on migration as German chancellor Merkel appears to have made something of a breakthrough, earning the support of Greece's Alexis Tsipras," says Hardy.
Saxo's FX chief notes that EURUSD is looking soft into the event on dollar strength but also perhaps some lingering EU existential doubt.
"All eyes remain on China," reports Saxo Bank Head of Equity Strategy Peter Garnry, who points to the Chinese CSI 300 index dipping below 3,400 to test long-term support.
"A Chinese think tank paper that was apparently released accidentally showed great concern coming from Beijing [on the state of the country's markets]," says Garnry, who notes that emerging market bonds and equities continue to be among the worst-performing assets in global markets.
Saxo Bank Head of Commodity Strategy Ole Hansen reports that trade war fears alongside broader concerns of a Chinese slowdown have copper prices challenged in a double-bottom formation around $2.94/lb while the recent oil rally that was driven by Iranian supply fears has paused after two days of price rise.
Finally, Hansen says, gold remains under pressure from increased short-selling amidst the strong dollar trend with the technical picture continuing to look bearish.
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?
Energy crisis could turn energy stocks into secular winnerWith long-term expected returns for the global energy sector close to 10%, we look at 40 stocks that could be set to cash in.
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.