From export bans to price controls, governments in Asia are taking a much more targeted approach than their Western counterparts in curbing global inflationary pressure, a strategy that appears to be working at least for now.
1. Forex Market Insight
With the euro zone facing record inflation – partly driven by war factors, but also by pandemic-related supply constraints – European Central Bank (ECB) officials are increasingly supporting a rate hike in July.
Meanwhile, ECB officials said any changes should be “predictable, gradual and data-dependent” in order to combat high inflation, so that debtors can better cope with higher borrowing costs.
This makes it even more important to act in a timely manner.
“Delaying the monetary policy turn is a risky strategy,” he said. “The more inflationary pressures spread, the more intense and abrupt rate hikes will be needed.”
(EUR/USD 1-hour chart)
We focus on the 1.0529-line today. If EUR runs steadily below the 1.0529-line, then pay attention to the support strength of the position of 1.0357. If the strength of EUR breaks above the 1.0529-line, then pay attention to the suppression strength of the two positions of 1.0662 and 1.0776.
GBP Intraday Trend Analysis
The Bank of England raised interest rates by 0.25 percentage points last Thursday, 5th May 2022, raising the benchmark rate to 1%, the highest rate since 2009 and the fourth consecutive rate hike by the Bank of England.
The Bank of England also predicted that inflation will reach 10% this year, with Russia’s unprovoked attack on Ukraine fueling a spike in food and energy prices.
(GBP/USD 1-hour chart)
GBP is mainly focused on the 1.2478-line today. If GBP runs below the 1.2478-line, it will pay attention to the suppression strength of the two positions of 1.2301 and 1.2106. If GBP runs above the 1.2478-line, then pay attention to the support strength of the position of 1.2668.
2. Precious Metals Market Insight
Spot gold extended decline, once hitting a near three-month low to $1831.30 an ounce.
As the dollar regains momentum, investors turned their attention to U.S. inflation data for clues on the Federal Reserve’s monetary policy strategy.
Although the geopolitical situation remains volatile, it is being ignored by the market for the time being.
(Gold 1-hour chart)
Gold pays attention to the 1830-line today. If the gold price runs steadily above the 1830-line, then it will pay attention to the support strength of the 1844 and 1855 positions. If the gold price breaks below the 1830-line, then pay attention to the suppression strength of the two positions of the 1812 and 1804.
3. Commodities Market Insight
WTI Crude Oil
Oil prices fell more than 2% yesterday, 10th May 2022, dropping below the 100 mark for a second straight day of losses and the lowest in two weeks.
The demand outlook was pressured by the spread of the pandemic and the growing risk of recession. At the same time, the dollar rose on market concerns about tightening monetary policy.
The strong dollar makes crude oil more expensive for buyers using other currencies.
(Crude Oil 1-hour chart)
Oil prices focus on the 97.33-line today. If the oil price runs above the 97.33-line, then focus on the suppression strength of the two positions of 102.52 and 107.52. If the oil price runs below the 97.33-line, then pay attention to the support strength of the two positions of 95.05 and 93.57.
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