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
The Federal Reserve raised interest rates by 0.5 percentage points (50 basis points) for the first time in 22 years and will raise rates again in June. The Fed is expected to strip $2.7 trillion from its nearly $9 trillion (trillion) balance sheet in the next 2 years and 5 months, faster than previously expected.
At a press conference after the Fed’s policy statement, Powell indicated that the Fed was not actively considering a 75 basis point rate hike. Since this had been priced as expected, non-US currencies rebounded after the news published.
In addition, the currency market has also increased bets on the European Central Bank rate hike, which is expected to increase by 95 basis points by the end of 2022, which will at least narrow the interest rate differential with the dollar. As of early Asian trading on 5th May 2022, EUR/USD rose rapidly during the day at 1.0619.
(EUR/USD 1-hour chart)
We focus on the 1.0529-line today. If the euro runs steadily below the 1.0529-line, then pay attention to the support strength of the position of 1.0357. If the strength of the euro 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
Following the Fed’s rate hike, the Bank of England’s interest rate meeting will also be ushered in today.
Currently, it is widely expected that the Bank of England will raise interest rates for the fourth consecutive time to deal with soaring inflation, and traders are already betting that the Bank will join the 50 basis point rate hike camp by September.
Accordingly, GBP received corresponding support. While with the help of the dollar’s retreat, the pound pulled up sharply in the foreign exchange market yesterday.
(GBP/USD 1-hour chart)
The pound is mainly focused on the 1.2478-line today. If the pound runs below the 1.2478-line, it will pay attention to the suppression strength of the two positions of 1.2301 and 1.2243. If the pound runs above the 1.2478-line, then pay attention to the support strength of the two positions of 1.2668 and 1.2807.
2. Precious Metals Market Insight
Spot gold rose sharply in the short term, and the intraday increase reached nearly $40.
Gold prices rallied sharply as Fed Chairman Powell ruled out a single 75 basis point rate hike, while the dollar index plunged overnight after Powell’s speech.
(Gold 1-hour chart)
Gold pays attention to the 1880-line today. If the gold price runs steadily above the 1880-line, then it will pay attention to the support strength of the 1909 and 1919 positions. If the gold price breaks above the 1880-line, then pay attention to the suppression strength of the two positions of the 1872 and 1861.
3. Commodities Market Insight
WTI Crude Oil
Brent oil futures settled up $5.17, or 4.9%, to $110.14 per barrel.
Earlier released EIA data showed that U.S. East Coast diesel stocks fell to record lows as U.S. refiners increased supplies to the global market against the backdrop of reduced Russian supplies, adding to supply pressure.
At the same time, European Commission President von der Leyen said that the EU proposed to ban the import of Russian crude oil for the next six months and the import of Russian refined oil by the end of the year.
(Crude oil 1-hour chart)
Oil prices focus on the 102.52-line today. If the oil price runs above the 102.52-line, then focus on the suppression strength of the two positions of 107.52 and 111.95. If the oil price runs below the 102.52-line, then pay attention to the support strength of the two positions of 99.50 and 97.33.
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