Market Drivers – US Session – Tuesday 22 March

Mohamed Abdelhamid 23 March, 2022 4:09 am Commodities, Cryptocurrency, Forex Market, Market Update

The US dollar edged lower against most major rivals on Tuesday, except against the Japanese yen, with USD/JPY soaring to 121.02, its highest since February 2016.

Economic Data

Manufacturing activity in the US central Atlantic region rebounded in March after growing marginally in February, according to a survey from the Federal Reserve Bank of Richmond released Tuesday.

The Fifth District Survey of Manufacturing Activity’s index increased to 13 in March from one in February, above economists’ estimates.

Tuesday’s US economic data was bullish for stocks after the Mar Richmond Fed manufacturing survey rose +12 to 13, stronger than expectations of 2.

Other Developments
The number of coronavirus contagions keeps rising in Europe, mostly linked to the BA2 variant. The World Health Organization blamed it on European governments lifting restrictions too soon.

Additionally, Russia continues to escalate its attack on Ukraine, with no solution at sight for the Eastern European crisis. Several news said, Tuesday, that Belarus could join the ongoing war on the Russian side.

Bitcoin rose to a three-week high as cryptocurrencies moved with major stock market indices. Bitcoin rose to $42,673, up 4.1% within the previous 24 hours.The price of the largest cryptocurrency by market value touched $43,337 earlier Tuesday, the highest point since 3 March.

Bitcoin’s price is, broadly, moving in line with the major indices. Crypto Twitter has been forecasting an upwards movement based on a combination of technical analysis and certain fundamentals, but it’s too early to say whether this is a sustained rally.

Crypto service providers may be an “accomplice to” circumventing sanctions against Russia, and crypto assets have been and remain a threat, said Christine Lagarde, president of the European Central Bank (ECB).

Wall Street followed the lead of its overseas counterparts, also posting gains and weighing on the dollar. Speculative interest ignored bonds sell-off that sent the yield on the US 10-year Treasury note to a multi-month high of 2.39%.

The USD advanced during early Wednesday’s Asian session, following the lead of soaring US government bond yields after Fed Chair Powell hinted at a 50 bps hike in May. European indexes managed to post some modest gains, putting a halt to the dollar’s demand.

The EUR posted a tepid advance versus the USD, with the pair now trading in the 1.1020 price zone. The Union is too close and too affected by the Russia-Ukraine conflict to actually see its currency appreciate, despite mounting speculation the ECB will have to hike rates by at least 50 bps before the year-end.

The GBP/USD pair reached a fresh three-week high of 1.3273, retaining most of its intraday gains by the end of the day.

The AUD/USD pair reached a fresh 2022 high of 0.7469, trading nearby ahead of the Asian opening, while USD/CAD consolidated losses near its weekly low at 1.2564.

Crude oil prices started the day with a strong footing but finished the day with modest losses. WTI settled at around $10.900 a barrel.

Gold edged sharply lower during US trading hours, bottoming for the day at $1,910.64 a troy ounce. It later recovered and ended at around $1,922.00.

Also Read