Market Drivers – US Session – 26 April

Mohamed Abdelhamid 27 April, 2022 4:53 am Forex Market, Market Update

Forex trade was again dominated by risk-off on Tuesday, with the safe-haven yen and US dollar’s outperforming, as US equities cratered.
Investors and traders cited everything from economic and military tensions between Russia and the NATO to China lockdown risk and worsening global growth expectations in addition to the anticipated hawkish monetary policy tightening from major central banks as impacting the markets’ overall sentiment.

Economic Data
New orders for durable goods increased 0.8 percent to $275 billion, the Commerce Department said on Tuesday. The monthly gain was paced by computers and electronic products, up 2.6 percent to $26.3 billion, according to a department report. Orders have risen five of the past six months. The March increase followed a 1.7 percent decline in February. Excluding transportation, orders in March rose 1.1 percent. Excluding defense, new orders gained 1.2 percent. The overall transportation equipment category rose 0.2 percent to $83.7 billion. However, the different parts of the category varied greatly.

The S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index, covering all nine U.S. census divisions, reported a 19.8% annual gain in February, up from 19.1% in the previous month. The 10-City Composite annual increase came in at 18.6%, up from 17.3% in the previous month. The 20-City Composite posted a 20.2% year-over-year gain, up from 18.9% in the previous month.

The Conference Board Consumer Confidence Index decreased slightly in April, after an increase in March. The Index now stands at 107.3 (1985=100), down from 107.6 in March.

Other Developments

Regarding geopolitics, reports that Russia’s Gazprom is to begin halting gas supplies to Poland and through Bulgaria as soon as 27 April did little to help sentiment late in the session.

The US dollar hit fresh multi-month highs in the 102.30s, as it continues to hone in one 2020 highs near 103.00. The bulk of the gains for the DXY were driven by losses in EUR/USD and GBP/USD, with the Euro and sterling the two worst performers of the major G10 currencies.

Traders cited receding BoE tightening bets and concerning UK government borrowing data for the 2021/22 year as weighing on sentiment towards the pound and the usual concerns about energy-related stagflation in the Eurozone as weighing on the euro.

Strong US March Durable Goods, February S&P/Case-Shiller House Price Index and April Conference Board Consumer Confidence survey data released earlier in the day did not have an impact on USD sentiment.

The Japanese currency extended its recent run of gains against its G10 counterparts, with USD/JPY dropping back to the mid-127.00s versus last week’s highs above 129.00 and EUR/JPY hitting two weeks in the mid-135.00s. Meanwhile, GBP/JPY extended its three-day run of losses from last week’s highs above 168.00 to nearly 5.0%, with the pair eyeing a test of 160.00.

Attention turns in the upcoming session to the release of Australian Q1 2022 Consumer Price Inflation figures and Chinese February Industrial Profits data at 0230BST. However, the main driver of sentiment through the coming Asia Pacific session is likely to remain the state of the Covid-19 outbreak/lockdown situation in China.

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