Market Drivers – US Session – 11 April

The market sentiment was sour at the beginning of the week, with the US dollar initially falling but later recovering against its major rivals. Demand for safety pushed USD/CHF lower, to the 0.9300 region, and gold higher, as the precious metal trades around $1,950 per ounce.

Economic Data
British stocks ended lower on Monday as data showed the economy slowed more than expected in February, intensifying worries about a cost-of-living squeeze.

Gross domestic product rose by 0.1% in February, missing the 0.3% rise forecast by economists in a Reuters poll and down from a 0.8% increase in January. London’s leading share index (.FTSE) closed 0.7% lower, pulling back from its strongest level in nearly two months, while the domestically focused FTSE 250 midcap index (.FTMC) declined 0.3%.

Other Developments
US government bond yields helped USD/JPY to reach a fresh multi-year high of 125.76, currently trading a handful of pips below the latter.

Yields surged amid concerns related to skyrocketing inflation and the US Federal Reserve’s aggressive response to it. Recession sounds out loud, although there’s no particular sign that confirms such a downturn. The yield of the 10-year Treasury note peaked at 2.793%, while that on the 2-year note hit 2.594%.

Commodity-linked currencies were the worst performers, with AUD/USD down to the 0.7410 price zone and USD/CAD up to 1.2636. The EUR/USD pair and GBP/USD ended the day little changed, at 1.0880 and 1.3020 respectively.

US policymakers continued to pave the way towards a 50 bps rate hike in the May meeting. Central bankers from around the world are adopting more aggressive tightening stances, further weighing on the market’s sentiment.

Global indexes closed in the red, with Wall Street posting substantial losses, reflecting the dismal market sentiment. Asian indexes are poised to follow the lead, which may see the dollar appreciating further. The US will publish March inflation figures on Tuesday, and the White House anticipated it would be higher.

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