Market Drivers – US Session – 5 April

Mohamed Abdelhamid 6 April, 2022 3:07 am Commodities, Forex Market, Market Update

The US dollar is the most prominent winner on Tuesday, firmly up against all of major rival currencies. Diminishing chances of a diplomatic solution to the Russia-Ukraine conflict and central banks’ aggressiveness were behind the market’s movements during the US trading session.

Economic Data
US Institute for Supply Management (ISM) has unfolded the Services Purchase Managers Index (PMI) on Tuesday and has displayed an outperformance from the US economy against the estimates. The US ISM Services PMI landed at 58.3, higher than the preliminary estimate of 58.3 and prior print of 56.5, which has further benefited the robust Dollar Index.

Other Developments
In the afternoon, US Federal Reserve Governor Lael Brainard hinted at an aggressive reduction of the balance sheet and noted that combined with rate hikes would move monetary policy closer to neutral later this year. His words sent the yield on the 10-year Treasury note to 2.567%, now holding nearby.

At the beginning of the day, the Reserve Bank of Australia gave up its patient stance, providing an unexpected boost to the local currency. Governor Philip Lowe dropped the sentence “prepared to be patient” from its usual statement and hinted at an interest rate hike in June.

The last time the RBA hiked was in 2010. Lowe also said that policymakers will now focus on inflation and labour costs data. The Australian Federal election will take place in May.

The EU is analyzing a ban on Russian coal imports as the US increases oil imports from Canada. France’s Europe Affairs Minister Beaune said that a new round of sanctions against Russia would most likely be imposed on Wednesday.

The EUR/USD pair plunged to 1.0900 while GBP/USD trades around 1.3076. The AUD/USD pair managed to retain some of its post-RBA gains but pulled down from a fresh 2022 high of 0.7660. USD/CAD nears 1.2500 as crude oil prices edged sharply lower, with WTI currently hovering around $100.00 a barrel.

Gold traded as high as $1,944.56 a troy ounce, now struggling around $1,920, amid renewed demand for the greenback. The US FOMC will publish the Minutes of its latest meeting on Wednesday.

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USD Surges On Hawkish Fed Officials’ Comments