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The US dollar index surged on the back of prevalent risk aversion. Panic selloff hit US equities and a broad crash impacted most cryptocurrencies, meanwhile massive quantitative tightening signals attracted the attention of traders, investors and market participants. Monetary policymakers recurrently hint at measures set to trench liquidity.
Economic Data
There were 203,000 Initial Jobless Claims in the week ending on 7 May, a little above the expected drop to 195,000 from 202,000 one week ago, data released by the US Department of Labour on Thursday showed.
Other Developments
ECB officials keep setting the scene for July rate hike, while Bank of Canada Deputy Governor Toni Gravelle suggested that the central bank would need to raise rates above neutral. Finally, Bank of England Governor Ramsden noted that inflation might not drop as fast as forecast, highlighting the need for more rate hikes.
The Fed is two steps ahead of other central banks, hiking rates by 50 bps in May and pledging for at least 2 or 3 more 50 bps hikes while drawing plans to reduce its balance sheet.
Tensions are escalating between Russia and the West. Russian Deputy Chairman Dmitry Medvedev warned that military assistance for Ukraine risks creating a conflict between Russia and NATO.
Ukraine announced it would suspend Gazprom gas transit on its territory. European Commission President Ursula von der Leyen said Russia was the most direct threat to the international order. Russia menaced with retaliation if Finland join NATO. Earlier, Finland’s President and the prime minister said that the country should apply to join NATO without delay.
Commodity-linked currencies edged lower against the greenback. AUD/USD is now at 0.6850, while USD/CAD trades in the 1.3040 price zone.
Gold reached a fresh monthly low, now changing hands at around $1,824 a troy ounce, while crude oil prices kept recovering, with WTI trading at $106.85 a barrel.
Global indexes closed in the red, although Wall Street managed to trim most of its intraday losses ahead of the close.
EUR/USD fell to 1.353, now trading at around 1.0370. The GBP/USD pair plunged below the 1.2200 figure. The USD/CHF pair reached parity for the first time since December 2019, now trading at around 1.0040, while USD/JPY edged sharply lower, stabilizing at around 128.40, meanwhile, Treasury yields retreated amid renewed demand for safety.
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Bank of Mexico hikes interest rate by 50bps to 7%
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Wells Fargo: US Dollar Can Strengthen Further Against G10 Currencies
