Thu, December 08, 2022

Weekly Overview: Forex, Stocks, Crypto, Commodities June 10

Weekly market updates: Forex, Stocks, Crypto, Commodities

Global markets and trends change every day. Several big influencers cause price movements every second. How have Forex, Stocks, Cryptocurrencies, and Commodities performed this week? Our weekly overview will answer that question and summarize the week’s performance.

Forex Weekly Overview

The dollar rose in early Asian trade on Friday ahead of U.S. inflation data and after the European Central Bank (ECB) hinted at future interest rate hikes.

The U.S. dollar index, which tracks the greenback against a basket of other currencies, was down 0.09% at 103.127 by 1:09 a.m. ET (5:10 a.m. GMT). 

USD/JPY was down 0.40% at 133.79.

AUD/USD was up 0.13% to hit 0.7106, and NZD/USD was up 0.19% to hit 0.6404.

USD/CNY shed 0.03% to hit 6.6900, while GBP/USD was up 0.10% to hit 1.2502.

Manufacturing inflation in China slowed to a 14-month low in May. Official data showed that the producer price index (PPI) rose 6.4% in May from a year earlier after increasing 8.0% in April amid weak demand for steel, aluminum, and other commodities due to COVID-19 disruptions.

The data also showed that the consumer price index (CPI) rose 2.1% year on year in May.

After easing restrictions on June 1, Shanghai has resumed a partial lockdown due to the new COVID-19 outbreak.

At the same time, investors are pricing in a signal from the European Central Bank to raise interest rates by 25 basis points in July and more if inflation remains high. Eurozone inflation is now over 8%. On July 1, 2022, the ECB will also end its net asset purchases.

Yields on short-term U.S. government bonds rose sharply.

Investors are now turning their attention to U.S. inflation data for more clues on the Fed’s path to rate hikes later in the day.

The U.S. dollar index should be stable between 101 and 105. It could continue to move higher as higher yields are highlighted by U.S. CPI data and next week’s Fed meeting.

Inflation Around The Globe 

Most central banks worldwide have taken action to curb rising inflation by raising interest rates. Investors will focus on the latest U.S. CPI inflation data for May released on Friday. Inflation is widely forecast to increase by 8.3% year-on-year, unchanged from April. 

While some investors are hopeful that inflation may have peaked, a recent surge in oil prices to a 13-week high has dampened that optimism and added to the appeal of the safe-haven dollar.

U.S. data on Thursday showed the labor market remained very tight, with weekly initial jobless claims rising to a seasonally adjusted 229,000 for the week ended June 4, the highest level since mid-January and above 210,000 people’s estimates.

By contrast, the Bank of Japan (BOJ) was one of the few central banks not responding to rising prices, sending the yen from a 7-1/2-year low to a 20-year low against the dollar. EUR. 

Governor Haruhiko Kuroda said on Wednesday that a weaker yen is good for the economy as long as the trend remains stable, adding that foreign exchange policy is not the BOJ’s authority.

The euro was down 0.86% at 142.610 yen, just below its January 2015 high of 144.25 yen on Wednesday.

The yen was down 0.01% at $134.28 against the dollar, while the pound was last at $1.2502, down 0.30% on the day.

Stocks Weekly Overview

Stock futures increased in early trade Friday ahead of the much-anticipated inflation report.

Futures linked to the Dow Jones Industrial Average gained 42 points or about 0.1%. The S&P 500 and Nasdaq 100 rose 0.19% and 0.27%, respectively.

Investors will see the CPI report for May ahead of the opening bell on Friday. Economists polled by Dow Jones expected an 8.3% increase in the main index and a 5.9% increase in the core index, excluding food and energy prices. 

If the report comes out as expected or shows slowing growth, Wall Street may take it as a sign that inflation may have peaked, and the Fed may need to become less aggressive later in the year.

Futures moved after stocks fell sharply in regular trading on Thursday, with the S&P 500 and Nasdaq Composite down more than 2%. In a challenging final hour of trading on Wall Street, the Dow closed above 600 points, down about 400 points.

Additionally, the Dow is down 1.9% this week and is on track for its 10th straight weekly loss in the past 11 years. The S&P 500 and Nasdaq Composite fell more than 2% and is on track for their ninth straight weekly loss in 10 years.

Asian Stocks                                                                   

Asia-Pacific stocks were mostly lower Friday morning. Investors were digesting signals from the European Central Bank about future rate hikes ahead of U.S. inflation data.

As of 10:49 a.m ET (2:49 GMT), Japan’s Nikkei 225 was down 1.41%, and South Korea’s Kospi was down 1.08%.

In Australia, the ASX 200 lost 0.99%, and Hong Kong’s Hang Seng lost 0.89%.

The Hong Kong-listed tech giant tumbled, with its sub-index opening 2.9% lower.

U.S.-listed Alibaba (NYSE: BABA) Group Holdings Ltd. The stock tumbled after China’s securities regulator dismissed a report that it was considering reviving fintech listings.

China’s Shanghai Composite rose 0.10%, while the Shenzhen Composite added 0.02%.

Crypto Weekly Overview 

Bitcoin (BTC) briefly breached $32,000 on May 31. Still, the excitement lasted less than four hours after resistance proved more challenging than expected. The $32,300 level is up 20% from the May 12 swing low of $27,000, giving bulls much-needed hope to buy call options at $34,000 and above.

The short-lived optimism returned to a seller’s market on June 1 after BTC plunged 7.6% in less than 6 hours to hold the price below $30,000. The negative move coincided with the Fed starting to shrink its $9 trillion balance sheet.

On June 2, Arthur Hayes, the former CEO of the BitMEX exchange, suggested that Bitcoin bottoming in May could be a strong signal. Using on-chain data, Hayes predicts strong support at $25,000, as $69,000 marks an all-time high for the cycle, down 64%.

Is BTC Prediction Optimistic?

 While analysts may be making bullish price forecasts, the threat of regulation continued to dampen investor optimism, with U.S. stocks taking another hit on June 2. The Commodity Futures Trading Commission (CFTC) filed a lawsuit against Gemini Trust Co, alleging misleading statements in 2017 about the firm’s certification assessment of bitcoin futures contracts.

On June 7, the Russian parliament introduced a bill to ban digital assets as a means of payment. The draft law loosely defines digital financial assets as “electronic platforms” that can be identified as subjects of the national payment system and must be submitted to the central bank registry.

Open interest for options expiring on June 10 is $800 million. Still, the actual figure will be much lower as bulls are overly optimistic. Those traders may have been fooled by a brief rally to $32,000 on May 31, as their bets on Friday’s options expiration ranged as high as $50,000. 

A call-to-call ratio of 0.94 shows a balance between $390 million in call (buy) options and $410 million in put (sell) options. Bitcoin is currently near $30,000, which means that most bullish bets could become worthless.

 Commodities Weekly Overview

Oil prices eased on Friday but remained within a three-month high range as worries over Shanghai’s new COVID-19 lockdown measures outweighed strong demand for fuel in the U.S., the world’s top consumer.

August Brent crude futures were down 77 cents, or 0.6%, at $122.30 a barrel by 0448 GMT, after falling 0.4% the previous day. U.S. West Texas Intermediate crude for July fell 72 cents, or 0.6%, to $120.79 a barrel, after falling 0.5% on Thursday. 

Brent is on track for a fourth straight weekly gain, while WTI is on track for a seventh straight week of gains as prices have risen overall over the past two months. Both benchmark indexes posted their highest closes since March 8 on Wednesday, their highest closes in 14 years.

Shanghai and Beijing issued another COVID alert on Thursday after parts of China’s largest economic center imposed new lockdown restrictions. The city announced a round of mass testing for millions of residents. 

China’s crude oil imports in May rose nearly 12% from a year-ago low, even as refiners struggled with high inventories last month as COVID-19 lockdowns and a slowing economy weighed on fuel demand.

Meanwhile, U.S. midsummer fuel demand continued to push crude prices higher.

The United States and other countries have participated in releasing some strategic reserves. Still, these actions have had a limited effect due to prolonged growth in global crude oil supplies.

 Bottom Line

Overall, according to our weekly overview analysis, all major markets have seen some strong moves this week, so, stay tuned for future updates!

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