What you should know on Wednesday, May 4:
Financial markets were in a better mood on Tuesday, with global indices managing to post gains, resulting in less demand for the safe-haven dollar.
However, spiraling inflation, tensions in Europe amid Russia’s war against Ukraine, and a growing number of coronavirus infections, not just in China, point to a long road to economic stability and keep investors on edge. cautious way.
At the same time, central banks have begun to drain markets of easy money meant to provide support in the early stages of the pandemic. The Reserve Bank of Australia raised the cash rate by 25 basis points early Tuesday. The US Federal Reserve and the Bank of England will announce their decisions in the coming days, and both could pull the trigger by 50 bps.
The yield on the US 10-year Treasury note hit a high of 3% on Monday, while the German yield hit the 1% level for the first time since 2015, both yielding on Tuesday and putting some pressure on the dollar.
Global indices rose, although Wall Street trimmed most of its gains before the close, giving the dollar a chance to make up some ground.
The US dollar remains the strongest as Tuesday’s losses were modest with the currency holding onto most of its yearly gains. EUR/USD hovers around 1.0510 early in the Asian session, while GBP/USD cannot sustain gains beyond 1.2500. Commodity-linked currencies posted modest gains against their US rival, with AUD/USD now trading around 0.7090 and USD/CAD around 1.2840.
Gold rose, now trading around $1,866 a troy ounce. Crude prices fell, with WTI trading at $102.75 per barrel.
Source: Fx Street
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