What you should know on Tuesday, April 12:
The market mood was sour at the beginning of the week, with the dollar initially falling but then recovering against its main rivals. The demand for safety pushed USD/CHF lower to the 0.9300 region and gold higher as the shiny metal is trading around $1,950 a troy ounce.
However, the soaring rise in US government bond yields helped the USD/JPY pair to hit a new multi-year high of 125.76, currently trading a handful of pips below the latter. Yields soared amid concerns over skyrocketing inflation and the US Federal Reserve’s aggressive response. Recession sounds strong, though there is no particular sign confirming such a drop. The 10-year Treasury bond yield peaked at 2.793%, while the 2-year yield hit 2.594%.
Commodity-linked currencies were the worst performers, with AUD/USD falling to the 0.7410 price zone and USD/CAD to 1.2636.
The EUR/USD and GBP/USD pair ended the day little changed at 1.0880 and 1.3020 respectively.
Chinese inflation rose in March, while major lockdowns in the country exacerbate supply chain problems, along with the Eastern European crisis.
Meanwhile, US policymakers continued to pave the way for a 50bp rate hike at the May meeting. Central bankers around the world are adopting more aggressive tightening stances, further weighing on market sentiment.
Global indices closed lower, with Wall Street posting substantial losses, reflecting the gloomy mood in the market. Asian indices are poised to follow suit, which may cause the dollar to appreciate further.
The United States will publish March inflation figures on Tuesday, and the White House anticipated that it would be “elevated.”
Source: Fx Street
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