This is what you need to know to trade today tuesday may 10:
Wall Street’s main indices suffered heavy losses on Monday and the S&P 500 hit its lowest level in a year below 4,000 points. Although markets remain relatively quiet early on Tuesday, US stock index futures are down 1.3%-1.7%, while the DXY dollar index consolidates gains below 104.00. Germany’s ZEW survey and the US NFIB Business Optimism Index could provide further impetus. Market participants will also pay close attention to comments from central bankers.
Investors are increasingly concerned about the slowdown in the global economy as coronavirus-related restrictions in China continue to weigh on international business activity. Despite the decrease in the number of cases in Shanghai, the authorities have reportedly tightened the measures, while the government redoubles the “zero-COVID policy”. Furthermore, it is expected that persistent supply chain problems keep global inflation rising for longer than expected. Meanwhile, there are no signs that the crisis between Russia and Ukraine has abated.
Following a 3% decline on Monday, the benchmark 10-year US Treasury bond yield remains in positive territory above 3.05% as of early Tuesday. Atlanta Fed President Raphael Bostic said Monday that a 75 basis point rate hike was not his baseline scenario, but he added that he was not taking anything off the table. Minneapolis Fed President Niel Kashkari sounded optimistic, saying he is confident inflation will return to the Fed’s 2% target.
The EUR/USD lost its traction after rallying towards 1.0600, but ended up closing modestly higher on Monday. In the early hours of the European session, the pair is trading sideways above 1.0550. The 10-year German government bond yield hit its highest level in more than seven yearssettling at 1.19% on Monday, which helped the common currency hold firm against the dollar.
The pair GBP/USD rallied after falling to its lowest level in nearly two years on Monday at 1.2261. The pair is trading with small gains around 1.2350 in European morning trading. Commenting on his decision to vote for a 50 basis point rate hike last week, “I put considerable weight on the risks that, unless controlled through monetary policy, domestic capacity and inflationary pressures will likely are higher and more persistent than the central forecast,” said Michael Saunders, a member of the Bank of England’s Monetary Policy Committee. “As a result, my preference has been to move relatively quickly to a more neutral monetary policy stance“, he explained.
The USD/JPY it fluctuates in a relatively tight range above 130.00 on Tuesday. The Executive Director of Monetary Policy of the Bank of Japan, Shinichi Uchida, said earlier in the day that should continue to support the economy with powerful monetary easing.
The Prayed fell hard on Monday but seems to have shaken off the downside pressure before testing $1,850. XAU/USD consolidates its losses around $1,860 and still at the mercy of global bond yields.
The Bitcoin crashed to its lowest level since July 2021 at $29,735 on Monday before staging a rebound. BTC/USD is now up over 6% on the day at $31,900. The Ethereum lost 11.5% on Monday and posted one of its biggest daily drops of the year. ETH/USD is up more than 7% to around $2,400 as of early Tuesday.
Source: Fx Street
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