- Futures mostly in the red ahead of the open, extending Thursday’s decline.
- Expectation of rise of 50 basic points of the Fed is affirmed after Powell’s speech.
- The dollar rises on all fronts, metals suffer.
European markets are falling in line with Wall Street’s sharp decline on Thursday after Powell’s speech. S&P 500 futures are in the red, signaling that the tone of caution continues.
Rate hike expectations hit markets
The S&P 500 closed down 1.48% on Thursday and futures on Friday are down 0.25%. The negative climate intensified after the speech of the president of the Federal Reserve, Jerome Powell, indicating that a 50 basis point hike in the interest rate is possible at the next FOMC meeting on May 3-4. His words were seen as confirmation by analysts.
This triggered a decline in equity markets and a rise in the dollar. The treasury bond yields They rose on Thursday and in the last few hours have traded in ranges. The 10-year tranche yields 2.91% and the 30-year tranche, 2.93%.
In Asia Stock markets also fell, also weakened by the central bank’s announcement of China to remain cautious and not neglect inflation.
Among the coins, the dollar and the and in They are the best performing. The Dollar Index (DXY) hit years high above 101.00 before paring gains. Risk aversion boosted the Japanese currency, which recovers some of the ground lost recently. Indeed, the sharp rise in USD/JPY sparked talk of possible intervention. There are reports that the possibility of action in the market was discussed between US and Japanese officials.
The metals are falling sharply, with the Prayed pressing the 1930$ zone silver yielding more than 2% near $24.00. Oil prices fell just over 1%.
On the data side, the US preliminary Martik PMI for April will be released, European Central Bank President Christine Largade and Bank of England Governor Andrew Bailey will speak. The corporate results presentation continues, with American Express, Verizon, Volvo and Kimberly-Clark presenting on Friday.
In the Eurozone, an unexpected rise in the PMI Markit index was known in April according to preliminary data, while in the United Kingdom a drop in retail sales of March of 1.4% was known, which caused the pound to fall in the market. The weekend will be the second round of the presidential elections in France, between Emmanuel Macron and Marine Le Pen. The polls show the current president ahead, so a victory for Le Pen could unleash great consequences.
Technical levels
Source: Fx Street
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