Inflation updates were the name of the game this week as hot reads from the U.S. sparked risk aversion sentiment in the markets.
The crytpo markets were especially volatile thanks to Elon Musk’s comments on Bitcoin’s use of fossil fuels, and the British pound takes the top spot among the major currencies after an early week boost from weekend election results.
Notable News & Economic Updates:
- Fed’s Evans says employment and inflation need to pick up before policy changes
- State of Crypto: Gary Gensler’s Regulatory Clarity Sounds Awfully Familiar
- Wall Street slips as inflation jitters spark broad sell-off on Tuesday
- Violence escalates between Israel and Palestine, 35 fatalities reported in Gaza
- Digital coin ether hits record high as 2021 gains near 500 percent
- Musk Sends Bitcoin Tumbling With Shock U-Turn on Payments
- Gold up on Thursday on hopes for continued low rates, firm yields cap gains
- Mexico’s central bank keeps rate unchanged at 4% in unanimous decision
- Dogecoin rallies on Elon Musk tweet, anticipated Coinbase listing
- Bank of England head says drivers of inflation will not persist
- Oil prices jump as major U.S. fuel pipeline restarts but COVID concerns cap gains
- Wall Street panicking that Biden’s tax hikes will be retroactive
- Equity market comeback rally gains steam on Friday with the Dow jumping 400 points
- U.S. administers 268.4 mln doses of COVID-19 vaccines – CDC
Inflation Fears Holds Risk Down
As mentioned in the intro above, the big market mover of the week was the rising inflation fears narrative, confirmed by the latest inflation data from the U.S.
This scenario has traders concerned that central banks may take away their easy money policies sooner-than-expected, despite being reminded otherwise by central bank officials through out the week.
Regardless of the calming efforts from the central banks, traders went into risk-off mode on Wednesday after the latest U.S. CPI data came in hotter than already high expectations, taking equities, crypto and oil markets lower while the U.S. dollar and other safe havens benefitted.
In the forex world, the price action among the major currencies was mostly mixed and relatively low in volatility. The British pound took the top spot after a fast bullish start on Monday in reaction to the weekend elections where pro-Scottish Independence parties took control of parliament.
The big losers of the week were the Aussie dollar and New Zealand dollars, likely victims of the risk aversion environment. And the Japanese yen wasn’t too far behind their Asia session counterparts, losing its attractiveness–even as a safe haven–as Japan’s pandemic situation worsens and as they fumble their vaccine rollout.
USD Pairs
- U.S. gov’t declared state of emergency over fuel pipeline cyber attack
- Fed’s Evans says employment and inflation need to pick up before policy changes
- New York Fed: Future Price Increase Expectations Jump Higher Again in April
- U.S. job openings hit record high in March
- Fed’s Bullard says ‘it’s too early to talk taper’ while the pandemic continues
- Inflation speeds up in April as consumer prices leap 4.2%, fastest since 2008
- Republicans tell Biden they won’t back any tax hikes for recovery plan
- U.S. weekly jobless claims at 14-month low; inflation heating up
- Another inflation gauge comes in hot with producer prices jumping 6.2% in April from a year ago
- Fed’s Bullard: U.S. on verge of moving from recovery to expansion
- U.S. retail sales were unchanged in April after surging a month earlier
- U.S. manufacturing production rises in April
- U.S. Consumer Sentiment Falls in Early May; Inflation Expectations Surge — University of Michigan
GBP Pairs
- Scottish nationalists vow independence vote after election win
- Boris Johnson announces new lifting of COVID-19 restrictions
- UK house prices increase at fastest rate in five years
- British retailers say closures and job losses still a risk despite lockdown easing
- U.K. economy contracted 1.5% in Q1 2021 vs. projected 1.6% drop in GDP
- U.K. industrial production rose 1.8% vs. projected 1.0% increase
- France aims to block U.K. finance firms from EU over fishing rights spat
EUR Pairs
- Raising pace of bond buys not off the table for ECB: Lane
- German Wholesale prices in April 2021: +7.2% on April 2020
- German investor morale surges as third COVID-19 wave eases
- France aims to block U.K. finance firms from EU over fishing rights spat
- ECB Monetary Policy Meeting Minutes from April 21 – 22, 2021
CHF Pairs
There major news events or economic updates from Switzerland to influence Swiss franc price action. The franc moved similarly with the euro, a pretty regular tendency given the close trade and geographic ties between Switzerland and the European Union, as well as both being viewed as “risk-off / safe haven” currencies relative to the other majors.
CAD Pairs
- Canada says U.S. ties could be undermined if Michigan shuts pipeline
- Bank of Canada says complete recovery needed to withdraw support
- Bank of Canada: rising C$ could hit export outlook, affect monetary policy
- Statistics Canada says wholesale and manufacturing sales climbed higher in March
NZD Pairs
- New Zealand electronic retail spending rises in April
- New Zealand food prices jump 1.1% on month in April
- New Zealand’s Ardern will pursue closer trade ties with U.S.
- New Zealand NZIER Business Manufacturing index down from 63.6 to 58.4
AUD Pairs
- Australian NAB business confidence index improved from 17 to 26 last month
- ANZ-Roy Morgan Australian Weekly Consumer Confidence ticks lower to 111.6 vs. 112.7 previous
- Australia taps Moderna for 25 million COVID-19 shots in vaccination ramp up
JPY Pairs
- Japan’s March household spending posts biggest monthly rise in 18 months
- BOJ policymakers warned of risks to recovery prospects at April meeting
- Japanese gov’t to declare state of emergency in three prefectures
- Japan’s Exports Seen Posting Largest Monthly Gain Since 2010 – Reuters Poll
- Japan vaccine chief blames drug approval system for slow inoculation drive
