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6
Jun

Cryptos Recover, High Turkish Inflation, RBA Decision

calendar 06/06/2022 - 05:51 UTC

The USD/TRY rate continued moving to the upside while the Turkish consumer price index (CPI) reached an annualised inflation of 73.5% and given the rather low central bank rates for such an economic situation, the real rates for investment in the currency can be seen as deeply negative.

Crypto markets started surging higher during the night hours on Monday with Bitcoin surpassing the $31k mark, while Ethereum moved closer towards the $1,900-threshold. Among the more popular altcoins, Cardano continued to outperform, rising last week by more than 22% and a further upside of close to ten per cent seen by Monday morning compared to price seen on Sunday night. With this move Cardano moved ahead of Ripple as the fourth non-stablecoin crypto by market cap.

Major stock market indices around the world were trading rather bearish on Friday. By Monday morning many markets like the US Tech 100 or the Germany 40 were moving higher, while the Japan 225 (Yen) index managed to reach a new high since early April, rising by more than one per cent.

Monday is set to be a fairly quiet day in terms of scheduled fundamental data releases. Later in the Asian-Pacific trading session from Japan overall household spending data as well as the leading economic index can be expected. Meanwhile the Reserve Bank of Australia is set announce its monetary policy decision. Analysts are not sure by how much the central bank will indeed hike rates with Bloomberg reporting that the majority of economists it surveyed believe in a 25 bp hike, while there are also voices expecting rate hikes closer to 50 bp.

EUR/USD

While the dollar recovered from its weak position compared to the previous day, the EUR/USD rate for now remained steadily above the 1.07-threshold. This was in part also due to the relatively strong position of the common European currency which appreciated against most other major currencies on Friday with the exceptions being the USD and CAD.

Fundamental data coming from the eurozone was to some extent disappointing with retail sales for April falling by 1.3% m/m and the composite PMI for Germany and Italy noticeably declining from 54.6 to 53.7 and 55.7 to 53.7 respectively.

A key event for this week might be the monetary policy decision of the European Central Bank (ECB) scheduled to take place on Thursday.

EUR/USD

Gold

Gold prices sharply reversed on Friday, thus returning back to the price range around $1,850 seen over the past two weeks. Silver and palladium prices also traded sharply lower, while platinum merely consolidated its position as the price still was up by more than five per cent on a weekly basis.

Commitment of Traders (COT) data, that the U.S. CFTC released on Friday indicated a drop in speculative net positions both in gold and silver futures with the metric for gold at a new low since early February.

Gold

WTI Oil

Oil prices continued to rise on Friday, with WTI crude oil trading at a new high since early March. Some factors that have been favouring higher oil prices were the end of the lockdown in Shanghai as well as the decision of EU countries to start phasing out Russian oil imports. The OPEC+ deal for July to increase the production quota by 648 thousand barrels per day (i.e. 50% than expected under the previous deal) will only moderately increase the amount oil in the market over the next months as the scheduled production increases up to September are due to be adjusted down by a corresponding amount.

After the U.S. Baker Hughes Oil Rig Count was down by net two rigs in the previous week, on Friday the number of operating oil rigs was announced to have been stable at 574.

On Tuesday the American Petroleum Institute (API) publishes its weekly statistical bulletin, while on Wednesday the Energy Information Administration (EIA) follows up with its data release also containing statistics on the weekly change in terms of crude oil, gasoline and distillate inventories.

WTI Oil

US 500

The US 500 index closed at the end of the week lower due to the negative performance eon the last trading day of the week as markets started moving South already in the morning hours on Friday and only stabilised somewhat in the afternoon some time after the downside might have been exacerbated following mediocre fundamental data such as the ISM Non-Manufacturing Index, which dropped from 57.1 to 55.9, while average hourly earnings and the unemployment rate at 0.3% m/m and 3.6% respectively remained unchanged compared to the previous month despite hopes for an improvement in those metrics.

Tesla (-9.58%) was by far the worst-performing component of both the S&P 500 and the NASDAQ Composite Index on Friday. While the company’s CEO announced towards the end of the week that job cuts of around ten per cent were needed, he later back-tracked a bit from that statement saying that the number of salaried staff will in fact remain almost the same over the next 12 months, while the total headcount should increase.

Novavax (-19.94%) shares traded sharply lower after the U.S. FDA raised concerns about potentially increased incidents of heart inflammation following the administration of the company’s COVID vaccine. These side-effects were seen in the past as significant for some age groups receiving mRNA vaccines from Pfizer/BioNTech and Moderna.

US 500

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