IFX Market Report: Tuesday 19th April 2022

The Dollar traded strong on Monday as all major European markets were closed for the day. The Greenback rose to a fresh two-year high yesterday in “thin and choppy” trading conditions, “in line with higher US Treasury yields, as investors braced for multiple half a percentage-point rate hikes from the Federal Reserve”. Global trading volume was thin in general on Monday with European, Hong Kong, Australian, and New Zealand markets all closed for Easter Monday.

According to Reuters, the US “rate futures market has priced in a 96% chance of 50 basis-points tightening at next month’s Fed policy meeting, and about 215 basis point in cumulative rate increases in 2022, providing ample support for the Dollar”. The Dollar also “climbed to a new 20-year peak of 126.98 Yen versus the Japanese currency, highlighting the contrast in monetary policy between a hawkish Fed and an ultra-dovish Bank of Japan”. The benchmark US 10-year Treasury yield, meanwhile, touched a three-year high of 2.884%. The Dollar Index, a gauge of the Greenback's value against six of its peers, surged to 100.86, the highest since April 2020.

GBPUSD saw little activity on Monday given that markets were closed. Cable started yesterday at 1.3021 and finished at 1.3023.

GBPEUR also traded rather flat on Monday. The pair opened 1.2059 and closed 1.2071.

EURUSD declined further on Monday as the Euro continues to struggle. EURUSD opened at 1.0798 and closed at 1.0788.

On the data front, at 15:00 yesterday the US released April’s final NAHB Housing Market Index, coming in 2 under forecast at 77. Federal Reserve member James Bullard gave a speech at 21:00 yesterday and noted that US inflation is “far too high” and the US central bank needs to get rates up to “3.5% by year end”. Today also, only US data releases are scheduled. At 13:30 US Building Permits and Housing Starts for March will be released. Finally, Fed member Charles Evans is due to speak at 17:05

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