Stock Market Today
US and European futures are trading on the soft side while traders continue to assess the monetary policy stance of the Fed, the BOE, the ECB and other central banks. Traders are worried that prospects of an economic slowdown are only increasing, which could spur another bout of risk aversion among investors and traders.
Bitcoin and Cryptos
Hopes continue to fade even further for the digital currency king as the BTV price dipped below the 35K price level over the weekend. This shows that bulls have lost control of the price even further, and it seems that the BTC price is highly likely to retest the 30K price mark. The sell-off in cryptos is across the board as it is not only Bitcoin under tremendous selling pressure, but other cryptos are also feeling the pain.
Oil
Oil prices are kick-starting the week by trading in positive territory. This is mainly because Hungary continues to resist an EU plan to prohibit Russian oil imports, delaying the bloc’s complete package of penalties aimed at President Vladimir Putin for his conflict in Ukraine. A meeting of the EU’s 27 ambassadors concluded without a deal yesterday, with negotiations anticipated to resume in the following days.
Speculators are not betting that an embargo on Russian oil being shipped to third-world nations might be postponed unless the Group of Seven commits to similar restrictions. The EU’s plan calls for a six-month embargo on crude oil and an early January restriction on refined fuels.
Forex
Dollar: Nothing is off the table; this was the message from Richmond President Thomas Barkin. Recently, Fed chairman Jerome Powell assured the market players that they need to worry about an interest rate hike of 75 basis points. The Fed doesn’t anticipate such an aggressive monetary policy. However, Barkin said, “I’ll just say our tempo right now is fairly rapid, and if you go by the chairman’s pace, that’s a pretty accelerated pace.” If we hear similar rhetoric from other Fed members in the coming week, the dollar index could pick up more steam.
Sterling: The Bank Of England increased the interest rate for the fourth consecutive time this year. Despite their 25 basis interest rate hike, the Sterling continues to trade weaker against most G10 countries. Most countries know that the currency is in a difficult spot as the UK’s economy is facing a stagflation environment. Sterling bears are back in command, with our $1.25-$1.20 range surpassed ahead of schedule and negative momentum prevailing. The next target is $1.20, but euro-sterling bulls are in good shape since the focus appears to be on the sterling’s downward trend for the time being.
The housing market in the United Kingdom is bracing for challenges as rising borrowing costs make matters more difficult for consumers. The addition to the cost-of-living issue is further straining house purchasers’ affordability. Mortgage lenders are hiking interest rates from historic lows, following the Bank of England’s lead. This makes owning a house more expensive when costs for everything from electricity to clothing are seeing the highest levels of inflation since the 1980s.
Week Ahead
Economic data is expected to show that the UK’s prognosis is deteriorating in the week ahead. The first-quarter GDP results for the United Kingdom may look robust at first glance. Still, the March reading is expected to reveal a lack of momentum, leading to the economy contracting in the second quarter.
On May 12th, UK GDP figures for the first quarter will likely show a 1% increase, down from 1.3 per cent in the previous quarter. If our prediction is accurate, the economy will be 0.9 per cent higher than before the epidemic. Only the March statistics will be fresh in the 1Q report; monthly data for January and February has already been disclosed. Following a 0.8 per cent growth in January and a gain of 0.1 per cent in February, we forecast an increase of 0.1 per cent this month.
We also have an OPEC meeting taking place Wednesday and followed by that, the US CPI m/m and core CPI m/m numbers are due. It is widely anticipated that both of these readings are likely to print a more robust reading than the forecast, which may only put more pressure on the Fed. The forecast or the CPI mm is 0.2%, while the previous reading was 1.2%. The forecast for the Core CPI m/m is o.4% against the last number of 0.3%.