GBP/USD fades Friday’s bounce off multi-day low, renews intraday bottom of late.Risk catalysts to entertain bears ahead of Thursday’s key data.GBP/USD takes offers to renew intraday low around 1.2300, fading the previous day’s bounce off a two-year low during Monday’s Asian session. The cable pair’s latest weakness could be linked to the broad risk-off mood, as well as negative headlines concerning Brexit. Also weighing on the pair could be the anxiety ahead of this week’s key UK Q1 GDP.
Starting with the risk profile, an over 1.0% fall in the S&P 500 Futures joins a three-year high of the US 10-year Treasury yields to portray the sour sentiment in the markets. While checking the moves, the risk of tighter monetary policy and China’s covid, as well as the Western sanctions on Russia, gain major attention. Also weighing on the GBP/USD prices are recent challenges to Brexit, mainly due to Sinn Fein’s victory in the Northern Ireland (NI) elections.
The hopes of faster, as well as heavier, rate hikes remain firmer ahead of this week’s key US inflation data. The reason could be linked to the absence of softer US jobs reports, as well as mostly hawkish comments from the Fed policymakers.
Following the data, Minneapolis Fed President and FOMC member Neel Kashkari said in a blog post on Medium, “Given that long-term real rates have the greatest influence on the demand for credit, financial conditions are already nearly back to neutral levels.” The policymaker also said his assessment of the nominal neutral rate of interest is still that it is around 2.0%. It’s worth noting that the President of the Federal Reserve Bank of St. Louis James Bullard reiterated his bullish bias and pushed the Fed towards a 3.5% rate.
On a different page, G7 nations met during the weekend and announced further sanctions on Russian oil, as well as services. “After meeting virtually with Ukrainian President Volodymyr Zelensky, the leaders said they would cut off key services on which Russia depends, reinforcing the isolation of Russia “across all sectors of its economy,” said Reuters. Also portraying the risk-off mood was news from China as Shanghai announced fresh activity restriction measures due to the worsening covid conditions.
Moving on, the risk catalysts may keep the GBP/USD prices pressured amid firmer USD but Thursday’s preliminary UK GDP for Q1 2022 will be crucial amid fears of economic stagflation.
Friday’s Dragonfly Doji, oversold RSI conditions challenge GBP/USD bears of late. While the latest swing low and June 2020 bottom, respectively around 1.2275 and 1.2250, restrict the short-term downside of the cable pair, corrective pullback needs validation from April’s low of 1.2411 to gain traction.
AUD/USD hits fresh four-month low near 0.7000 amid risk-aversion.AUD/USD justifies its risk barometer status by declining to test the 0.7000 mark during Monday’s Asian session, around the lowest level since January. Risk aversion intensifies as China’s covid conditions worsen, G7 unveils fresh sanctions on Russia. Chinese trade data fails to impress.
EUR/USD eyes fresh 2022 low around 1.0500 on damp mood, Fed-ECB divergence.EUR/USD bears return to the table, following Friday’s failed attempt to rebound from the yearly low, as risk aversion joins the chatters surrounding monetary policy divergence between the European Central Bank (ECB) and the US Federal Reserve (Fed).
Gold eyes $1,850 yet again amid a potential bear flag.Gold Price is back in the red zone on Monday after facing rejection below the $1,900-mark last Friday. The unrelenting strength in the US dollar alongside the Treasury yields, amid a risk-off market profile, weighs negatively on the bright metal.
Why this bullish signal could trigger SafeMoon price to double soon.SafeMoon price has been on a losing streak for more than four months and shows signs of a potential recovery. The daily time frame reveals a bullish pattern that is in development and could trigger a reversal.