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January 10th, Amundi, Europes largest asset management company, increased its holdings of British gilts in its global portfolio as British gilts were sold off this week, and said that British Chancellor of the Exchequer Reeves may have to cut spending due to soaring borrowing costs. The companys chief investment officer Gregoire Pesques said on Friday that the rise in bond yields this week made potential returns more attractive, and possible spending cuts would reduce inflationary pressures and slow economic growth, which could lead to more interest rate cuts. "The UK Office for Budget Responsibility (OBR) will revise its assumptions in March. In the last report, they believed that GDP growth this year would be 2%. This seems a bit optimistic." Amundi is one of the many asset management companies that still insist on holding British gilts.Amundi: Bought UK gilts in global portfolio due to more attractive yields and potential spending cuts in the UK.Deutsche Bank: Raised Teslas (TSLA.O) target price from $370 to $420.The Central Bank of Moldova raised its key interest rate to 5.6% from 3.6%.On January 10, Warren Patterson, head of commodity strategy at ING Bank, and Ewa Manthey, commodity strategist, said that the colder weather in parts of the northern hemisphere may stimulate oil demand, so market sentiment remains optimistic. Despite the strengthening of the US dollar and high US Treasury yields, the oil market continues its rally in 2025. The weakening of European currencies against the US dollar usually leads to a decline in oil demand. However, as the macroeconomic environment looks less favorable, market participants are increasing their investment in crude oil and other commodities. "Investors are turning to tangible assets to hedge against ongoing inflation risks and growing fiscal debt concerns, as well as the risk of tariffs disrupting normal trade dynamics," said the Saxo Bank strategy team in the report. "The current strength of crude oil may be the true face of the supply and demand balance in the global oil market, not just a flash in the pan," said Bjarne Schieldrop, chief commodity analyst at Swedens Nordic Bank.

Dollar Index: Bears Continue to Dominate Below 102.00

Alina Haynes

May 30, 2022 17:02

 截屏2022-05-30 下午4.54.16.png

 

The greenback, as measured by the US Dollar Index (DXY), continues on the defensive after Monday's recovery from lows in the 102.40-35 range.

Multi-Week Lows for the US Dollar Index

The index loses ground for the third consecutive session at the start of the week, remaining below the 102.000 level and despite a widespread preference for riskier assets among investors.

 

On Monday, no US market activity should leave the price action at the mercy of global risk appetite trends, as market participants continue to evaluate the various moves the Federal Reserve could take to normalize monetary conditions, primarily through interest rate hikes.

 

Monday's US schedule is barren, with just C. Waller (permanent voter, hawk) scheduled to speak during the NA session.

What to Search for Regarding USD

The dollar retreated to multi-week lows at the conclusion of last week due primarily to investors' tilt toward riskier assets.

 

Also weighing on the dollar was the view that inflation may have peaked in April, which supports the notion that the Fed may not need to be as active in hiking Fed Funds rates as market players anticipate.

 

In the meantime, the Fed's divergence from the majority of its G10 peers, geopolitical turbulence, rising US rates, and a potential "hard landing" of the US economy are all factors that will continue to favor a stronger dollar in the coming months.

 

House Price Index, CB Consumer Confidence (Tuesday); MBA Mortgage Applications, Final Manufacturing PMI, ISM Manufacturing, Construction Spending, Fed Beige Book (Wednesday); ADP Employment Change, Initial Claims, Factory Orders (Thursday); Nonfarm Payrolls, Unemployment Rate, Final Services PMI, ISM Non-Manufacturing (Friday); and Nonfarm Payrolls, Unemployment Rate, Final Services PMI, ISM Non-Manufacturing (Friday).

 

Back burner issues: Powell's "softish" landing... what does that mean? Increasing geopolitical tensions with Russia and China. The Fed's more aggressive path for interest rates this year and in 2023. US-China trade dispute. Future of the Build Back Better plan by Biden.

US Dollar Index Relevant Levels

Now, the index is falling 0.08 percent at 101.55 and the next support level is at 101.38 (30-day low for the month of May), followed by 101.11 (55-day simple moving average) and 99.81. (weekly low April 21). In contrast, a breach of 105.00 (13 May 2022 high) would pave the way to 105.63 (11 December 2002 high) and then 106.00. (round level).

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