Risk sentiment falls after weak Chinese data
EUR/GBP => The pair rises to 0.85
Bitcoin => The holds above $30k
AUD/USD => The pair falls below 0.69
EUR/GBP awaits Eurozone economic forecasts
EUR/GBP fell 0.7% last week, which was more of a euro weakness story than owing to significant pound strength. The pound traded broadly lower versus its major peers on recession fears and as Brexit concerns returned. Meanwhile, the euro fell as tensions with Russia ramped up as Finland prepares to apply to join NATO, and Sweden could follow. Fears of recession and energy security also hurt demand for the euro. Today the pair is edging higher as attention is turning toward German wholesale inflation, which is expected to rise to a record high. Eurozone economic forecasts are also set to be released amid fears of a recession and as a July rate hike is gaining momentum at the ECB.
|Ger. PPI April YoY||Expected: 24% (1.4%)||Previous: 22.6%|
Where next for the EUR/GBP?
EUR/GBP extended its rise from 0.8250, the mid-April low, rising above its 50 & 100 sma before running into resistance at 0.8620 and rebounding lower. The move lower has found support on the 4-week rising trendline at 0.8490, where it trades at the time of writing. The 50 sma crossing over the 100 SMA and the bullish RSI keep buyers hopeful of further upside. Immediate resistance can be seen at 0.8510, the March high, ahead of 0.8540, the December 21 high, and 0.8620, the 2022 high. On the flip side, should the trendline fail to hold, support can be seen at 0.8465, the April 27 high, ahead of 0.84 the 50 sma.
Bitcoin edges lower, support at 30k in focus
Firmer US equities helped lift demand for cryptocurrencies on Friday, with Bitcoin gaining 6% and Ethereum 4%. Positive risk sentiment and the rise in stock indices helped fuel a trend reversal in the asset, which continued across the weekend. BTC/USD lost 15% last week in its worst weekly selloff in 4 months amid fears over slowing global growth, an aggressive Federal Reserve, and as stable coin Terra de-pegged from the USD. Today BTC/USD is falling amid a souring market mood at the start of the week, with 30k the key support in focus.
AUD/USD drops after weak Chinese data
AUD/USD lost just shy of 2% last week as risk aversion, ongoing lockdowns in China, and falling Gold, which lost 3.8%, pulled AUD lower. Meanwhile, the USD benefitted from higher than expected inflation data, which fuelled bets that the Fed will need to act faster to tighten monetary policy. Today the pair is falling after data overnight raised concerns over the Chinese economy as the strict zero-COVID policy shows no signs of easing. Chinese retail sales and industrial production fell by more than expected, hurting demand for the Australian dollar. Looking ahead, the release of the minutes from the May RBA meeting will be in focus and could shed light on the central bank’s plans for monetary policy after hiking rates by 0.25% in May.
|U.S. consumer sentiment
China retail sales
|Actual: 59 (6.2)
Actual: -11.1% (2.5%)
Support can be found at 0.8630 (2022 low) and 0.6790 (falling trendline support).
Resistance for the pair can be seen at 0.6965 (January low) and 0.70 (round number)