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America’s Roundup: Dollar gains as inflation jitters return, Wall Street ends sharply lower, Gold erases losses, Oil falls 2.5% as U.S. refiners ramp up output-May 19th,2022

Market Roundup

•Canada Apr Core CPI (MoM) 0.7%,0.4% forecast, 1.0% previous

•Canada Apr Core CPI (YoY) 5.7%,5.4% forecast, 5.5% previous

•US Apr Housing Starts (MoM) -0.2%, 0.3% previous

•US Apr Housing Starts 1.724M,1.765M forecast, 1.793M previous

•US Apr Building Permits (MoM) -3.2%, 0.3% previous

•US Apr Building Permits  1.819M,1.812M forecast, 1.870M previous

•Canada Apr CPI (MoM) 0.6%,0.5% forecast,1.4% previous

•US Crude Oil Inventories -3.394M,1.383M forecast,8.487M previous

•US Gasoline Inventories -4.779M,-1.333M  previous

Looking Ahead - Economic Data (GMT)

• 01:30  Australia Apr Employment Change  30.0K forecast,17.9K previous

•01:30   Australia Apr Unemployment Rate 3.9%  forecast, 4.0% previous

•01:30   Australia Apr Full Employment Change 20.5K previous

Looking Ahead - Economic events and other releases (GMT)

•02:00   New Zealand  Annual Budget Release   

Currency Summaries

EUR/USD: The euro reversed an earlier rise to a one-week high on Wednesday, a day after European Central Bank policymaker Klaas Knot said a 50 basis point rate increase in July was possible if inflation broadens. Meanwhile, risk appetite faded   as nagging doubts about inflation and the drag from rate rises overshadowed bits and pieces of good news about the global growth outlook. On Wednesday, more ECB policymakers were banging the drum for interest rate hikes in the coming months. Money markets now expect as much as 108 bps of rate hikes through the rest of the year. The single currency was last 0.3% lower at $1.05175. Immediate resistance can be seen at 1.0492(14DMA), an upside break can trigger rise towards 1.0557 (38.2% fib).On the downside, immediate support is seen at 1.0443 (23.6% fib), a break below could take the pair towards 1.0350 (Lower BB).

GBP/USD: The pound fell against the dollar on Wednesday after data showed British inflation rising to 9%, the highest level in 40 years. The drop reverses most of the gains made on Tuesday when the pound touched its highest level since May 5.Strong labour market data had boosted expectations that the Bank of England would have to further increase interest rates, but the latest inflation numbers are fuelling fears that the threat of recession may temper how far the central bank can go. Consumer price inflation hit 9% in April, making Britain’s inflation rate the highest of Europe’s five biggest economies and almost certainly the Group of Seven countries. Immediate resistance can be seen at 1.2372 (14DMA),an upside break can trigger rise towards 1.2436(38.2%fib).On the downside, immediate support is seen at 1.2333 (23.6%fib), a break below could take the pair towards 1.2229 (16th may low).

 USD/CAD: The Canadian dollar edged lower against its U.S. counterpart on Wednesday as rising inflation and lower oil prices weighed on Canadian dollar. Canada's annual inflation rate rose faster than expected in April, official data showed on Wednesday, and analysts warned soaring used-car and gasoline prices could stoke the trend, raising pressure on the central bank to tighten policy quickly. The headline annual inflation rate hit 6.8% in April, Statistics Canada data showed, slightly ahead of analyst forecasts.Immediate resistance can be seen at 1.2895(23.6%fib), an upside break can trigger rise towards 1.2912(May 2nd high).On the downside, immediate support is seen at 1.2853(21DMA), a break below could take the pair towards 1.2830(38.2%fib).

USD/JPY: The dollar edged higher against the Japanese yen on Wednesday as the sell-off in risk assets boosted the safe-haven appeal of the greenback. Federal Reserve Chair Jerome Powell on Tuesday said the U.S. central bank would ratchet interest rates up as high as needed to tame inflation, including taking rates above neutral. Treasury yields fell, although a steep path for rates remained the prevailing market consensus as the benchmark 10-year note yield hit a one-week high of 3.015% after Powell’s hawkish comments. Strong resistance can be seen at 128.61(23.6%fib), an upside break can trigger rise towards 129.36 (21DMA).On the downside, immediate support is seen at 127.36 (Lower BB), a break below could take the pair towards 127.03(38.2%fib).

Equities Recap

European shares slipped on Wednesday led by technology stocks, as worries about inflation and monetary policy tightening dampened optimism around China's economic recovery.

UK's benchmark FTSE 100 closed down by  1.07 percent, Germany's Dax ended down by 1.29 percent, France’s CAC finished the day down by 1.20 percent.

Wall Street ended sharply lower on Wednesday, with Target losing around a quarter of its stock market value and highlighting worries about the U.S. economy after the retailer became the latest victim of surging prices.

Dow Jones closed down by 3.57percent, S&P 500 closed down by 4.04  percent, Nasdaq settled down   by 4.73 % percent.

Commodities Recap

Gold reversed course to rise on Wednesday as a slide in U.S. Treasury yields helped offset pressure from a firmer dollar and the Federal Reserve’s plans for aggressive interest rate hikes.

Spot gold rose 0.1% to $1,816.49 per ounce by 2:10 p.m. ET (1810 GMT). U.S. gold futures settled down 0.2% at $1,815.9.

Oil prices fell 2.5% on Wednesday, reversing early gains as traders grew less worried about a supply crunch after government data showed U.S. refiners ramped up output, and as crude futures followed Wall Street lower.

Brent crude settled down $2.82, or 2.5%, at $109.11 a barrel. U.S. West Texas Intermediate (WTI) crude fell $2.81, or 2.5%, to $109.59 a barrel.

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