Daily Market Comment – King dollar reigns supreme as stocks keep sliding



  • No stopping the mighty dollar, rising US yields provide fuel
  • Stocks struggle for altitude amid Fed and China worries
  • All eyes on US CPI data this week - peak inflation at last? 

Dollar power

There’s no stopping the mighty US dollar, which continues to slice its way through the currency complex. Stress in equity markets, worries about a synchronized global economic slowdown, and the relentless grind higher in US yields continue to drive up demand for the reserve currency.

Once the dust from last week’s Fed meeting settled, markets concluded that by not acting with sufficient force now, the central bank would need to do even more later to tame inflation. Treasury yields at the longer end of the curve stormed to new highs, which suggests bond traders are increasingly concerned about a Fed policy mistake. 

The US jobs report did not change much. Nonfarm payrolls overcame expectations but every other metric was a shade softer than projections. Overall, the labor market remains the bright spot in the economy, underscoring the need for the Fed to keep its foot heavy on the brakes. 

A half-percentage point rate increase at the next meeting in June is fully priced in and money markets imply an 80% chance for a larger, 75 basis points hike - even though Chairman Powell effectively ruled that out. 

Stock markets under pressure

The shellacking in equity markets shows no signs of abating, with the combined forces of rising interest rates, slowing global growth, and a furious race to cut leverage wreaking havoc on Wall Street. The tech-loaded Nasdaq lost 1.4% on Friday and futures point to another round of pain when the market reopens today. 

China remains committed to its zero-covid strategy despite growing signs that the economy is starting to crack. Authorities in Shanghai tightened lockdown rules again over the weekend, fueling worries around slower domestic growth and persistent global inflation as supply chains remain under strain. 

With growing signs that Chinese economic growth might turn negative this quarter as PMI business surveys crater, Beijing has allowed the yuan to depreciate. The move has been rapid and has only added fuel to the rally in the US dollar. The currencies of nations that rely on Chinese demand for their commodity products - such as the Australian dollar - have suffered collateral damage. 

All eyes on US inflation

There isn’t much on the economic calendar for today but there will be some fireworks on Wednesday, when the latest US inflation print is released. The yearly CPI rate is expected to have declined to 8.1% in April, heralding the long-awaited ‘peak’ in inflation - not because inflationary pressures have truly abated but rather due to favorable base effects finally kicking in. 

If incoming data dispels some concerns around inflation, that could halt the frantic rally in US yields, knocking the wind out of the dollar’s sails and breathing some life back into battered tech stocks. 

That said, until the outlook for economic growth in Europe and China starts to improve, it’s difficult to envision any retreat in the dollar turning into a trend reversal. Some positive news on Ukraine or China abandoning its zero-covid strategy would be needed before that is on the table. 

Neither is likely for now, and in fact, there's a risk that news flow deteriorates further. Today marks the anniversary of the Soviet Union defeating Nazi Germany in WWII, and political analysts worry that the Kremlin could take the opportunity to escalate the invasion of Ukraine by formally declaring it a war.

免責聲明: XM Group提供線上交易平台的登入和執行服務,允許個人查看和/或使用網站所提供的內容,但不進行任何更改或擴展其服務和訪問權限,並受以下條款與條例約束:(i)條款與條例;(ii)風險提示;(iii)完全免責聲明。網站內部所提供的所有資訊,僅限於一般資訊用途。請注意,我們所有的線上交易平台內容並不構成,也不被視為進入金融市場交易的邀約或邀請 。金融市場交易會對您的投資帶來重大風險。

所有缐上交易平台所發佈的資料,僅適用於教育/資訊類用途,不包含也不應被視爲適用於金融、投資稅或交易相關諮詢和建議,或是交易價格紀錄,或是任何金融商品或非應邀途徑的金融相關優惠的交易邀約或邀請。

本網站的所有XM和第三方所提供的内容,包括意見、新聞、研究、分析、價格其他資訊和第三方網站鏈接,皆爲‘按原狀’,並作爲一般市場評論所提供,而非投資建議。請理解和接受,所有被歸類為投資研究範圍的相關内容,並非爲了促進投資研究獨立性,而根據法律要求所編寫,而是被視爲符合營銷傳播相關法律與法規所編寫的内容。請確保您已詳讀並完全理解我們的非獨立投資研究提示和風險提示資訊,相關詳情請點擊 這裡查看。

我們運用 cookies 提供您最佳之網頁使用經驗。更改您的cookie 設定跟詳情。

風險提示:您的資金存在風險。槓桿商品並不適合所有客戶。請詳細閱讀我們的風險聲明