Morning Brief – Monday begins how Friday ended

United States stock index futures have slipped further again during the Asian trading session again as the combined weight of Federal Reserve raising rates.

High consumer price inflation, economic slowdown, and persistent lockdowns in China are combining to send ‘risk’ lower and perpetuate market de-leveraging.

Morgan Stanley is warning that “we live in the most chaotic, hard-to-predict macroeconomic times in decades. The ingredients for a global recession are on the table.”

The major U.S. investment bank is also forecasting “substantial further selloff in US equities, even in the base case of no recession.” Goldman Sachs have also put out a note saying the same.

The Onshore yuan currency is not at its lowest for onshore yuan since November 2020. Fear about the Chinese economy and the breakout and overall demand for the US dollar is prompting this trade.

This week traders look to Chinese CPI inflation numbers, which are remarkably lower. I think there is plenty of space for further PBOC monetary policy easing given the low reported CPI numbers.

Oil has had a busy morning after it opened lower and then staged a comeback. There are on the back reports about the continued efforts to make progress on getting Iran back into the nuclear deal and on Saudi Aramco cutting prices for June.

In the foreign exchange market the USD has strengthened during the Asia session across the majors board. The Yen, CHF, AUD, EUR, GBP, CAD and NZD all have lost ground against the US dollar.

The EURUSD pair remains the proxy to watch for the next breakout in the US dollar index this week. A break under 1.0400 is likely to start the next bear leg lower.

Give the overall risk-off mood we are also seeing gold and silver prices moving lower. Gold is down on the day and bulls need to defend the $1,850 support zone this week.

Silver is in a much more precarious situation, and is approaching the yearly low, around the $22.00 level. Silver is used in many industrial goods and the global economic situation worsening harms its bull case.

Bitcoin is a big story today and is under pressure towards the yearly low. A break under the $33,000 is likely to expose further losses towards the psychological $30,000 level.