Central Bank Rate Hike battles continue as Uncertainty looms

Midday Update

Markets were agile early Tuesday morning as investors resume trading after the Easter break. The Central banks continue to battle inflation and Traders continue to assess the Fed’s tightening policy.

Fed member Bullard indicated the Fed needs to move more quickly; boosting the Dollar strength as he projects a 75bps as early as the May meeting. RBNZ Governor Orr gave a more hawkish outlook on Monday as he expects to be implementing more rate hikes in the quarter ahead.

The geopolitical tensions renew as Russia embarks on a new campaign as they attack Donbas. President Vladimir Putin brags that sanctions against Russia have failed to suffocate their plans, pointing to a long future of uncertainty for investors. The Shanghai covid deaths continue to surge adding to economic uncertainty for the markets in the near term as China continues to enforce lockdowns.

The Dollar index soared by +0.11% as prospects of an aggressive Fed rate hiking boosts the Dollar strength. The index made a new 2-year high after sweeping above 101.00 high in the early European session. A break above that area may open room for further upside towards 102.00 psychological resistance. Investors focus on the Biden call with allies and Housing data for March.

AUDJPY surged by +1.30% early European session post hawkish RBA meeting minutes indicating interest rates hikes could be experienced earlier than forecasted. The fundamentals have boosted the AUD currency in the near-term while rising commodity prices push the commodity-based pair higher. The pair broke the 94.35, a 22 March high making a fresh 7-year high at 94.95. AUDJPY reinforces bullish momentum and upside gains may target a 98.00 near-term barrier.

NZDJPY jumped higher by +1.21% making a new monthly high ahead of the Global Trade Price Index. The pair made a new monthly high at 86.84 although bulls remain capped by the 87.00 psychological barrier.

Governor Orr also boosted the hawkish sentiment in the near term. The BoJ remains neutral on the policy as the Yen tumbles to multi-year lows.

European stocks opened lower ahead of Wednesday’s European inflation data. The Dax was down by -0.77% and bears may target 13500 as ECB decides on tightening. The CAC40 dropped by -0.70% as the short-term rally remains short-lived. The index may retest 6400, the monthly low if 6600 continues to hold.

The FTSE dropped by -0.17% as bulls remain capped by 7700 near-term high and a break below 7500 may reinforce a bearish outlook. Investors watch out for Euro CPI on Thursday.

US stock futures edged lower as Treasury yields soars due to inflation fears. The Nasdaq futures tanked by -0.58% as bulls found a near-term resistance at 14000. S&P500 edged lower by -0.38% as bears breaks below a 4400.00 near-term support pre-market bell. The Dow Jones Industrial index lost -0.26% and bears may target 34000 near-term support.

The Benchmark US 10-year yield rose +1.08% as bulls attempt to reclaim 3.00%. The Fed member Bullard’s hawkish sentiments caused the boom as inflation worries continue to grow. A room for upside movement remains relevant towards 3.26% unless the yields fall below 2.65%.