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There was a general selloff on the global markets as investors shun away from risky assets. Wednesday’s theme is centred around inflation and central bank policy. UK inflation climbed to a fresh 40-year high, while the Producer Price Index beat expectations by far. Canada is also expecting inflation figures later in the day. Investors’ focus shifted towards Fed chairman Powell’s testimony at the semi-annual monetary policy meeting today.
AUDUSD plunged by -0.99% in the early European session ahead of Fed Chairman Powell’s testimony. The risk-sensitive Aussie joined the broad sell-off as commodities plunged. The hawkish RBA Phillip Lowe faded as markets shifted focus to the inflation address by Fed Chairman Powell. The pair has a near-term resistance at 0.7000 and critical support at 0.68500 a break below that level causes selling pressure towards the 0.6800, a 2-year low.
GBPNZD soared by +1.04% as UK inflation data boosts Pound strength in the near term. The UK CPI climbed to 9.1% from 9.0% setting a fresh 40-year high while the New Zealand Dollar strength was underpinned by a negative trade balance. NZD trade balance dropped to 263M from 440M in May. The GBPNZD climbed to a 3-month high at 1.96000 and a break above that level may renew bullish interests toward the 2.000 psychological resistance.
EURJPY dropped by -0.53% as safe-haven bids increased on the Japanese Yen. The BoJ April minutes indicate the Bank will intervene if necessary adding to the Japanese Yen demand in the near term. The pair trimmed gains at the 144.00 resistance and a break above that level will drive bulls towards the 149.00, a 14-year high. Near-term support is at 142.00 level. Investors should pay attention to the Japanese Services PMI data due for release early Thursday morning.
European stocks slumped on Wednesday as UK inflation data soars to a fresh 40-year high. FTSE100 plunged by -1.35% early Wednesday morning as bulls shy away from the 7200 psychological barriers. Bears could target the 7000 and 6900 levels in the near term. DAX sank by -2.08% breaking below the 13000 psychological figure. Bulls are challenged by the 13400 near-term high, while bears may trade lower towards the 12800 level.
CAC40 dropped by -1.50% as bulls failed to reclaim the 6025 level. Bears are challenging the 5841 support and a break below that level could see bears targeting the 5755 level, a 15-months low.
US stock equities joined the global sell-off ahead of Fed Chairman Powell’s testimony on monetary policy today. S&P 500 futures dropped by -1.56% near and bears may target the 3600 psychological figure. Gains are challenged by the 3800 resistance.
Nasdaq100 trimmed Tuesday gains by -1.77% as bulls lost steam below the 11600 level. A break below the 11000 psychological support may renew selling pressure towards the 10800 level. DJIA index slumped by -1.33% as bulls struggled to hold on to gains above the 30500 level and a break below 30000 could open the possibility of a 29000 level in the near term.
Gold rallied higher by +0.38% as recession fears make headlines ahead of Fed monetary policy testimony. The yellow metal has a near-term barrier at 1860 and a break above that may open the way for the 1890.00 level in the near term.
