Markets experienced an extended selloff as inflation worries peaked. The US consumer inflation slowed down for April but did little to calm investors as the Fed remains on the course of hiking rates in the next two policy meetings. The UK GDP indicated a big economic shrink amidst rising energy prices causing a panic mode sentiment in the near term. Investors shift their focus on US producer inflation for April and Employment data.
GBPUSD tanked by -0.37% as UK economic data shrinks. The UK GDP YoY Q1 missed expectations by dropping to 8.7% from 9%. The pair broke below the 1.2260, a 5-day low and a reinforcing selling pressure towards 1.2100, a 2-year low. BoE Ramsden indicated risk inflation means more rate hikes are needed. Traders should pay attention to the US April PPI, Initial Jobless Claim and FOMC member Daly’s speech later in the New York session.
GBPJPY dropped by -1.29% early in the European session as investors were in full-mode risk aversion. The Japanese yen was bid as investors sought safety from the rising inflation worries. A break below 159.00, a 7-week low renewed selling pressure towards 156.427, coincides with an 8-week low. The GBPJPY may have a corrective move towards 158.00 despite a bearish cloud on the pair. The 155.00 psychological support and 158.00 resistance are critical areas to watch out for.
AUDUSD plunged by -0.80% early Thursday morning as the dollar gains on renewed Fed rate hike sentiments. Fed Bullard said a 50bps rate hike cycle will be good as Fed officials stay on course for further tightening. The break below the 0.6913 immediate support has reinforced a bearish outlook on the pair. The next area to watch out for is the 0.6675 area which coincides with June 2020 lows.
European stocks dropped sharply as inflation growth worries rose. FTSE plunged by -1.20% post-UK GDP data. Bears are currently trading at 7150 support and a break below that area may see targets going towards the 7100, 9-week low.
The DAX index trimmed Wednesday’s gains dropping -2.09% as bulls lost steam at 13800 near-term resistance. A break below 13500 may renew selling interest towards 13400. The trend is capped by a 50-day moving average and downside movement may seek to cover a price action gap between 13200.58 and 12824.54.
CAC40 was down by -1.00% as 6300, broken support turned resistance held. A break below the 6024, the immediate low will reinforce a bearish attack towards 5750, a 15-months low.
US stocks slumped pre bell on Thursday after higher than anticipated inflation rate reinforced an aggressive Fed rate hike cycle ahead. The S&P 500 futures extended losses by -1.00% as inflation worries make investors agile. Bears may target 3800 psychological support in the near term.
The Nasdaq futures fell by -1.19% breaching the 12000 psychological support. The next critical support is at 11000 area which coincides with October 2020 lows.
Dow Jones Industrial futures index was down by -0.60% as selling pressure renews below 32000 broken support. The bulls may try to defend the 31000 area.
Bitcoin dropped to its lowest since 12 December 2020. The Cryptocurrency lost -1.67% on Thursday as the Stable coin TERRAUSD suffered an algorithmic error that triggered a DeFi mass exodus from early Wednesday. The next critical support to watch out for is the 25000 mark if 28000 gets broken.