Friday Briefing: From DXY, Gold to Russia – Ukraine; May 20, 2022

US Dollar Index Overview

• The DXY trades slightly lower on Friday and stabilizes below 103.00 mark.
• The intraday high is 103.11 and low at 102.77 mark.
• A day Chart with triple EMA confirms up trend while H1 chart suggests down trend for the time being.
• Immediate hurdles are seen at 103.10 to 102.80 mark.
• A sustained close of either side on D1 chart requires for the further directions.

Technical View:

XAU/USD (Gold):

• Gold moves in rigid boundaries on Friday and consolidates around $1,842 mark.
• Today pair made intraday high at $1,846 and low at $1,836 mark.
• A day chart is down and H1 chart with triple EMA suggests up trend for the time being.
• A sustained close above $1,848 on H1 chart requires for the upside rally.
• Alternatively, a consistent close below $1,836 on H1 chart will test further supports.

Key Headlines for the FX market:

• Chinese banks cut a key interest rate for long-term loans by a record amount, a move that would reduce mortgage costs and may boost weak loan demand amid a property slump and Covid lockdowns. The five-year loan prime rate, a reference for home mortgages, was lowered to 4.45% from 4.6%, down by the most since a revamp of the rate in 2019 – PBOC.
• ECB’s Kazaks – I hope first rate increase will happen in July.
• ECB’s Muller – Fighting high inflation needs to be in focus.
• Japan PM Kishida – Rapid yen movements are ‘undesirable’.
• Japan PM Kishida – Rising raw material prices, together with weak yen, affect households, businesses.
• The U.S. dollar moves in rigid boundaries against major peers as DXY is down for the day while US10Y (Bond yield) trades slightly positive.

Latest updates on Russia – Ukraine Conflicts:

• Russia’s Rosneft says German ex-chancellor Schroeder leaves board.
• Russia to halt gas flows to Finland on Saturday.
• Russian Defence Minister Sergei Shoigu said that Moscow would create new military bases in western Russia in response to the expansion of Nato.
• Russia claims ‘nearing’ full control of Ukraine breakaway region of Lugansk.
• President Joe Biden left Thursday for South Korea and Japan to cement US leadership in Asia at a time when the White House’s attention has been pulled back to Russia and Europe — and amid fears of a North Korean nuclear test during his trip.
• White House says Biden will sign Ukraine funding bill while traveling in Asia, reports Reuters.
• Chinese efforts to replenish reserves with Russian oil would not violate US sanctions, says White House (Reuters).
• Congress approved a $40 billion aid package for Ukraine Thursday, the latest tranche of US assistance under President Joe Biden’s promise of unwavering support for Kyiv in its fight against Russia’s invasion, reports AFP.
• Turkey’s leader opposes having Sweden and Finland join NATO, but the military alliance’s top official says he expects the issue to be resolved and the two Nordic nations to become members soon.
• BRICS ministers discussed the situation in Ukraine and supported talks between Russia and Ukraine. They expressed concern at the energy and food security implications of the conflict: India statement on Brics FMs meet.
• Biden says Sweden, Finland ‘meet every NATO requirement’.
• G7 nations will likely extend $15 billion to help Ukraine pay its bills in coming months, but surging inflation, climate change, supply chains and the impending food crisis are also on the agenda.

Source: Times of india

Keep an eye open for the latest news and fundamentals affecting the FX markets.

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