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Market Update – May 3 – USD Holds, Stocks Recover, Hawkish Surprise from RBA

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USD continues to hold onto recent gains, Stocks bounced back from Friday’s crash but  VIX remains over 30.0 and the RBA increased interest rates by 25 bp, not the 15bp most were expecting, to 0.35%.  US ISM Manufacturing PMI – missed significantly at 55.4 vs. 57.5 & 57.1 last time. Yields jumped higher with 10-yr over 3.00% at one point. Gold slumped over 2% as yields rose, and Oil rose over $5 following news of EU threats (with Germany apparently in agreement) to cut Russian energy imports and ‘more Russian banks’ to leave SWIFT. Asian markets mixed and European Futures all higher.

  • USDIndex holds at highs ahead of FED’s “nailed on” at least 50bp hike tomorrow, trades at 103.55.
  • EquitiesUSA500 +23 (0.57%) at 4155. US500FUTS at 4158 now. FB, AMD & NVDA all +5%, TSLA +3.77% (Musk looking for additional sources of funding for TWTR takeover).  BP beat expectations profits at $6bn
  • Yields moved higher 10-yr closed at 2.996%, having breached 3.00%, & trades within a tick of that level today. 
  • Oil & Gold both had volatile session –  USOil tested down to $100.00 before reversing to $106 on EU news, trades at $104.60 now. Gold slumped from  $1920 zone on Friday to $1854 yesterday and struggles at $1858 now.
  • Bitcoin pivots through $38.5k capped at $39K & supported at $38k.  
  • FX marketsEURUSD down to 1.0500, USDJPY pivots at 130.00, Cable holds over 1.2500 at 1.2515.   AUD spiked from 0.7030 to 0.7147.

Overnight  RBA’s Lowe: “Further increases in interest rates will be necessary over the months ahead”. (Last rate hike was 2011)

Today German Unemployment, EZ PPI & Unemployment, US Factory Orders and NZ Unemployment, Speech from ECB’s Lagarde. Earnings – AMD, Pfizer, Starbucks,  BNP Paribas, Deutsche Post and Uniper. JPY & China closed.

Biggest FX Mover @ (06:30 GMT) AUDCHF (+1.10%) Rallied from RBA surprise. Lows yesterday at 0.6850 to 0.6985 highs (resistance) today. MAs aligned higher, MACD signal line & histogram moving higher, RSI 71, OB but rising, H1 ATR 0.0018, Daily ATR 0.0075.

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Stuart Cowell

Head Market Analyst

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