1 Minute Market Rundown – 25th April 2022
Risk Firmly on the Backfoot
Crypto Lower
Sterling and Euro Looking More and More Vulnerable
Risk remains heavy across the board as fears over covid in China weigh on markets compounded fears sparked by faster and more aggressive FED tightening. We are also seeing commodities come under pressure sparked by the China fears as well as yields lower – a true risk sell off. Unsurprisingly, crypto is also getting hit.
We flagged last week that the path of least resistance for risk markets, at the moment, looks and feels lower and this morning just reinforces that view for us. Our trade of the day on Friday was short GBP/USD and whilst we have taken partial profits we continue to run a short and looking to add on a rally. We are also sitting short EUR/USD despite the Macron victory. There was only a small chance Le Pen would win and so a Macron victory was largely priced in and now full attention is back on interest rate differentials.
There is just no getting away from the fact that the FED are uber hawkish at the moment and combine that with concerns over China’s economy it is incredibly tough to see how risk does well in this environment. As always you will get pockets of reprieve but any rallies in risk markets should be met with good selling pressure. In this environment the USD will do well.
Crypto markets have not come out unscathed with BTC and ETH now sitting back below $40k and $3000 respectively, hitting 6-weeks lows. Looking at the charts also does not really provide any comfort. It looks like it’s broken a 2 month trend and could head lower. Saying all that, it still remains in its range seen in the last 6 months with $35-$50k containing the pair. $36,500-$37,000 looks like the initial level of support. The alts are also under pressure with SOL firmly back below $100 and Terra back below $90. It has pained us to be bearish on crypto recently but with its correlation to risk assets, it may well suffer further losses with $30k in BTC being possible in the coming week(s).
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