1 Minute Market Rundown – 29th April 2022
Risk Stages a Fightback
Crypto Consolidates
USD at a Crossroads…(We Think)
Yesterday saw another significant round of USD buying as month end is upon us. For those who watch price action closely, the final leg higher in the USD yesterday could actually signify a short term high has been put in place. This all came despite the fact that risk assets actually performed well yesterday with equities rallying and yields rising.
The USD rise was also spurred on by the BoJ who are as dovish as the FED are hawkish. We have been for a while now long USD against EUR and GBP but took profit on our positions on Wednesday. We have been highlighting that whilst we have been bearish EUR and GBP we did think the pace of the move has been quicker than expected which means the market is ripe for a reversal. We are seeing signs of this first thing this morning with the USD lower across the board. There is still some more pain to be felt so for now we are looking to sell EUR and GBP but think there is still some more room for it to rally.
Crypto markets continue to trade sideways. Hasn’t exactly been the best month for the majors with BTC and ETH down 15% and 13% respectively. Saying that, key support levels continue to hold. There is just no getting away from that we are rangebound and options traders are having a field day. May be a good time to look at some longer dated vol plays. In the spot market the levels remain incredibly well defined, BTC is stuck in a $35k-$50k range and looking for a reason to break out of it.
Which leads us on nicely to what could cause a breakout. Now a crypto specific headline of course will but otherwise it’ll need a shift in the macroeconomic narrative. If you have been looking at economic data releases recently, one word comes to mind – horrific. The data has been nothing short of horrific. We find ourselves now questioning if we, as well as the market, have gotten too hawkish. Will central banks really allow this data to keep printing so poorly in its battle to fight inflation? We are starting to get sceptical. As written above, we are currently square and whilst looking for extreme USD sell-offs to buy we will be watching the data and comments from central bankers that whilst they may be hiking they are acknowledging that growth is still a concern.
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