CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Open account
☰
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Open account
✖

European Open: USD/JPY hugs 130 like an old friend it's about to leave

Article By: ,  Market Analyst
May 4, 2022 6:07 AM

Asian Indices:

  • Australia's ASX 200 index fell by -3.1 points (-0.04%) and currently trades at 7,313.10
  • Japan's Nikkei 225 index has fallen by -29.37 points (-0.11%) and currently trades at 26,818.53
  • Hong Kong's Hang Seng index has fallen by -281.57 points (-1.33%) and currently trades at 20,820.32
  • China's A50 Index has risen by 150.75 points (1.13%) and currently trades at 13,516.30

 

UK and Europe:

  • UK's FTSE 100 futures are currently up 8.5 points (0.11%), the cash market is currently estimated to open at 7,569.83
  • Euro STOXX 50 futures are currently up 3 points (0.08%), the cash market is currently estimated to open at 3,764.19
  • Germany's DAX futures are currently up 7 points (0.05%), the cash market is currently estimated to open at 14,046.47

 

US Futures:

  • DJI futures are currently up 38 points (0.12%)
  • S&P 500 futures are currently up 36.75 points (0.28%)
  • Nasdaq 100 futures are currently up 7.75 points (0.19%)

 

 

FTSE 100:

The FTSE 100 has risen for five consecutive days, which is its fourth such occurrence since January 2021. A weaker GBP is helping to play its part and it looks like the FTSE wants to break above 7600 today. A break above 7569.8 confirms last week’s bullish pinbar, and we also like how yesterday’s (potentially) bullish hammer found support at the 50-day eMA.

 

FTSE 350: 4218.6 (0.22%) 03 May 2022

  • 111 (31.71%) stocks advanced and 230 (65.71%) declined
  • 7 stocks rose to a new 52-week high, 14 fell to new lows
  • 29.43% of stocks closed above their 200-day average
  • 39.71% of stocks closed above their 50-day average
  • 14.86% of stocks closed above their 20-day average

 

Outperformers:

  • + 7.96% - Auction Technology Group PLC (ATG.L)
  • + 7.60% - Energean PLC (ENOG.L)
  • + 5.80% - BP PLC (BP.L)

 

Underperformers:

  • -10.32% - SEGRO PLC (SGRO.L)
  • -9.35% - Jtc PLC (JTC.L)
  • -8.61% - Tritax Big Box Reit PLC (BBOXT.L)

 

 

A 50-bps hike is baked into the cake

It should go without saying that today’s FOMC meeting is the main event, even if a 50-bps hike is baked into the cake. Money markets have priced in a 99.8% chance of that happening, but the tone of today’s decision could either confirm or bring into doubt the market’s confidence of multiple 50-bps hikes.

As things stand, money markets are pricing in additional 50-bps hike at their June, July and September meetings, before dropping to 25-bps hikes in November and December. So it’s really about confirming whether the markets have the right curvature or not.

For today, traders will be looking for any clues that change the expected trajectory via the statement or press conference, however subtle they may be. With that said, it is more likely the any notable shift in policy would be made apparent in public comments as we head towards their June meeting, or the meeting itself (which also includes the staff forecasts, dot plot and press conference).

 

As you’d expect, currency markets are trading within tight ranges ahead of today’s FOMC meeting. But tight ranges ahead such events are usually an indication that a flash of volatility is due. So we don’t expect to see USD/JPY trading at 130 this time tomorrow.

USD/JPY is hugging 130 like it’s an old friend it’s about to part ways with, with the question being which way it will break. It’s been confined to a 20-pip range these past 12 hours and sits in the middle of the 129.67 – 130.48 range it has been stuck within since Monday. We all know the trend points higher, but we may need a decisively hawkish hike (via hints of additional 50-bs hikes) for it to break convincingly above 130.50 and target 131.00. If it’s simply a 50-bps hike and ‘see you next month’ then we’d expect some bearish volatility to slap the dollar around as it could bring into question the extremely hawkish trajectory that markets are currently expecting. 

 

Up next (Time in GMT)

 

 

How to trade with City Index

You can easily trade with City Index by using these four easy steps:

  1. Open an account, or log in if you’re already a customer 

    • Open an account in the UK
    • Open an account in Australia
    • Open an account in Singapore

  2. Search for the company you want to trade in our award-winning platform 
  3. Choose your position and size, and your stop and limit levels 
  4. Place the trade

 

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. CFD and Forex Trading are leveraged products and your capital is at risk. They may not be suitable for everyone. Please ensure you fully understand the risks involved by reading our full risk warning.

City Index is a trading name of StoneX Financial Ltd. Head and Registered Office: 1st Floor, Moor House, 120 London Wall, London, EC2Y 5ET. StoneX Financial Ltd is a company registered in England and Wales, number: 05616586. Authorised and regulated by the Financial Conduct Authority. FCA Register Number: 446717.

City Index is a trademark of StoneX Financial Ltd.

The information on this website is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement.

© City Index 2024