Markets Report - 16 May 2022

A daily breakdown of the markets for the 16th May 2022, provided to you by Sterlex.

🇪🇺💶European Central Bank Council member Francois Villeroy de Galhau told Reuters today that he expects a decisive policy meeting in June and an active summer. The Bank of France chief said they will monitor developments in the effective exchange rate as a significant driver of imported inflation, adding that a euro which is too weak would go against our price stability objective. The souring market mood, following disappointing economic data from China, has prevented the single currency from gaining any momentum in early trading. The euro is staying within a tight range against the dollar following last week’s decline. The European Commission will later today release the economic growth forecasts for the bloc and could dictate the single currency’s short-term direction.

🇬🇧💷UK N.Ireland Protocol has picked up traction again with volatile EU comments pushing back to scrap the trade deal all together... this only adds more uncertainty for the £ on the back of a dovish BOE Bailey last week and the prior week as he signals stagflation in UK, delays the 'recession' call for now.

🇺🇸 🏦Equity risk takes a breather from the surging losses in recent weeks despite some risk assets getting slight bounce before Friday US close, market sentiment tone still points to a dollar bid, whilst rest of market points to equity & bond risk offered lower still. The rate hiking cycle globally, inflation, war risk premiums all continue to weigh on market confidence as traders across institutions de-risk and scale back. We see the china covid lockdowns & Retail sales slow down hurting market sentiment also. This environment makes it very difficult to swing trade or forecast any real conviction in any asset class anything more then 2 days out. All forecasts are off at this stage, unless you have a bearish bias overall. This fear/scarcity tone may continue for days and weeks ahead. The Fed can only deliver less bad news, not good news to equities. Key Risk assets are still SPX, Emini, Euro (high yield), Metals (Silver haven), and Crypto BTC.