Weekly data: Risk, Uncertainty, Jittery Recession and Euro – Dollar Parity

This article was submitted by Terence Hove, market analyst at Exness.

According to Exness Senior Market Analyst Terence Hove, the key themes that are likely to be dominant in markets taking charge of the second half of 2022 are risk and uncertainty leading to jittery recession concerns and with the continuing powering of the USD and a move toward Euro – Dollar Parity.

US Non Farm Payroll data came out buoyant on Friday beating expectations, 298k vs actual 381k. This saw a bullish response in the USD (US Dollar) also measured though the US-Dollar Index (DXY) currently trading at 24 year highs of 107.8.

The USD has been the biggest winner amongst currencies and other assets as it asserts its position as the preferred safe haven asset. As the world gruples with high inflation and the US Fed’s own fight, the USD continues to charge ahead on each inflationary data print as seen with the buoyant US NFP data print last Friday.

With US Earnings season kicking off this week with JP Morgan expected to open the season announcement on Thursday 14th July. With US CPI and Retail Sales data also expected later in the week on Wednesday and Friday respectively, Exness Senior Market Analyst Terence Hove advised that “we are likely to see volatility in the Gold, USTech (Nasdaq100), S&P 500, Bitcoin and EURUSD. With the US Fed expected to deliver its interest rate decision toward the end July, this data will be closely watched for further indications of inflation within the economy. And with each inflationary data print, expect the USD to gain further bullish momentum.” Terence Hove further advised that “very little seems in the way to halt US Dollar strength as the Euro Area is battling inflation, which the battle is now compounded by energy scarcity fears as the Russian Nord Stream gas pipeline is shut down for routine maintenance from 11th – 21st July, suspending supply to Germany. ”The factors are center stage for the risk and uncertainty fear currently driving markets and a response to this is moves pilling into the USD including US Treasuries.

Current price action suggests the USD could likely trade past parity against the Euro (a move toward  €0.9750) and frankly continue to strengthen against most other currencies as we are seeing against the Japanese Yen (JPY,¥). Hence the USD will ideally be a good position to hold in the portfolio, said Terence Hove.

Disclaimer: opinions are personal to the author and do not reflect the opinions of Exness or LeapRate.

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